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[2016] ZAGPPHC 1235
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Ritchie NO v Ritchie NO and Others (75467/15) [2016] ZAGPPHC 1235 (11 November 2016)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO:
75461/15
Date:
11/11/2016
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
RITCHIE N.O., NICOLE
JAENEE
APPLICANT
and
RITCHIE N.O., WINSTON
HENRY
1
ST
RESPONDENT
RITCHIE
N.O., ANNE
BEATTIE
2
ND
RESPONDENT
RITCHIE
N.O., WINSTON
JOHN
3
RD
RESPONDENT
LOMBARD
N.O., JOHAN
GODFRIED
4
TH
RESPONDENT
RITCHIE
N.O., SUDNEY
STEPHEN
5
TH
RESPONDENT
RITCHIE
N.O.,
JULIANA
6
TH
RESPONDENT
VAN DER LINDE N.O.,
JACQUES GIDEON
7
TH
RESPONDENT
RITCHIE
N.O., RAYMOND
WAYNE
8
TH
RESPONDENT
RITCHIE
N.O., GELLE
CATHRINE
9
TH
RESPONDENT
RITCHIE
MOTORS (PTY)
LTD
10
TH
RESPONDENT
THE
COMMISSONER OF SOUTH
AFRICAN
11
TH
RESPONDENT
REVENUE
SERVICES
JUDGMENT
MALI
J
1.
This is an application for a declaratory order for the payment of
interest on the proportionate share of estate duty attracted
as a
result of the receipt by the first to tenth respondents of the
proceeds of policies on the life of the deceased Allister Ritchie.
The deceased is the late husband of the applicant.
2.
The payment of interest in accordance with the interest charged by
the eleventh respondent the South African Revenue Service
("SARS").
3.
The majority of the parties in this matter seem to be members of the
same family, although they are cited in their respective
official
capacities. According to the applicant there is a history of
acrimonious relationship between her and some of the respondents.
4.
The first to fourth respondents are cited as trustees for the time
being of the Winston Ritchie Family Trust ("WRF").
4.1 The first respondent being Winston
Hendry Ritchie N.O., an adult male with Identity number: […],
currently residing at
[…] Street, Standerton, 2430;. He is
also the Director of the tenth respondent.
4.2 the second respondent being Anne
Beattie Ritchie N.O., an adult female with Identity number: […],
currently residing
at […] Street, Standerton, 2430;
4.3 the third respondent being Winston
John Ritchie N.O.. an adult male with Identity number: […],
currently residing at
[…] Street, Standerton, 2430;
4.4 the fourth respondent being Johan
Godfried Lombard N.O., an adult male with Identity number: […],
currently residing
at […] Street, Standerton, 2430;
4.5 the fifth respondent being Sydney
Stephen Ritchie N.O, an adult male with Identity number: […],
currently residing at
[…], Meer en See, Richards Bay, 3901;
4.6 the sixth respondent is Juliana
Richie N.O, an adult female with Identity number: […],
currently residing at […],
Meer en See, Richards Bay, 3901
4.7 the seventh respondent is Jacques
Gideon van der Linde N.O, an adult male with Identity number: […],
currently residing
at […] Street, Garsfontein Ext 08, 0081;
4.8 the eighth respondent is Raymond
Wayne Ritchie N.O., an adult male with Identity number: […],
currently residing at […],
Meer en See, Richards Bay, 3901;
4.9 the ninth respondent is Gelle
Cathrine Ritchie N.O., an adult male with Identity number: […],
currently residing at […],
Lourensford Road 14318, Somerset
West, 7130;
4.10 the tenth respondent is Ritchie
Motor (Pty) Ltd, a private company, with registration number:
1947/027904/07, duly incorporated
in terms of the company laws of the
Republic of South Africa, with its principal place of business
situated at 17 Church Street,
Standerton.
4.11 the eleventh respondent is the
Commissioner of the South African Revenue Service, ("the
Commissioner"), responsible
for administering the provisions of,
inter alia,
the Estate Duty Act. It has its registered address
situated at 299 Bronkhorst Street, Brooklyn, Pretoria. There is no
relief sough
against the Commissioner, it only being cited as a party
having an interest.
BACKGROUND FACTS
5.
The Deceased Estate, the SSR Trust, the WRF Trust, and the 10
th
respondent were beneficiaries of various life insurance policies
taken out on deceased life ("the Policies").During or
about
2008, the proceeds of the Policies were paid directly to the
Beneficiaries. They were paid as follows:
The Deceased
Estate:
R 1 470 353.00
The SSR
Trust:
R 4 150 687.00
The WRF
Trust:
R 4 150 687.00
The Tenth
Respondent:
R 2 160 534.00
6.
