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[2010] ZAGPPHC 587
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T.M.W v J.J.W (46463/2007) [2010] ZAGPPHC 587 (24 February 2010)
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
PROVINCIAL DIVISION)
CASE NO: 46463/2007
DATE: 24 FEBRUARY
2010
NOT REPORTABLE
NOT OF INTEREST TO
OTHER JUDGES
IN THE MATTER
BETWEEN:
T[...] M[...] W[...]
….........................................................................................................................
PLAINTIFF
And
J[...] J[...] W[...]
…........................................................................................................................
DEFENDANT
JUDGMENT
TOLMAY. J:
The parties in this
matter were married on 22 December 1990 in terms of an Antenuptial
Contract wherein the accrual system as set
in in the
Matrimonial
Property Act. 88 of 1984
, was made applicable.
All aspects
pertaining to the disputes between the parties were settled bar two.
namely whether the tax liability attached to the
parties pensionable
interest is a liability in their respective estates that should be
taken into account in determining the nett
accrual in their
respective estates and costs. No evidence was led and the parties
presented me with oral argument and on request
delivered heads of
argument after the matter was heard.
In the light of the
aforesaid and by agreement between the parties I granted a final
decree of divorce on 9 February 2010 incorporating
an order regarding
those aspects that the parties agreed upon and reserved judgment
regarding the outstanding disputes.
This judgment deals
with the two outstanding issues on which I reserved judgment.
The Parties’
Pensionable Interests
I have been asked to
determine whether the tax liability on the parties’ pensionable
interests is a liability properly to
be taken into account in
determining the nett estates of the parties for purposes of
calculating the accrual in the respective
estates.
The parties have
reached an agreement regarding the value and composition of their
respective estates and I need not concern myself
with that for
purposes of this judgment. It is common cause that defendant will
have to pay an amount to plaintiff as his estate
had shown a larger
accrual.
Plaintiff’s
counsel argued that while there is a tax liability on the pensionable
interest, that tax liability is not due
at date of divorce and
therefore should not be regarded as a liability. In this case
plaintiff did not ask that an endorsement
be made nor that payment of
part of the pension fund be made directly to her. Defendant argues
that the tax liability should be
regarded as a liability on date of
divorce and should be taken into account when the accrual is
determined.
The definition of
“Pension Interest” in the
Divorce Act. 70 of 1979
reads
as follows:
“’
Pension
Interest’
in
relation to a party to a divorce action who -
(a) is a member of a
pension fund (excluding a retirement annuity fund), means the
benefits to which that party would have been
ent tied in terms of the
rules of that fund if his membership of the fund would have been
terminated on the date of the divorce
on account of his resignation
from his office.
In
ex parte
Randles: in re King v King
[1998]
2 All SA 412
,
the
applicant was the liquidator of the joint estate of mr and mrs King.
In terms of the order of court regulating the divorce of
the parties
in the divorce action, one half of the plaintiff's “pension
interest” was payable to the defendant. As
the parties could
not agree on the value to be placed on the defendant’s interest
in the pension fund, the applicant approached
the court for an order
determining the extent of the interest. In that matter the plaintiff
argued that the “benefits”
in the definition of "pension
interest" referred to the withdrawal benefit before tax of the
member’s interest,
and the defendant argued that it referred to
the actuarial reserve benefit. In that matter the Court held that
there was no general
rule that could be applied to determine what a
member’s interest was. The “pension interest” in
sec 1
was according to that court not a reference to any pension
interest, but to that conferred by the particular pension fund of the
member. The Court found that the benefit in terms of the rules of the
plaintiff’s pension fund was what actually accrued
to the
member on his notional resignation, not by what he might at any time
thereafter choose to do with it.
On
p 414 of the
ex
parte
Randles
matter
the following is stated: “It may be observed at the outset,
however, that the section does not deal with the case of
an actual
resignation by the member from the pension fund. It is a deemed or
notional resignation that is made on the suppositions
made.
It
is the benefit
to
which the member would have been entitled if his membership of the
fund
w
ould
have terminated at the time of divorce on account of his resignation
(my
underlining).
In
the decision of
Protektor
Preservation Pension Fund v Bellars 2009(4) SA 455 (D&CLD) at pp
458, paras 12 and 13.
the
learned judge states the following:
“
[12]
Now as pointed out by the applicant’s deponent in the founding
affidavit the said
s 7(8)
was designed to ensure that there be an
equitable division of assets between the spouses on divorce. Thus the
portion of the pension
interests that falls to be transferred to the
non-member spouse is based on its valuation as at the date of the
divorce.
