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[2012] ZAGPJHC 282
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GF v AF (17992/2011) [2012] ZAGPJHC 282 (12 June 2012)
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NOT REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO:
17992/2011
DATE:12/06/2012
In
the matter between:
G E
F
.....................................................................................................
Applicant
and
A
F
........................................................................................................,
Respondent
JUDGMENT
VICTOR,
J:
[1]
This is an application for summary judgement
in the sum of R182 422,29 plus interest and costs on the attorney and
client scale.
Before dealing with the merits of the application,
something needs to be said about the manner and the procedure which
preceded
the final hearing of this matter.
[2] On Tuesday and certainly by the time the file was sent to my
chambers, the defendant’s opposing affidavit was not in
the
file. On Tuesday, Mr Welz mentioned that there was an affidavit by
the defendant but that it had not been properly served and
filed.
There was no answering affidavit in the court file. I raised with him
whether this would not result in further unnecessary
procedural steps
to recall the matter or rescind the judgment. At the time of hearing
the matter at the unopposed roll there was
no appearance noted by the
respondent and after hearing full argument, I granted the order.
[3] At the end of the roll for the day Counsel appeared and requested
that the matter be recalled by reason of the fact that the
matter was
opposed and that he had been instructed the opposing affidavit should
be in the court file.
[4] The defendant sought condonation for the fact that the answering
affidavit was not received by me. However, the application
for
condonation lacked detail. This aspect was relevant to the question
of costs.
[5] The facts for the condonation are as follows: The correspondent
attorney on behalf of the plaintiff, Mr Shull filed an affidavit
to
explain the situation. This became necessary because Mr Felgate on
behalf of the defendant wished to argue the summary judgment
matter
and I required an explanation as to what had happened.
[5] According to Mr Shull, on 1 July 2011, at 08h47 he received the
affidavit resisting summary judgment. On the same day, at
12h04 he
sent a letter by fax to the defendant’s attorneys,
acknowledging receipt of the affidavit and advising that the
application for summary judgment would proceed. He also sent a copy
of that fax to the attorney who had instructed him as correspondent,
Mr Dracatos.
[6] The letters are very clear. The letter to the defendant’s
attorney notes that the summary judgment would be proceeding
on the
Tuesday of the motion court week. A request was made as to the name
of the defendant’s advocate and the defendant’s
attorney
and at the same time he advised that the plaintiff’s advocate
would be Mr Welz.
[7] Quite clearly from the facsimile report, this letter must have
been received by the defendant’s attorney. In response
an
affidavit was filed by the respondent’s attorney employed in
the firm Breytenbach, Mostert and Skosana.
[8] In this affidavit, the allegation is made that the answering
affidavit was filed at the plaintiff’s attorney’s
correspondent timeously before 12h00, but did not get to court in
time, because the court closed between 13h00 and 14h00. I have
perused the affidavit as well as that of Mr Giyane who was the
messenger, who claims to have served the affidavit before 12:00,
on 1
July 2011 and it is unclear from his affidavit, whether he indeed
filed the affidavit at all, after two o'clock. It certainly
was not
brought to my chambers.
[9] I make the observation that the defendant’s attorney has
dealt with this matter in a most cavalier manner. The matter
was
dealt with in the ordinary unopposed roll. It also necessitated Mr
Shull coming to court on Wednesday because the court requested
that
someone from the plaintiff’s attorney’s offices attend
court, so that the procedural aspects of this matter could
be
explained. After considering the matter I directed the matter be
heard on the Thursday.
[10] Counsel who moved the application attended court on the
Thursday. The applicant opposed the recalling of the matter but I
allowed rehearing because of the importance of the matter to the
parties.
[11] I took into account the cavalier manner in which the defendant’s
attorney had dealt with this matter. But at the end
of the day, I
found that it was in the interests of justice for the matter to be
fully argued. An appropriate costs order was appropriate
as a result
of the procedural non compliance made by the defendant’s
attorney, whether it was wilful or not but it certainly
was handled
in a negligent manner.
. The parties were previously married. The marriage was dissolved
by a decree of divorce. There was a settlement agreement and
in
clause 8.5 of the settlement agreement, the following was agreed to
between the parties:
"The plaintiff shall be entitled to an amount equal to half of
the value payable of the defendant’s pension fund,
as at date
of granting of a decree of divorce in this matter. Should the
plaintiff wish to receive payment of the amount to which
she becomes
entitled, at the date of granting the decree of divorce, the
defendant undertakes to sign all documents and to do all
things
necessary within seven days of being called upon to do so, for the
pension fund to effect payment to the plaintiff, the
pension fund
shall make payment to the plaintiff as is set out in the Pension
Funds Amendment Act.”