In terms of section 3(3)(a) of
the Act, the proceeds from the Policies were included in the net
value of the Deceased Estate, and
were reflected in the Final
Liquidation and Distribution Account of the Deceased Estate ("the
L&D Account")
[1]
dated 22 December 2008, copies were made available to the SSR Trust,
the WRF Trust and the 10
th
respondent, although the first to tenth respondents ("respondents")
deny having sight of the L&D account.
The amount of R 1 886
452.20 was apportioned to the Beneficiaries as follows:
the 10
th
responde R
341 573.50
the SSR
Trust: R
656 210.31
the WRF
Trust R
656 210.30
the Deceased
Estate: R
232 458.09
Total Estate Duty
Due: R
1 886 452.20
7.
On 27 July 2010 the applicant made payment of estate duty and
interest in the amount of R33 823.83, calculated from 26 February
2008 to 27 July 2010 due by the deceased estate. This payment
was made before the issue of the original assessment by the
Commisioner.
8.
On 30 August 2011 the Commissioner issued original assessments in
respect of estate duty payable by the late estate. On 21 May
2012
first to tenth respondents filed notice of objection to the
assessments on the basis that the Commissioner failed to allow
them
the deduction of premiums together with interest they paid in respect
of the policies. On 17 January 2014 the Commissioner
partially upheld
their objection.
9.
On 18 February 2014 the Commissioner issued a notice of revised
reduced assessments to the applicant. In the second last paragraph
of
the said letter it is stated:
"Please note that interest is
still to be charged on the revised estate duty, under section 10 of
the Estate Duty Act."
10.
On 14 May 2014 the Commissioner issued a reduced assessment in the
form of Rev 250 to the applicant. At page 2 of Rev 250 note
2 and 3
it is stated
"Payment must be made within 30 days from the
date of assessment at any SARS branch office. If applicable, an
assessment of
the payment of interest ( Rev 249) will be issued in
terms of section 10 (1) of the Act.
11.
On 19 November 2014 the Commissioner issued a Rev 249 to the
applicant advising that R649 104. 15 was the amount of interest
payable.
ISSUE
12.
The issue for determination is whether the first to tenth respondents
are liable for interest chargeable by the Commissioner
on the estate
duty because of the late payment of estate duty.
LAW
13.
Section 9 (1) of the estate duty Act 45 of 1955 ('" the Act")
provides that the Commissioner shall assess the duty
payable under
this Act and shall in respect of every estate liable for the duty
issue a notice of assessment to the executor or,
if there is no
executor to any person liable for the duty.
14.
Section 10 (1) of the Act provides if any duty remains unpaid at the
expiration of a period of thirty days from the date of
payment
notified in accordance with sub-section (2) of section nine, there
shall be payable, in addition to the unpaid duty, interest
at the
rate of six per cent per annum on the amount of unpaid duty
calculated from the date of the expiration of the said period
to the
date of payment: Provided that, where the assessment of duty is
delayed beyond a period of twelve months from the date of
death,
interest at the rate of per cent per annum shall be payable as from a
date twelve months after the date of death on the
difference (if any)
between the duty assessed and any deposit (if any) made on account of
the duty payable within the said period
of twelve months.
15.
Section 10 (2) Whenever the Commissioner is satisfied that the delay
in the payment of duty within the period of thirty days
from the date
of payment notified in accordance with sub-section (2) of section
nine, or within the period of twelve months from
the date of death,
as the case may be, has not been occasioned either by the executor or
by any person liable for the duty, he
may allow an extension of time
within which the duty may be paid without interest if, before the
expiration of the said period
of thirty days or the said period of
twelve months, as the case may be or such further period as the
Commissioner may allow (a)
a deposit on account of the duty payable
is made of an amount which, in the opinion of the Commissioner, is
reasonable regard being
had to the amount of the duty payable; and
(b) application is made in writing to the Commissioner for such
extension of time.
16.
Section 11 provides that where duty is levied on property which, in
accordance with sub-section (3) of section three, is deemed
to be
property of the deceased - (i) as to property referred to in
paragraph (a) of that sub-section, the executor: Provided that
where
the amount due under the policy is recoverable by any person other
than the executor, the person liable for the duty shall
be the person
entitled to recover the amount.\
17.
In
NATAL JOINT MUNICIPAL PENSION FUND v ENDUMENI MUNICIPALITY
("Endumeni") 8 at paragraphs [18]-[19], it was held
that, in interpreting a contract, the court must have regard to the
language of the clause as well as the purpose for which it was
agreed. At paragraph [26] the SCA stated: 8
2012 (4) SA 593
SCA:
"In between these two
extremes, in most cases the court is faced with two or more possible
meanings that are to a greater or
lesser degree available on the
language used. Here it is usually said that the language
12
is
ambiguous although the only ambiguity lies in selecting the proper
meaning (on which views may legitimately differ). In resolving
the
problem the apparent
purpose
of the provision
and the context in which it occurs will be important guides to the
correct interpretation. An interpretation will
not be given that
leads to impractical, unbusinesslike or oppressive consequences or
that will stultify the broader operation of
the legislation or
contract under consideration."
