About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2020
>>
[2020] ZAGPJHC 258
|
|
I R v D R (A3035/2020) [2020] ZAGPJHC 258 (19 October 2020)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
APPEAL
CASE NO
:
A3035/2020
COURT
A QUO
CASE NO
:
RC/912/2017
DATE
:
19
th
October 2020
In
the matter between:
R
,
I
Appellant
and
R
,
D
Respondent
Coram:
Adams J
et
Majavu AJ
Heard
:
14 October 2020
Delivered:
19 October 2020 – This judgment was handed down
electronically by circulation to the parties' representatives by
email, by
being uploaded to the
CaseLines
digital system of
the GLD and by release to SAFLII. The date and time for hand-down is
deemed to be 11h00 on 19 October 2020
Summary:
Marriage – Divorce – marriage out
of Community of Property subject to the accrual system –
Contract –
settlement agreement in divorce action – interpretation of
contract – whether husband can recover from
wife tax payable on
payment by husband’s pension fund to the wife of her half share
of the accrual – the applicability
of section 7(7) and (8) of
the Divorce Act and section 37D(1)(d) of the Pension Funds Act –
an agreement must be read in
its context and regard must be had to
the purpose for which it was concluded – the point of departure
is the language.
ORDER
On
appeal from:
The
Gauteng Regional Court, Vereeniging (Regional Magistrate S P Morwane
sitting as Court of first instance):
(1)
The appeal is upheld with costs.
(2)
The order of the Vereeniging Regional Court
is set aside and in its place the following order is substituted:
‘
a)
The applicant’s application for the setting aside of the
warrant of execution against his property is dismissed with costs.
b)
The applicant shall pay the respondent’s
costs of the application.’
(3)
The respondent shall pay the appellant’s
costs of this appeal.
JUDGMENT
Adams
J (Majavu AJ concurring):
[1].
The issue in this appeal concerns the
proper interpretation of a clause contained in a settlement agreement
concluded between the
appellant (the wife) and the respondent (the
husband), which was incorporated into the divorce order granted in
the Vereeniging
Regional Court (‘the trial court’) on the
31
st
of July 2018. The question to be answered is what the legal effect is
of the terms of the said clause which relates to the redistribution
of the accrual of the respective estates of the parties.
[2].
The English translation of the clause reads
as follows:
‘
3.1
The [appellant] is entitled to payment of the amount of R2 527 995,
being 50% of the amount of the difference between
the accrual of the
[respondent’s] estate and that of the appellant’.
[3].
This clause should be read together with
the following clauses in the settlement agreement, which was in fact
the second agreement
of settlement concluded between the parties:
‘
4.2
The administrator of the [respondent’s] Provident Fund shall
deduct the amount of R2 527 995 from the member's
benefit
in terms of Section 7(8)(a)(i) of the Divorce Act read with Section
37(D)(1)(d)(i) of the Pension Funds Act.
4.3 The [appellant]
prefers that the aforementioned amount be paid out to her directly
into a bank account to be nominated by her.
4.4 The administrator of
the [respondent’s] Pension Fund shall endorse their register
and records accordingly.
4.5 The [appellant] shall
ensure that payment of the said amount is effected within sixty days
from the date of the divorce.’
[4].
The appellant and the respondent were
previously married to each out of community of property in terms of
an antenuptial contract
subject to the accrual system. On the 31
st
of July 2018 the marriage was dissolved by a decree of divorce of the
Vereeniging Regional Court incorporating an agreement of
settlement
concluded between the parties on the day of the divorce. The
important part of the agreement of settlement was clause
3.1 cited in
para 2 supra, which provided that the respondent was entitled to an
amount of R2 527 995, which represented
her half of the
difference between the accrual of the respective estates of the
parties. In terms of the settlement agreement,
the aforementioned sum
of R2 527 995 was payable by the respondent to the
appellant within sixty days from the date of
the divorce order.
[5].
The original clause in Afrikaans reads as
follows:
‘
3.1
Die verweerderes is geregtig op betaling van die bedrag van
R2 527 995 synde 50% van die bedrag waarmee die eiser
se
boedel meer aangewas het as haar boedel.’
