Minister of Finance v Gin Bros and Goldblatt

• Jurisdiction: South Africa
• Judge: Horwitz J and Brink J
• Judgment Date: 25 March 1954
• Citation: 1954 (3) SA 7 (O)
• Hearing Date: 04 February 1954
• Court: Orange Free State Provincial Division

D Brink, J.:

In terms of a written agreement dated the 21st May, 1937, Kalil Kaplen sold erf No. 1041, of which he was the registered owner, to respondents and undertook to erect a building thereon for the respondents. By further agreement between the same parties entered into during September, 1937, Kaplen sold portion C of erf No. 1042 to respondents and agreed at the same time to enlarge the building contemplated under the prior agreement by extending it so as to embrace E also portion C of erf No. 1042.

Respondents paid transfer duty on the value of the erven purchased under the said agreements, but paid no duty on the value of the building subsequently erected thereon by Kaplen. Applicant, in his capacity as F Minister of Finance of the Union Government, contends that on a proper construction of the two agreements, which are annexed to the petition and marked 'A' and 'B' respectively, transfer duty is also payable on the value of the building. The contention of the applicant is that respondents bought and acquired under the two agreements improved erven G and are liable to pay transfer duty on the erven as improved in terms of sec. 3 of the Transfer Duty Ord. 12 of 1906, as amended by Act 30 of 1908. Although these Ordinances have been repealed by Act 40 of 1949, save as to certain sections thereof which do not affect the present application, by sec. 21 of the Union Act

'any duty which has at the date of commencement of this Act become payable under any Law so repealed, but which has not at that date been H paid, shall be recovered in accordance with and subject to the provisions of the said Law.'

Accordingly, applicant seeks an order declaring that he is entitled to claim transfer duty on the value of the improved erven and for payment of such duty with interest. Respondents contest these claims.

No objection was taken to the form of the proceedings. There is no dispute as to the facts and the parties are agreed that if transfer duty as claimed is payable, the amounts set out in the prayer to the petition are

Brink J

correct. The Courts have held that payment of money can be claimed in proceedings by way of motion where there is no dispute as to the facts and as to the amount claimed. (Cf. Lutchman v Perumal, 1950 (2) SA 178 (N); Williams v Tunstall, 1949 (3) SA 835 (T) and Room Hire Co. A (Pty.), Ltd v Jeppe Street Mansions (Pty.), Ltd., 1949 (3) SA 1155 (T)). It is unnecessary to discuss the question whether the Court ought to entertain the present proceedings under sec. 102 of Act 46 of 1935, for, in addition to a claim for a declaratory order, there is here also a claim for consequential relief.

Sec. 3 of the 1906 Ordinance provides that, save as in the Ordinance B excepted, transfer duty

'on the value of any fixed property . . . shall be payable and paid . . . (i) By the person acquiring or becoming entitled to any such fixed property or lease by way of purchase, cession, exchange, donation, legacy, inheritance, or in any other manner.'

For the purposes of the Ordinance, and so far as the context does not otherwise indicate, 'fixed property' is defined in sec. 2 as including

C '(a) Land or the usufruct thereof or any servitude or any other limited interest therein other than a lease'

with certain exceptions not relevant hereto. Sec. 10 provides that all transfer duty must be paid

within six months from the date of sale . . . or other transactions for the purpose of effecting a change of ownership . . .'

D while sec. 2 (1) of Act 30 of 1908 makes provision for the case where

'in any agreement of sale . . . it shall be agreed that upon the happening of an uncertain future event any valuable consideration shall be given in respect of the said property.'

In such a case, in addition to any transfer duty payable before transfer E upon the ascertained value of the property under the 1906 Ordinance, transfer duty becomes due and payable on the amount of such valuable consideration within six months of the happening of the uncertain event.

With regard to the Transfer Duty Ordinance, it is convenient to refer briefly to the meaning of 'acquire' in sec. 3 thereof. In the case of Transvaal Investment Co., Ltd v Springs Municipality, 1922 AD 337, INNES, C.J., said at p. 341:

F 'Now, juristically, the word 'acquire' connotes ownership; the ordinary legal meaning implies the acquisition of dominium. To acquire a thing is to become the owner of it. No doubt it may be used in a wider sense so as to include the acquisition of a right to obtain the dominium; but the narrower meaning is the accurate and more obvious one.'

G Whether the word bears the narrow or the wider meaning must depend upon the context in which it appears (cf. Mahomed v The Suratee Mahomedan Estate Co., 1926 W.L.D. 121 at p. 125; Corondimas and Another v Badat, 1946 AD 548 at pp. 558 - 559) and upon the intention of the Legislature which is to be gathered from language used and the object sought to be achieved. I have no doubt that in sec. 3 of the Ordinance H the word is used in its wider meaning and includes the acquisition of a jus in personam ad rem acquirendam. It is clear from the provisions of sec. 10 that transfer duty is payable within six months from the date of sale. The liability to pay that duty does not commence when transfer is passed; in fact, transfer duty may be payable even if transfer is never passed. The basis of liability for transfer duty is the acquisition of property in the wider sense and not its registration in the Deeds Registry.

Brink J

Reference must next be made to the detailed contents of the two agreements here in issue. The first, annexure 'A', commences with recitals to the effect that the seller, Kaplen, is the owner of erf No. 1041 'which has a building thereon' and that the seller intends to demolish this building forthwith as the respondents have agreed to purchase the vacant stand. Under the first clause it is provided that

'the seller sells to the purchasers certain remaining extent of Erf No. A 1041 . . . as per existing title deed and diagram for the sum of £550.'

Clause 2 recites that

'whereas the purchasers intend to build on the said property hereby sold . . . and the seller has intimated his willingness to erect the said building, and whereas the parties desire to have the terms and conditions thereof embodied in writing; it is hereby agreed:'.

B Clauses 3 to 10, both inclusive, then proceed to deal with the covenanted erection of the building in accordance with an architect's plan and in terms of specification of work detailed in an annexure to the agreement. The building which must be completed to the satisfaction C of the architect, with the least possible delay, must not exceed in the cost thereof the sum of £2,100; the seller undertakes to supply office accommodation; two of the offices must comprise a total area of not less than 250 square feet; the seller undertakes to erect at his own expense a dividing fence between 'the property hereby sold and his own property'; the premises must be ratproof and must satisfy all the D requirements of the Medical Officers of Health, and/or the Municipality of Bloemfontein, to enable the purchasers to obtain the licence certificate entitling them to trade as general merchants and produce dealers; and the purchasers accept liability for architect's fees save as to the sum of £10 which the seller agrees to contribute towards such E expenses. Then clause 10 follows...