18.
The applicant's case is that the respondent unlawfully and
unreasonably refused to pay their proportionate share of the Estate
Duty, as early as December 2008 upon the finalisation of the L&D
account. The payment of the proportionate shares of the estate
duty
by the SSR Trust, the WRF Trust and the Tenth Respondent was only
made on 29 April 2014.
19.
It was further submitted on behalf of the applicant that the refusal
of the respondents to make payment of the proportionate
shares of the
estate duty on time effectively caused delay in the payment of estate
duty. The applicant submits that in the alternative
the delay endured
from the date of original assessment 30 August 2011 to date of
payment on 29 April 2014.
20.
Respondents deny receiving assessment that despite The Commissioner
having made clear determinations and or assessment against
them.
Nothing is clearer than the SARS determination. In the event of
dispute they have a right to approach SARS.
21.
The duty remained unpaid because it was not paid at the expiration of
30 days from 30 August 2011 the date of original assessment.
It has
been established that the respondents received the assessments
despite their denial which is countered by the filing of
the notice
of objection to the same assessment. On 5 August 2015 the
Commissioner issued separate individual assessment of the
interest
payable on the proportionate revised estate duty to the SSR Trust,
the WHR Trust and Ritchie Motors. The respondents challenge
the
validity of the assessments, albeit in a wrong forum. For the sake of
completeness, an assessment as defined in section 1 of
the Tax
Administration Act as follows:
'the determination by the
Commissioner, by way of
a
notice of assessment (including
a
notice of assessment in electronic form) served in
a
manner
contemplated in section 106 (2).....of an amount upon which any tax
leviable under this Act is chargeable".
22.
In
ITC
1740 (65 SATC 98)
at 104 E-F
Galgut DJP held that in
order to fall within this definition, 'what is required is at least a
purposeful act, one whereby the document
embodying the mental act is
intended to be an assessment'. In my view, the overwhelming
impression created by the notices issued
by the Commosioner is that
it is indeed, the notices or documents constitute assessments.
23.
Furthermore the Commissioner did the appropriate thing by issuing the
assessments to the respondents, they are the ones who
lodged
objection in their respective capacities. The respondents cannot
lodge objections in their names and expect the assessments
to be
issued to another.
24.
The respondents' further refusal to pay the interest
inter alia
based on the interpretation of section 13 of the Act. Section 13
provides that the applicant is entitled to recover the estate duty
from the respondents which she is required to pay. The provisions of
section 13 is misplaced. The provisions of section 11 are
clear that
the amount due under the policy is recoverable by any person other
than the executor, the person liable for the duty
shall be the person
entitled to recover the amount. In casu the persons liable for the
duty are the respondents. Section 13 of
the Act is silent with
regards to the payment of interest. It follows that the person liable
to pay for duty is liable to pay interest
on the said duty.
25.
The respondents submitted that the only time they received claim for
payment for interest was when the applicants attorneys
wrote to them
on 14 August 2015. The respondent's denial of the assessment issued
by the Commissioner on 30 August 2011 is somewhat
perplexing because
the respondents lodged an objection to same on 21 May 2012.
26.
The Commissioner's letter to the abovementioned objection dated 17
January 2014 speaks for itself. The letter is headed
"Request
for reduction of Interest Declined".
The letter makes
reference to the unsatisfactory manner of calculation of the deposit
by the applicant and the delays related thereto.
It is also apparent
from the letter that one of the reasons for disallowance of the tenth
respondent's objection is the length
of time taken to make a request
for reduction in interest only on 21 May 2012.
27.
The begging question is why the respondents bothered to request a
reduction in interest in the event that the applicant is the
only
taxpayer responsible for payment of same. In my view they acknowledge
that as the beneficiaries of the property of the deceased
who are
liable for estate duty it follows that they are liable for interest
thereon. The only plausible reason for them refusing
to pay interest
is that they were unsuccessful in their objection to the
Commissioner.
28.
According to the respondents on 26 January 2012 their attorneys wrote
to the applicant informing her about the objections lodged
against
the estate duty assessment. The applicant denies receiving the said
letter. I do not understand the relevance of the letter
written on 26
January 2012 when the applicant made her payment in 2010.
29.