[6].
Undoubtedly this provision in the
settlement agreement was based on and was in terms of the provisions
of s 3(1) of the Matrimonial
Property Act, Act 88 of 1984 (‘the
MPA’) and implies: (a) that the appellant’s estate showed
a smaller accrual
than the estate of the respondent; and (b) that the
difference between the accrual of the respective estates of the
spouses was
an amount of R5 055 990. I gathered that this
amount represented in the main the value of all of the assets in the
estate
of the respondent, which consisted of a house, his benefit
interest in his pension fund and other property. The aforegoing is
common
cause between the parties, although the exact details of the
values of the individual assets were not apparent from the papers
before us. It bears emphasising that, contrary to what the respondent
contends, the amount of R2 527 995 did not represent
50% of
his pension benefit – certainly not on the evidence before the
trial court.
[7].
All the same, in my judgment this agreement
had the effect that the respondent would pay to the appellant, who
would receive from
the respondent
in
lieu
of half of his assets, an amount
of R2 527 995. This is apparent from the wording of the
clause and there can and should
be no debate about that. This is also
how the parties understood the agreement and to give effect to their
accord the respondent
was going to raise the funds to pay off his
admitted debt to the appellant. The evidence was that he would
endeavour to raise a
loan for that amount against his pension fund as
he did not have access to that type of cash and he was reluctant to
sell his house,
which he wanted to retain for himself. Importantly,
in this agreement it was clearly not contemplated by the parties that
the appellant
would receive a portion or a percentage of the
respondent’s ‘pension interest’ in his pension fund
– that
was to remain intact for the benefit of the respondent.
[8].
So far so good and if the respondent had
obtained a loan there would have been no issues – the appellant
would have received
her R2 527 995, probably as a capital
payment. There would have been no tax implications for either the
appellant or
the respondent, and if there were, each party would have
had to deal with that on his or her own. However, as luck would have
it,
the respondent’s application for a loan against his pension
fund was unsuccessful and another plan had to be hatched as the
appellant by then was insisting on payment in terms of the settlement
agreement and the court order.
[9].
During September 2018, the respondent,
through his attorneys, proposed that the settlement agreement be
amended so as to enable
him to access his pension fund and to pay the
appellant directly from his pension interest the amount of
R2 527 995.
This could only be done by bringing the
agreement within the ambit of s 7(7) and (8) of the Divorce Act, Act
70 of 1979 (‘the
Divorce Act’), read with s 37D(1)(d) of
the Pension Funds Act, Act 24 of 1956 (‘the PFA’). This
resulted in the
amended agreement of settlement, signed by the
parties on the 13
th
of October 2018, and which was made an order of Court of the 25
th
of October 2018 by the Vereeniging Regional Court. This is the
agreement which is the subject of the dispute between the parties
in
this appeal. The only difference between the initial agreement and
the amended agreement was the incorporation of clause 4 referred
to
at para 3 above. Significantly, clause 3.1 of the agreement was
retained. This means that in the end the express agreement between
the parties was that the appellant was entitled to R2 527 995,
‘synde’ half of the difference between the
difference
between the accrual of the estates of the parties.
[10].
I indicated above that my interpretation of
this clause is that the respondent should pay to the appellant
R2 527 995
in lieu
of her fifty percent share in the increased value of the estate of
the respondent. The question is whether the new clause 4 (cited
in
para 3 supra) makes a difference to this interpretation of the
agreement.
[11].
That question arises in the following
context. After the amended agreement of settlement was made an order
of court on the 25
th
of October 2018 the respondent’s Pension Fund processed the
appellant’s claim and on the 26
th
of November 2018 paid to the appellant an amount of R1 770 916.80,
which was arrived at by deducting R757 078.20
for tax payable on
the ‘withdrawal’, treated as income in the hands of the
appellant. Predictably, the appellant was
aggrieved by this deduction
and proceeded to issue a warrant of execution against the
respondent’s property for payment of
the said sum of
R757 078.20. The respondent in response to the warrant applied
to the Vereeniging Regional Court to set aside
the writ, arguing that
he had complied with his obligations in terms of the court order of
the 25
th
of October 2018 and the agreement of settlement underpinning that
order.
