Secretary for Inland Revenue v Hartzenberg

• Jurisdiction: South Africa
• Judge: Beyers ACJ, Botha JA, Holmes JA, Trollip AJA and Marais AJA
• Judgment Date: 26 November 1965
• Citation: 1966 (1) SA 405 (A)
• Hearing Date: 19 November 1965
• Court: Appellate Division

A Botha, J.A.:

On 20th July, 1961, the respondent, to whom I shall refer as the purchaser, entered into a written deed of sale in terms of which he acquired from Afrikaner Behuisings (Eiendoms) Bpk., certain immovable property for R4,600. R130 of the purchase price was payable in cash and the balance in monthly instalments of R30. According to this deed, to which I shall refer as the 1961 agreement, the purchaser was entitled to B possession of the property sold with effect from 1st August, 1961, from which date the risk in the property passed to him. Transfer duty was apparently not paid by the purchaser in respect of this transaction, and by 22nd June, 1964, he had paid only R130.73 in respect of the purchase consideration.

C In the meantime, sec. 2 of Act 77 of 1964 was enacted. This section substituted a new section for sec. 2 of the Transfer Duty Act, 40 of 1949, as amended. The substituted section provided for a reduced rate of transfer duty payable in respect of certain acquisitions of immovable property where the date of acquisition was 16th March, 1964, or thereafter. It is clear that if the transaction here in question had taken place on or after 16th March, 1964, the duty payable in respect D thereof would have been less than was otherwise payable.

By reason of these circumstances, the purchaser, on 22nd June, 1964, entered into a new agreement with Afrikaner Behuisings (Eiendoms) Bpk., whereby the 1961 agreement was, in terms, cancelled, and a new deed of E sale constituted between the same parties, in respect of the same property and at the same price. This agreement, which will be referred to as the 1964 agreement, provided for the refund to the purchaser of the amount of R130.73 paid by him under the 1961 agreement, but under the new deed of sale constituted by the 1964 agreement, the exact amount, viz. R130.73, was payable in cash, in respect of the purchase F price, on the signing of the agreement, and the balance in monthly instalments of R34. As under the 1961 agreement, the purchaser was, under the 1964 agreement, entitled to possession of the property sold with effect from 1st August, 1961, from which date the risk in the property was deemed to have passed to him.

G The 1964 agreement was openly entered into to enable the purchaser to take advantage of the lower rate of transfer duty introduced in 1964 in respect of acquisitions of property on or after 16th March, 1964. This is clear from the papers before us, and the agreement itself says so.

H The purchaser thereafter tendered transfer duty to the appellant, to whom I shall refer as the Secretary, on the basis that the property was acquired by him after 16th March, 1964, in terms of the 1964 agreement. The Secretary, however, declined to accept duty on that basis, and claimed that the duty payable should be calculated in accordance with the provisions of sec. 2 of the Transfer Duty Act, 1949, as it read in July, 1961, and...