[13] The plaintiff duly complied with his obligations and made all
the necessary arrangements with the pension fund. Central to
this
issue is the fact that the agreement is silent as to who should pay
tax on pension amount.
[14] After the divorce, the Old Mutual, the administrator of the
pension fund, made a payment to the defendant in an amount equal
to
half of the plaintiff’s individual reserve held by the fund, as
at date of divorce and such payment amounted to R640 078,23.
However, subsequent to the payment and prior to February 2009, the
Old Mutual deducted a further amount of R255 136,06 from the
applicant’s minimum reserve held by it. This amount was R182
422,29 being the tax payable on the share of the pension as
well as a
further amount of R72 713,77 being the vat payable.
[15] The plaintiff’s particulars of claim deal fully with the
manner in which the different sections of the Divorce Act apply
as
well as Schedule 2 of the Revenue Laws Amendment Act. Quite clearly
Section 1
of the
Divorce Act 70 of 1979
defines a pension interest in
relation to a divorce action. The definition of a pension interest
in
Section 1
of the
Divorce Act has
to be read to include the after
tax withdrawal benefit as defined in the fund’s rules.
Section
7
of the
Divorce Act contains
further provisions relating to the
pension interest in a divorce, including
Section 7(8)
of the
Divorce
Act which
is designed to ensure an equitable distribution and an
equitable division of the assets on divorce.
[16] In terms of
Section 37(d)(1)(a)
of the
Pension Funds Act 24 of
1956
, the deduction from a member’s minimum individual reserve
of any amount assigned to such individual, can be paid out as well
as
the tax required to be deducted or withheld in terms of the fourth
schedule of the Income Tax Act, thus justifying the Old
Mutual
deducting the said amount from whatever was left in reserve even
after payment had been effected.
[17] Quite clearly, the defendant in this matter was the beneficiary
of the lump sum payment and therefore was only entitled to
that lump
sum benefit after the necessary tax deduction had been made. In
terms of clause 2(b)(1) of the second schedule to the
Income Tax Act
the tax component has to be deducted prior to the pension interest
accruing in the hands of the beneficiary.
[18] Prior to 1 March 2009, the following reference is made and
definition was made in respect of gross income. Gross income is
the
aggregate of the amounts deducted from the minimum individual reserve
of a person during that year, in terms of
section 37(d)(1)(d)
of the
Pension Funds Act 24 of 1956
which aggregate amount must be deemed to
be a retirement fund lump sum withdraw benefit received by or accrued
to the person on
the date of the deduction.
[19]
Section 1
goes on to provide specifically as follows:
"Provided that so much of any tax payable as is due to the
inclusion in the income of such person of any amount contemplated
in
this paragraph pursuant to any order contemplated in section (7) of
the
Divorce Act made
to the extent that the tax is attributable to an
amount contemplated in the said section of the
Pension Funds Act, be
recovered by such person from the person to whom and in whose favour
the amount is paid or payable.”
[20] Quite clearly therefore the defendant was only entitled to the
pension interest after the relevant tax was deducted. It is
the
defendant’s case and described by Mr Welz as being a curious
set of defences, set out in a very brief affidavit that
the plaintiff
in its particulars of claim failed to indicate what additional tax he
had to pay as a result of the amount that was
paid to the defendant
included in his gross income.
[21] Mr Felgate very properly abandoned the other defences which were
set out in the summary judgment application that included
a defence
in terms of the
National Credit Act 34 of 2005
and various other
curious defences.
[22] It was submitted on behalf of the defendant therefore said that
the amount claimed and referred to in paragraph 11 of the
particulars
of claim, did not take into account a proper calculation of what the
tax should have been. In other words, the plaintiff
had other income
and this affected the gross income component which the defendant
should not have been prejudiced by. Therefore
the amount claimed by
the plaintiff, is not an amount capable of being the subject matter
of summary judgment proceedings.
[22] Rule 32(1)(b) of the Uniform Rules of Court, deal with what
constitutes a liquidated amount in money and as submitted by Mr
Welz,
if the amount is capable of ascertainment or can be readily
ascertained then the claim is capable of the grant of summary
judgment.
[23] In determining whether the claim is to be considered 'a
liquidated amount in money' within the meaning of Rule 32 (1) (b)
the
principle is clear. In
Fatti's Engineering Co (Pty) Ltd v Vendick
Spares (Pty) Ltd
1962 (1) SA 736
(T) the decision as to whether a
debt is capable of speedy ascertainment is a matter on which the
judge exercises a discretion.