[12].
The respondent submitted in the court
a
quo
, as he does in this court, that the
amount stated in clause 3.1 of the settlement agreement constitutes
fifty percent of the respondent's
pension interest in his provident
fund. The value of the respondent's pension interest, so the
respondent further submitted, constituted
the value by which his
estate exceeded the value of the appellant's estate. The difficulty
with this contention by the respondent
is that there is no evidence
before us in support of same. Even more telling is the fact that this
contention flies in the face
of the express wording of the clause,
which is to the effect that the said sum represented her share of the
difference between
the accrual of their estates – in this
clause 3.1 nothing is said about the pension interest of the
respondent.
[13].
The respondent also refers to
correspondence between the parties which preceded the conclusion of
the amended settlement agreement.
I am not sure that such evidence is
admissible. It may well be that reference to the said correspondence,
which relates to the
negotiations leading up to the conclusion of the
amended settlement agreement, offend against the parole evidence
rule.
[14].
But even if I accept that the evidence is
admissible on the basis that it gives context to the conclusion of
the agreement and assist
in understanding the purpose at which the
conclusion of the agreement was aimed, it mitigates against the case
of the respondent.
The simple fact of the matter is that it is clear
from those exchanges between the parties that they had diagonally
opposed views
as to who of them would be liable for any tax
deductions. So much so that the appellant during the discussions had
proposed that
a clause be incorporated in the amended agreement of
settlement to the effect that the respondent would make good any
shortfall
in the payment as a result of tax deductions. Therefore, as
I said, the correspondence between the parties prior to the
conclusion
of the amended agreement is of little assistance in the
interpretation of the said agreement.
[15].
The trial court ruled in favour of the
respondent. It held in essence that the appellant is liable for the
payment of the tax deducted
from the amount due to her on the basis
that the provisions of s 37D(1)(d) of the Pension Funds Act is
applicable. The learned
Regional Magistrate concluded as follows:
‘
(20).
In the present matter, not only did the [appellant] agree to be paid
her share in terms of the provisions of the Divorce Act
and the
Pension Funds Act that triggered the issue of tax liability and
deductions to be made. She set in motion the provisions
of Section
37D(4)(b)(1) of the Pension Funds Act that permits the [appellant] to
make an election on how her share of the pension
interest should be
paid out and thus accelerating the said payment with its tax
deduction, which was correctly done separately
on the amount to be
paid.
(21). The [appellant’s]
claim of her accrual share in the [respondent’s] estate, by
virtue of the second settlement
agreement falls squarely within the
ambit of
Section 7(7)
and
7
(8) of the
Divorce Act 70 of 1979
. A
further reading of the second settlement agreement directs the reader
to read same with the provisions
Section 37D(1)(d)(i)
of the
Pension
Funds Act 24 of 1956
. On what basis would the [respondent’s]
Provident Fund not deduct the tax from the [appellant’s] claim,
when the Court
Order so directs.
(22). This Court was not
called upon to interpret the Court order as it stands, against the
intention of the parties. The reasons
why the [appellant] opted to
sign the second settlement agreement as it stands is unknown.’
[16].
The trial court accordingly granted an
order setting aside the warrant of execution against the property of
the respondent and ordered
the appellant to pay the respondent’s
costs of the application to set aside the writ. It is against that
judgment and order
that the appellant appeals to this court.
Discussion
[17].
It is trite law that the provisions of an
agreement must be read and understood in the context within, and
having regard to the
purpose for which, the agreement was concluded.
The point of departure is the language employed in the document. But
the words
must not be considered in isolation. A restrictive
examination of words, without regard to the context or factual
matrix, has to
be avoided. Evidence of prior negotiations is
inadmissible, but evidence relating to the surrounding circumstances
and the meaning
to be given to special words and phrases used by the
parties, is admissible. No distinction is drawn between context and
background
circumstances. Words have to be interpreted sensibly so as
to avoid unbusinesslike results.
