Matanzima v Minister of Welfare and Pensions and Others

• Jurisdiction: South Africa
• Judge: Goldin JA, James JA, Mitchell AJA
• Judgment Date: 08 September 1989
• Citation: 1990 (4) SA 1 (TkA)
• Hearing Date: 08 September 1989
• Court: Transkei Appellate Division

Goldin JA:

This appeal concerns the right of the fourth respondent (the G Commissioner for Inland Revenue of Transkei), to whom I shall refer as

Goldin JA

'the Commissioner', to Obtain Payment of Tax Due by an Insolvent, Prior to His Sequestration, by Attaching the Insolvent's Pension which Does Not Fall into the Insolvent's Estate.

Appellant obtained a rule nisi interdicting the first three respondents from paying the Commissioner amounts which became due by him for income tax prior to the sequestration of his estate. Upon the return B day the rule was discharged with costs because the Commissioner was held to be entitled to attach the parliamentary pension payable to appellant by one or all of the said three respondents. This is an appeal against the order discharging the rule.

The relevant facts are summarised in the judgment of the Court a quo C as follows:

'On 3 October 1987 the applicant, a former Prime Minister of Transkei, became entitled to a pension in terms of the Parliamentary Service Pensions Act 18 of 1976. On 1 April 1988 fourth respondent (to whom I shall hereinafter refer as "the Commissioner") raised two additional assessments to tax against applicant in respect of the tax years ending D on 28 February 1986 and 28 February 1987 respectively. In terms of these assessments applicant was assessed to tax in an amount exceeding R1m. On 31 May 1988, applicant's estate was provisionally sequestrated, the Commissioner being one of the petitioning creditors. On 9 June 1988 a final order of sequestration was made. On 27 June 1988 the Commissioner, purporting to act in terms of s 99 of the Income Tax Act 58 of 1962, declared second respondent to be the agent of applicant for the purposes E of the Act and required him to make payment to the Receiver of Revenue from the Parliamentary pension due to applicant of the tax due in terms of the two additional assessments referred to above, together with interest.'

Appellant contends that upon his insolvency the amount of tax due by him prior to his insolvency is only payable out of the estate so that F the Commissioner is in the same position as other creditors as provided by the Insolvency Act 24 of 1936 (RSA). The Commissioner maintains that, whilst he can prove a claim in applicant's estate, he can additionally or alternatively obtain payment in respect of the appellant's pre-sequestration liability for income tax by invoking s 99 of the Income Tax Act 58 of 1962 (RSA) which entitles him to lay his hands on a pension due to appellant.

G Section 99 provides that the Commissioner

'may, if he thinks necessary, declare any person to be the agent of any other person, and the person so declared an agent shall be the agent for the purposes of this Act and may be required to make payment of any tax due from any moneys, including pensions, salary, wages or other remuneration, which may be held by him for or due by him to the person H whose agent he has been declared to be'.

Section 99 of Act 58 of 1962 applies in Transkei in terms of the Transkei Taxation Act 1969 (Tk) as amended by s 3 of the Taxation Adjustment Act 1976 (Tk).

The question is, as the learned Judge put it, 'whether s 99 puts the Commissioner in a position different from the position of other I creditors'. He decided that s 99 'no doubt designed to protect the fiscus, gives the Commissioner rights which the creditors of the tax payer do not enjoy'.

Sequestration does not discharge debts owed by an insolvent but extinguishes or transfers his liability for payment which creditors can only obtain from his trustee out of assets which fall into the estate as J provided by the Insolvency Act. As the learned Judge a quo put it,

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