Precise rules therefore are impossible
of formulaic precision. In my view the amount was capable of speedy
and prompt ascertainment
and it was therefore a liquidated amount.
In this case, the Old Mutual had formulated the amount and this
demonstrated that the
amount was capable of speedy ascertainment. The
plaintiff did not have to attend to calculations.
[24] In addition in paragraph 11 of the particulars of claim, the
calculation as to how the amounts are arrived at, show and
demonstrate
that the amount was capable of ascertainment very easily.
There can be no dispute that the amount claimed was indeed the
amount
deducted.
[25] Mr Felgate relied on item 2(1)(b)(1) of the Income Tax Act:
"So much of any tax payable as is due to the inclusion in the
income of such person, of any amount contemplated in this
paragraph.
It was submitted on behalf of the defendant that upon a proper
construction of the words as is due to the inclusion
in the income of
such person, clearly limits the amount recoverable from the
defendant by the plaintiff to the amount which the
plaintiff’s
tax liability had been increased due to the deemed inclusion of the
amount so deducted.”
[26] Reliance was placed on the case of
Bern NO v Commissioner for
Inland Revenue and Another
1999(3) SA 876D, 881H-882A. Although
this dealt with an amount which accrued and in relation to
disposition of a pension benefit,
upon the death of the member Mr
Felgate submitted that it was appropriate to deal with this case in
that manner. It was the defendant’s
case that no allegation
had been made by the plaintiff as to the amount by which his tax
liability has been increased, due to the
deemed inclusion of the
amount allegedly deducted from the plaintiff’s minimum reserve.
It was contended that in the absence
of a more detailed calculation
and taking into account the plaintiff’s total tax liability,
the amount of such additional
taxation is in dispute and therefore
not capable of the grant of summary judgment.
[27] According to the defendant, the plaintiff should have made a
full disclosure of his financial position during that tax year
and
how his other income affected that deduction by Old Mutual. Whilst
there might be merit in the submission by the defendant
in relation
to the disposition of a pension benefit upon the death of the member,
this matter is one which involves a divorce.
[28] The divorce agreement, although it does not deal with the tax
component of the pension benefit, was settled quite clearly
in a
manner which specifically omitted to deal and the parties agreed not
to deal with the tax implications. The parties, however,
anticipated
that some statutory interpretation would be required, as the final
sentence in that clause refers to the following:
“
The
Pension Fund shall make payment to the plaintiff as is set out in the
Pension Funds Amendment Act.”
My emphasis.
[29] Quite clearly the parties were aware that there would be some
statutory implication, whether it be in terms of the
Pension Funds
Act or
and then of course any other statute which would have a direct
impact on that. If it was the defendant’s intention that she
would not be liable for any taxation on her benefit, that provision
should have been included in the settlement agreement.
[30] Absent reference to any tax implications, the defendant has to
accept the imposition of the taxation on the lump sum payment
made to
her. In addition, the submission made by the defendant that the
entire tax profile of the plaintiff should have been
pleaded.
[31] The parties must have anticipated that there would be a tax
implication. Their failure to deal with such a tax implication
in
the agreement expressly means that the settlement which was agreed to
between the parties must be construed strictly and there
is no room
for debate or further determination as to how the taxation on that
lump sum payment should be made.
[32] In the result I find that the defendant’s defence to this
claim fails.
[33] On the question of the costs, the defendant albeit through her
attorneys resulted in unnecessary costs being incurred by
the
plaintiff. Costs on the unopposed scale were incurred on
Tuesday, 5 July 2011. Costs on the unopposed scale were also
incurred on 6 July 2007.
[33] I therefore order that in the light of the defendant’s
attorney’s attitude, the cavalier manner in which he has
dealt
with this matter, that a costs order on the attorney and client scale
for those two hearings must be made.
[34] As regards the hearing when the actual opposed matter was heard,
that must be on the party and party scale.
The order that I make is that:
1. Summary judgment is granted in terms of the draft which I mark “X”
and which is dated 8 July 2011 as amended by
me, as follows:
1.1. Prayer 1 stands.
1.2. Prayer 2 stands.
1.3. Prayer 3: The defendant is to pay the costs of the appearances
on 5 and 6 July 2011 on the unopposed scale on the attorney
client
scale.
2. The defendant is to pay the costs of suit
_________________
VICTOR J