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[2016] ZAGPPHC 230
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R.J.N v F.P.K and Others (Reasons) (15438/2015) [2016] ZAGPPHC 230 (23 March 2016)
SAFLII
Note: Certain personal/private details of parties or witnesses
have been redacted from this document in compliance
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SAFLII
Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 15438/2015
DATE:
23 MARCH 2016
[R……………]
[J……….]
[N……………….]
.........................................................................
Applicant
And
[F………..]
[P……….]
[K…………]
...........................................................................
First
Respondent
GOVERNMENT
EMPLOYEES PENSION
FUND
..............................................
Second
Respondent
SOUTH
AFRICAN REVENUE
SERVICES
............................................................
Third
Respondent
REASONS
FOR JUDGMENT
AC
BASSON AJ
[1]
The
applican
t – [C………..] [R………]
[N……….] is
an adult male
colonel in the South African Police Services.
The first
respondent is Ms [K……….] (previously [M……….]
“the respondent”). The second respondent is the
Government Employees Pension Fund (“the Fund”) and the
third respondent is the South African Revenue Service (“SARS”).
[2]
It
is common cause that the applicant and the respondent were previously
married in community of property. A decree of divorce was
granted on
29 June 2012. In addition to the decree of divorce it was ordered -
“2.THAT
the joint estate shall be divided.
3.
THAT part of the pension (50%) interest
in the Government Employees Pension Fund to be paid out to the
defendant in terms of
section 7
(7) of the
Divorce Act 70 of 1979
.
4.
THAT an endorsement of this order be
made in the records of the said fund until payment of this order in
terms of
section 7(8)
of the
Divorce Act 70 of 1979
[3]
It
is common cause - and is also evident from the court order - that
apart from the order that the respondent is entitled to 50%
of the
applicant’s pension fund interest, the joint estate has not
been divided at the time of the granting of the divorce.
In fact it
is common cause that at the time of the hearing of this application
on 8 February 2016 - almost 4 years later - the
joint estate has
still not been divided. According to the replying affidavit, the
process is yet to commence and is far from being
finalised. Why this
process has not begun is unclear. A liquidator has also not been
appointed to divide the joint estate.
[4]
The
amount to which the respondent is entitled to in terms of the divorce
order is R 2 212 168.80 (before tax). SARS calculated
the amount of R
206 851.63 as the amount of tax payable by the respondent in respect
of this amount. The Fund paid out an amount
of R 2 005 309.07 to the
respondent being 50% of the applicant’s pension interest at the
time of the divorce less tax into
the respondent’s nominated
bank account. This amount was paid over to the respondent on 19
August 2014 (about 2 years after
the decree of divorce was granted).
[5]
On
24 March 2014 - almost two years after the decree of divorce has been
granted - the applicant and the respondent entered into
a settlement
agreement in terms of which it was agreed that the parties will
approach the regional Court of Mbombela for an order
varying the
order (dated 29 June 2012) in respect of respondent’s
entitlement to 50% of the applicant’s pension interest.
To this
effect the parties agreed as follows:
“2.1
The parties record that the Plaintiff is a member of the Government
Employees Pension Fund (“the fund”).
2.2
The parties agree that the Defendant shall be entitled to an amount
of R 1,479,000 (one million four hundred and seventy nine
thousand
Rand) of the Plaintiffs pension interest in the fund as defined in
section 1
of the
Divorce Act 70 of 1979
.”
[6]
Effectively
the parties therefore agreed that the respondent would no longer be
entitled to 50% of the applicant’s pension
fund interest (R 2
212 168.80 before tax) but that she will be entitled to a lesser
amount.
[7]
The
variation was granted on 17 April 2014 and the Fund was directed to
endorse its records to reflect the respondent’s entitlement
pending payment or transfer to the respondent of the allocated
portion of the pension interest in terms of the provisions of section
37D(4) of the Pension Fund Act 24 of 1956.
[8]
On
19 August 2014 the Fund, being unaware of the variation order and
acting in accordance with the order dated 29 June 2012, proceeded
to
pay an amount of R 2 005 309.17 (50% of the applicant’s pension
fund interest less tax) into the respondent’s nominated
bank
account. Prior to the payment the Fund had applied for a directive
from SARS informing them of the above- mentioned payment
to the
respondent. SARS accordingly calculated the amount of tax deductible
from the pension fund based on 50% of the applicant’s
pension
interest at the time and forthwith issued a tax directive stipulating
that an amount of R 206 851.63 must be deducted from
the payout
as tax.