[18].
In casu
,
the wording of the clause is crystal clear – the appellant is
entitled to payment of the sum of R2 527 995, which
represents her half share of the difference between the accrual of
the estates of the parties. What is also clear is that there
is no
provision in the agreement that any amounts should be deducted from
this sum. Therefore, if the language employed in the
agreement is the
starting point, then there can be no doubt that pursuant to the
amended agreement of settlement the appellant
should have received
R2 527 995.
[19].
Clause 4 does not alter this position. We
know for a fact that clause 4.1, which makes reference to
s
7(8)(a)(i)
of the
Divorce Act and
s 37(D)(1)(d)(i)
of the
Pension
Funds Act, was
inserted into the amended agreement for one purpose
and for one purpose only, that is to assist the respondent and to
enable him
to comply with his obligation to pay to the appellant her
half share of the difference between the accrual in their estates. It
was in that context that the amended agreement, incorporating clause
4, was drafted and concluded The only way in which the respondent
was
able to withdraw the amount from his pension fund was to word the
amended settlement agreement, in particular clause 4, in
the manner
it was worded – with specific reference to
s 7(8)(a)(i)
of the
Divorce Act and
s 37(D)(1)(d)(i)
of the
Pension Funds Act. The
intention was never to award to the appellant a percentage of the
respondent’s pension interest as contemplated in
s 7
of the
Divorce Act. The
truth is that the amount was withdrawn from the
respondent’s pension fund at his instance and on his behalf –
he needed
the money in order to discharge his obligation to the
appellant in terms of the agreement. It is therefore the respondent,
and
not the appellant, who received payment from his pension fund and
he is liable for the tax.
[20].
This, as indicated, is the context in which
the amended agreement was concluded, which lends itself to an
interpretation which accords
with the express wording of clause 3
that the appellant, when all was said and done should have received
R2 527 995 and
that the respondent was liable to her for
payment of that amount.
[21].
Moreover, the intention was never to have
assigned to the appellant from the respondent’s pension benefit
the amount of R2 527 995
or any amount for that matter,
despite the fact that the parties were aware that one of the assets
which formed part of the respondent’s
estate was his pension
interest in the Pension Fund. If that was the intention of the
parties, the agreement surely would have
provided thus and not that
the appellant is entitled to a specified sum.
[22].
In sum, on a proper interpretation of the
amended settlement agreement reached between the parties it has to be
accepted that the
appellant should have received from the respondent
R2 527 995. The learned Magistrate misdirected herself in
that regard.
As I have already indicated, such an interpretation is
consistent with the express wording of clause 3 and with the amended
agreement
as a whole read in context, and having regard to the
purpose for which it was concluded.
[23].
For all the reasons set out above, it has
been shown that the trial court erred in finding that the respondent
is not liable to
refund to the appellant the amount of R757 078.20.
Therefore, the appeal must succeed.
[24].
In the circumstances, I am of the view that
the appeal against the order of the Regional Court should be upheld.
Order
In
the result, the following order is made:-
(1)
The appeal is upheld with costs.
(2)
The order of the Vereeniging Regional Court
is set aside and in its place the following order is substituted:
‘
a)
The applicant’s application for the setting aside of the
warrant of execution against his property is dismissed with costs.
c)
The applicant shall pay the respondent’s
costs of the application.’
(3)
The respondent shall pay the appellant’s
costs of this appeal.
__________________________
L R ADAMS
Judge of the High
Court
Gauteng Local
Division, Johannesburg
I
agree
__________________________
Z M P MAJAVU
Acting Judge of the
High Court
Gauteng
Local Division, Johannesburg
HEARD ON:
14
th
October
2020
JUDGMENT DATE:
19
th
October 2020
FOR
THE APPELLANT:
Adv
K Meyer
INSTRUCTED
BY:
Esthé
Muller Incorporated, Vereeniging
FOR
THE RESPONDENT:
Adv
P G Leeuwner
INSTRUCTED
BY:
William
S Grant Attorneys, Vereeniging