[13] The definition
of 'pension interest’ speaks of a termination of membership of
the fund on account of resignation from
office'. Thus the valuation
of the pension interest was based on a deemed resignation of the
member from the scheme.”
Both the aforesaid
decisions, correctly in my opinion, indicated that a party’s
"pension interest” should be determined
as at date of
divorce and should be determined by the benefit to which the member
would have been entitled if he resigned.
The aforesaid
decisions did not deal with the calculation of the accrual in an
estate.
In terms of
sec 3
of
the
Matrimonial Property Act. 88 of 1984
the claim to accrual sharing
arises only at the date of dissolution of the marriage. Therefore it
is only at this date that calculations
can be made as to the accrual
of the respective estates. In terms of sec 4 of the Matrimonial
Property Act the accrual of the estate
of the spouse is the amount by
which the nett value of his/her estate exceeds the nett value of
his/her estate at the commencement
of the marriage.
Section
4(1 )(a) of the Matrimonial Property Act
supra
reads
as follows:
“
4(1
)(a) The accrual of the estate of a spouse is the amount by which the
nett value of his estate at the dissolution of his marriage
exceeds
the nett value of his estate at the commencement of that marriage."
In
the South African Concise Oxford Dictionary, the word
“
net”
or
“
nett”
is
described as follows:
“
(of
an amount, value, or price) remaining after a deduction of tax or
other contributions.”
In the Dictionary of
Legal Words and Phrases - Claassen, - Vol 3 the word "net”
and “nett” is described as
meaning “this term means
‘free from, or subject to any deduction’” or
''clear of all deductions’”.
In
the light of the fact that the accrual should be determined at date
of divorce the pension interest could only be determined
at that same
date. The valuation should be based on a deemed resignation, and
therefore the definition of “pension interest”
in sec 1
of the divorce Act should be read to include the after tax withdrawal
benefit that would be payable to a member if he
or she had opted to
take a total withdrawal benefit as at date of divorce, because only
that
could
be the nett accrual as at date of divorce.
It is common cause
between the parties that there is a tax liability on their respective
pensionable interests. I must point out
that the rules of the
respective pension funds were not made available to me. The amount to
be taxed on the pensionable interests
and how it will be deducted is
irrelevant for purposes hereof as I have not been asked to decide
thereon.
The fact that the
defendant may or may not use the funds in the Pension Fund to enable
him to pay the amount owing to the plaintiff
is irrelevant, for
purposes of determining the accrual the important consideration is
whether the nett accrual of the estate has
been correctly determined.
In order to
determine the accrual the parties’ nett interest will have to
be determined at date of divorce. Therefore the
tax liability as at
date of divorce must be taken into account when the accrual is
calculated.
Costs
Plaintiff argued
that as she was substantially successful defendant should pay the
costs of the action. It was also contended that
defendant up to the
very last minute was not forthcoming about the true value of his
estate, which necessitated her to continue
with her claim for
rehabilitative maintenance. Defendant argued that each party should
pay his/her own costs.
I have a discretion
regarding costs and sec 10 of the Divorce Act seems to broaden such
discretion.
It would seem that
the defendant did not reveal all his assets and this did result in
some of the disputes not being resolved earlier.
On the other hand
defendant was successful regarding the issue that needed to be
determined by me and it would seem that the matter
would have
proceeded to trial irrespective of the maintenance claim. The
defendant is the party with the larger estate and this
is also taken
into consideration in the exercise of my discretion. Consequently,
and in the exercise of my discretion I order the
defendant to pay 60%
of the plaintiff’s costs.
Consequently the
following order is made:
1. The tax
liability attached to the parties pensionable interests is a
liability in their respective estates and should be taken
into
account in determining the nett accrual of the respective estates.
2. Defendant is
ordered to pay 60% of the plaintiff’s taxed party and party
costs.
R G TOLMAY
JUDGE OF THE HIGH
COURT
ATTORNEYS FOR
PLAINTIFF:
COUZYN HERTZOG &
HORAK
321 MIDDLE STREET
BROOKLYN
PRETORIA
REF: H
GROBLER/aI/G305
ADVOCATE FOR
PLAINTIFF: ADV M VELDSMAN
ATTORNEYS FOR
DEFENDANT:
SCHOEMAN &
ASSOCIATES
289 CHARLES STREET
BROOKLYN
PRETORIA
REF: DJ
SCHOEMAN/yb/SW0116
ADVOCATE FOR
DEFENDANT: ADV D A SMITH (SC)
DATE OF TRIAL: 9
FEBRUARY 2010
DATE OF JUDGMENT: 24
FEBRUARY 2010
JUDGE: TOLMAY RG