[9]
The
applicant attempted to reverse the payment in light of the amendment
order but was unsuccessful.
Order sought
[10] The applicant approached this court for
an order compelling the respondent to repay an amount of R 526,309.17
being the amount
“overpaid" to the respondent consequent
to the variation order.
[11]The applicant also seeks an order that
the Fund be ordered to apply for a new tax directive from SARS for a
recalculation of
the tax amount deductible from the applicant’s
pension fund in light of the varied court order and that SARS be
ordered to
repay the amount of R 206,851.63 (being the whole tax
amount deducted in respect of the pension fund payment in terms of
the initial
court order).
Basis of opposition
[12]The respondent opposed this application
on the basis that the only issue that was settled between the parties
was the
reduced
entitlement that she had to the applicant’s pension fund
interest and that he forfeited any claim against her pension fund
interest The issues pertaining to the division of the remaining
assets of the joint estate remain unsettled. She submitted that,
depending on how the remaining assets were going to be divided, the
difference between the excess paid out to her in respect of
the
pension fund and the reduced pension fund interest may very well be
set off against the value of some of the other assets remaining
in
the joint estate. She further points out that it was not the
agreement between her and the applicant that she had to repay the
difference between the pension amount received by her and the reduced
amount
before
they
have resolved the division of the remaining assets of the joint
estate. According to her, should the parties not agree on
the
division of the joint estate, a liquidator will in any event have to
be appointed and that one of the issues that will have
to be taken
into account would be the difference between the pension interest
received by her in terms of the divorce order and
the lesser amount
subsequently agreed upon in terms of the settlement agreement.
[13]SARS likewise opposed the application
but on different grounds. The applicant seeks repayment from SARS of
an amount of R 206
851.63 on the basis that the tax should have been
calculated on the amount of R
1
479 000.00 (the reduced amount agreed
upon) and not on the amount of R 2
212
168.80 (being the amount awarded in terms of the divorce order). The
applicant therefore seeks repayment of the entire amount
of tax that
was calculated on the amount that was paid over to the respondent in
terms of the divorce order.
[14]In brief it is SARS’s contention
that the order sought against it is premature in the circumstances
and that such a payment
will not be in accordance with the provisions
of the Income Tax Act.
[1]
According to SARS the applicant must first ensure that the amount
that was overpaid to the respondent be refunded to the Fund.
Once
such payment has been made, the Fund will then legally be compelled
to apply to SARS for a new tax directive. Until such time
as a new
tax directive has been applied for by the Fund, SARS cannot do a
reassessment of the amount of tax payable and thus
cannot
legally comply with the order which is being sought by the applicant.
[15]The applicant disputes the contention
that the overpaid amount should only be paid back once the joint
estate has been divided.
According to him it should be taken into
account that the parties were married in community of property and
whatever the net value
of their joint estate was at the time of the
divorce will be divided equally between them. The pension fund
pay-out does not, according
to the applicant, form part of the joint
estate and there can never a set-off as proposed by the respondent.
Furthermore, there
is a financial impact in that the applicant will
only receive back what he has paid over to the defendant as the share
in his pension
fund at a later stage. By that time he will
effectively have lost the compounded interest he would have been
entitled to. Further
according to the applicant, the parties clearly
intended the issue pertaining to their respective pension funds to be
excluded
from the division process.
[16]The applicant’s cause of action is
based on the
condictio inebiti.
The essential elements of this cause of action are: (i) the
respondent must be enriched; (ii) the applicant must be impoverished;
(iii) the respondent’s enrichment must be at the expense of the
applicant; and (iv) the enrichment must be unjustified or
sine
causa
.