The respondents buttress their argument on the basis of partial
allowance of objection by the Commissioner. The disallowance
of the
objection placed the liability of interest upon the applicant. With
respect the interpretation adopted by the Commissioner
that the total
amount of interest should be borne by the applicant is not
acceptable. On the proper interpretation of section 11
read with
section 10 (2) of the Act the law is clear the respondents are liable
for estate duty; it therefore follows that they
are liable for
interest.
30.
In terms of section 10 the respondents are liable to pay duty which
they did. It therefore follows as a matter of logic that
the interest
upon their proportionate share is payable or is due by them. The
intention of the statute is that the delay in payment
of estate duty
must attract interest; however the statute is not intended to punish
the executor for others misdeeds.
31.
Furthermore the definition of Tax in the Tax Administration Act is:
"'tax', for
purposes of administration under this Act, includes
a
tax,
duty, levy, royalty, fee contribution, penalty, interest and any
other moneys imposed under the tax Acf'.
[2]
32.
The respondents as other persons liable for duty had an obligation to
apply for extension of time to pay the duty or inform
the
Commissioner about the delays, instead they objected to the
assessment by applying for reduction of the interest. Needless
to say
the objection was filed late considering the date of assessment. That
on its own shows that the respondents acknowledged
their duty towards
payment of interest. To the respondent's submission from the bar that
the applicant is liable for interest due
to her failure to apply for
the extension resulting in the postponement of interest with respect
the rules are clear the parties
fall or rise by their affidavits. It
is my view that SARS waved the applicant's responsibility, as
executrix, to be the party responsible
when the assessments were sent
directly to the respective respondents.
33.
On the proper interpretation of section 10 (1) and (2) of the Act the
estate duty was supposed to be paid on the expiration
of 30 days from
30 August 2011 by the executor or any person liable for the duty. It
is common cause that part payment of the duty
was made by the
applicant in 2010.
34.
The act could not have intended to burden the executor of the estate
in the event there are other persons liable for duty. The
remedy
provided for in Section 10 (2) is open to anyone who is liable for
payment of the duty. On the application of Endumeni above
it is
unbusinesslike to expect the executor of the estate to pay for
interest of duty payable by another person.
35.
In passing the only amount of interest which might be due by the
applicant is the portion related to the miscalculation of deposit
in
respect of interest by her on the proportionate share of the estate.
Regrettably that issue is not before court it is an issue
between the
applicant and the Commissioner. Having regard to the above the
applicant's application must succeed.
36.
In the result I make the following order;
36.1 The Winston Richie family trust
is liable to pay the interest in the amount of R224 470.61, levied by
the Commissioner of the
South African Revenue Services, in terms of
10(1) of the Estate Duty Act, no 45 of 1955 on its apportioned estate
duty relating
to the Late Estate Raymond Allister Ritchie.
36.2 The Sydney Stephen Ritchie Trust
is liable to pay the interest in the amount of R224 470.61 , levied
by the Commissioner of
the of the South African Revenue Services, in
terms of 10(1) of the Estate Duty Act, no 45 of 1955 on its
apportioned estate duty
relating to the Late Estate Raymond Allister
Ritchie.
36.3 Ritchie Motor (Pty) Limited is
liable to pay the interest in the amount of R116 842.44 , levied by
the Commissioner of the
of the South African Revenue Services, in
terms of 10(1) of the Estate Duty Act, no 45 of 1955. on its
apportioned estate duty
relating to the Late Estate Raymond Allister
Ritchie.
36.4 In addition to the amounts
referred to in prayers 36.1, 36.2, and 36.3 above, the Winston
Ritchie Family Trust, the Sydney
Stephen Ritchie Trust and Ritchie
Motors (Pty) Limited are each liable to pay any further interest that
may become payable by them
respectively, in pursuance of section
10(1) of the Estate Duty Act, No 45 of 1955, which interest relates
to their apportioned
estate duty from the Late Estate Raymond
Allister Ritchie.
36.5 The Winston Ritchie Family Trust,
the Sydney Stephen Ritchie Trust, and Ritchie Motors (Pty) Ltd shall
make payment of their
respective liabilities as referred to in
prayers 36.1, 36.2, and 36.3 above to the Commissioner of South
African Revenue Services
within 21 Days of this order being made.
36.6 The First to tenth Respondents
are ordered to pay the costs of this application, costs to include
costs of counsel.
N.P. MALI
JUDGE OF THE HIGH COURT
Counsel
for the Applicant:
Adv. J. G. Smit
Instructed
by:
NATALIE LUBBE & ASS
Counsel
for the 1st to 10
th
Respondents:
Adv. A. Lewis
Instructed
by:
LANGEVELDT & NEL ATTORNEYS
Date
of hearing:
25 July 2016
Date
of Judgment:
11 November 2016
[1]
See
Annexure "N4" of the papers
[2]
Tax
Administration Act 28 of 2011
.