[17]It is not in dispute that the Fund
transferred the pension benefit to the respondent under the
bona
fide
but mistaken belief that it owed a
certain amount of money to the respondent. The question whether the
respondent has been enriched
at the expense of the applicant as
alleged by the applicant is, however, a more difficult question to
answer in light of the fact
that the pension fund interest paid out
to her by the Fund remains part of the joint estate. The pension fund
interest that a party
has is deemed to form part of his or her assets
and in the determination of the patrimonial benefits to which a party
in any divorce
action may be entitled to, this interest is deemed to
be part of his or her assets. At the time of the divorce the court
order
determined that the respondent will be entitled to 50% of the
applicant’s pension interest. This entitlement was subsequently
reduced to a lesser amount. The amount overpaid in respect of the
pension fund interest forms part of the joint estate. Although
the
parties have agreed on what amount the respondent will be entitled to
in respect of the applicant’s pension interest
(as at the time
of the divorce) the joint estate must still be divided. The pension
benefit owed to the defendant will simply be
one of the assets that
will have to be considered in the division of the joint estate.
[2]
[18]I have already pointed out that it is
common cause that the joint estate has not been divided. The amount
overpaid to the respondent
forms part of the joint estate and should
be taken into account in the division of the joint estate. Should the
parties be unable
to agree a liquidator can be appointed to liquidate
the joint estate. By necessary implication, depending on the
determination
of the respondent’s share in the joint estate and
its value, the respondent may well find herself in a position where
she
has to pay back the amount that she was overpaid. The reverse is
also true. However, before the joint estate has been liquidated
it is
simply premature to conclude that the respondent has been enriched at
the expense of the applicant. I am therefore of the
view that the
application in its present form is premature and therefore falls to
be dismissed.
[19]Furthermore, the applicant clearly has
an alternative remedy at his disposal and in fact had an alternative
remedy at his disposal
long before the present application was
launched: A decree of divorce ordering the division of the joint
estate was granted on
29 June 2012. This application was heard on 8
February 2016 - almost 4 years later and almost two years after the
payment was made
by the Fund to the defendant. Despite this
extraordinary lapse of time, the applicant has taken no steps to
ensure the division
of the joint estate or to appoint a liquidator to
divide the joint estate in the event the parties are unable to reach
an agreement
regarding the division. The issue of the overpayment
could have been settled long ago had the applicant availed himself of
an obvious
alternative remedy.
[20]I should also mention that the applicant
avers that the respondent may not be in a position to repay the
amount overpaid to
her in terms of the settlement agreement and
allege that she may have squandered some of the money received on a
car. It is common
cause on the papers that at least a house forms
part of the yet to be divided joint estate. Whatever is owed to the
applicant can
therefore be recovered from the joint estate. Moreover,
if the applicant had a concern regarding the respondent squandering
the
amount overpaid to her, nothing prevented him from approaching
this court for an order that the amount overpaid be frozen in the
respondent’s bank account pending the final division or
liquidation of the joint estate. For reasons unknown to this court
the applicant has also decided not to avail himself of this
alternative remedy.
[21]In respect of SARS, it is clear that the
relief sought against SARS is dependent upon the relief sought
against the respondent.
In the event I am of the view that the
application falls to be dismissed. I am also in agreement with the
submission that until
the dispute between the applicant and the
respondent is resolved and until such a time the Fund has requested a
new tax directive,
there simply exists no legal basis why SARS should
be ordered to repay the total amount of tax levied on the amount of R
2 212
160.80. In the event I am of the view that the application in
against SARS likewise falls to be dismissed.
[22]In respect of costs, I can see no reason
why costs should not follow the result.
[23]In the event the following order is
made:
The application is dismissed with costs,
costs to include the costs of the first and third respondents.
AC
BASSON
JUDGE
OF THE HIGH COURT
Appearances:
For the
applicant:
Adv JC Prinsloo
Instructed
by:
Swanepoel & Partners Inc
For
the 1
st
Respondent:
Adv JGW Basson
Instructed
by:
MM Labe Attorneys
For
the 3
rd
Respondent:
Adv HA Mphse
Instructed
by:
The
State
Attorney
[1]
Act 58 of 1962 and more particular Chapter 11 Part 1 paragraph 5.
[2]
Section 7(7)(a)
of the
Divorce Act 70 of 1979
states the following:
"In the determination of the patrimonial benefits to which the
parties to any divorce action may be
entitled, the pension interest
of a party shall, subject to paragraphs (b) and (c)
t
be deemed to be part of his assets.”