Shacklock v Shacklock

• Jurisdiction: South Africa
• Judge: Centlivres JA, Schreiner JA and Hoexter AJA
• Judgment Date: 19 November 1948
• Citation: 1949 (1) SA 91 (A)
• Court: Appellate Division

Centlivres, J.A.:

On October 28th, 1932, when the parties to this appeal, to whom I shall refer as the plaintiff and defendant respectively, were husband and wife, the defendant (the husband) signed the following document: -

'I, Harvey William Shacklock, residing in Johannesburg, in the Union of South Africa, bind and oblige myself, my heirs, executors and assigns, to pay to my wife Frances Ada Shacklock (born Steggall) at present residing at the Langham Hotel, Johannesburg, aforesaid, but whose ordinary place of residence is London, England, the sum of £150 (One hundred and fifty pounds) per month as maintenance. The said amount of £150 shall be remitted to her on the first day of each and every calendar month from and after the first day of November, 1932, and shall be payable in South African currency. On my said wife returning to England, I undertake and bind myself that the said amount shall be remitted by me to her credit at Lloyd's Bank, 132 Regent Street, London, W. The cost of transfer and all other

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expenses in connection therewith shall be borne and payable by me and my heirs, executors and assigns during the whole lifetime of my said wife.

I hereby declare that the foregoing undertaking is irrevocable and cannot and shall not be cancelled by me or by my heirs, executors or assigns for any reason whatsoever.'

On December 2nd, 1935, the plaintiff was granted a decree of divorce in the Witwatersrand Local Division and the Court made a certain agreement an order of Court. The preamble of this agreement recites the fact that 'since the 28th day of October, 1932, the husband has been paying the wife the sum of £150 per month in terms of a written agreement of the said date.' The relevant clauses of the agreement are as follows: -

'2. The husband shall pay to the wife as and from 1st October, 1935, during the whole of her lifetime the sum of £150 (one hundred and fifty pounds) per month, whether she remarries or not.

3. The said money shall be paid monthly by the husband to the credit of the wife at Lloyd's Bank, No. 132 Regent Street, London, or such other place as the wife might select by notice in writing to the husband, and all costs of transfer and all other expenses connected with the payment of the said money, whether at Lloyd's Bank or elsewhere, shall be borne by the husband.

4. In addition to the said £150 per month the husband shall pay the amount payable by the wife for income tax under the laws in force from time to time in England on the amount received by her under this agreement, and all such amounts shall be paid in the manner provided in clause 3 hereof.'

Disputes arose between the parties as to the proper interpretation to be placed on the agreement. In October, 1946, the plaintiff brought an action in the Witwatersrand Local Division and in her declaration she complained that the defendant had wrongfully made various deductions from the amounts payable to her under the agreement. She alleged that these deductions amounted in all to £3174 8s. 7d., which amount she claimed from the defendant. In his plea (as amended) the defendant alleged that he was charged by the plaintiff with the following items which, on a true interpretation of the agreement, he was not liable to pay:

'1. Surtax paid to the Government of the United Kingdom.

2. Additional income tax paid to the Government of the United Kingdom by reason of the fact that income tax paid by the plaintiff is assessed on the total amount paid by the defendant under the said agreement, to wit alimony in the sum of £1,800 per annum and the income tax normally payable in the United Kingdom on the said amount of £1,800 per annum. The defendant claims that he is only liable to pay income tax assessed on an amount of £1,800 and is not liable for the further amount of tax charged by reason of the payments made by him under paragraph 4 of the said agreement. The amounts paid by the plaintiff in respect of the aforegoing items are know to the defendant.

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Defendant also alleged that he was entitled to credit in respect of the following items: -

'1. South African taxation paid by defendant to the Government of the Union of South Africa on behalf of the plaintiff on the said amount payable under the said agreement for the tax years ending June, 1941, to June, 1944 (inclusive) and amounting to the sum of £618 9s., the plaintiff being legally liable under the Union Income Tax Act for the payment of such taxation.

2. Refunds of taxation received by the plaintiff from the Government of the United Kingdom (known as Dominion Tax Relief) and received by her by reason of the fact that the plaintiff's income is derived from and is taxed in the Union of South Africa under and by virtue of the provisions of the Union Income Tax Act.'

In an alternative plea the defendant said: -

'Under the Finance Act, 1941, 4 and 5 Geo. VI., Chap. 30, secs. 25 and 26, which are applicable to the agreement between the plaintiff and the defendant, the defendant's liability for payment of taxation in England on the amounts paid to the plaintiff was limited as and from the 1940 - 1941 tax year to the amount which was payable in the year 1938 - 1939 tax year.

In the premises the defendant is entitled to credit for the excess as aforesaid paid by him as and from the 1940 - 1941 tax year, the amount whereof is unknown to defendant and defendant claims that plaintiff is obliged to account to him in respect thereof.'

At the trial the plaintiff was granted leave to file an alternative declaration. In that declaration she alleged: -

'1(a)

Prior to the 27th November, 1935, and at Johannesburg, the parties entered into a verbal agreement in terms of which it was agreed, inter alia, that the defendant would pay to the plaintiff in London, during the whole of her lifetime the sum of £150 per month free of all costs or taxes whether payable in South Africa or in the United Kingdom, all of which costs and taxes the defendant undertook to pay.

(b)

Alternatively to (a) hereof the plaintiff says that prior and up to November 27, 1935, the parties had a common continuing intention that the defendant should bind himself to pay to the plaintiff during the whole of her lifetime a sum of £150 per month, free of all costs and of all taxes whether payable in South Africa or in the United Kingdom, which said costs and taxes were to be paid by the defendant and that said obligations should be incorporated in a written agreement to be executed by the parties.

(2)

On or about the 27th November, 1935, the aforesaid verbal agreement between the parties and/or the aforesaid common continuing intention of the parties was purported to be recorded in writing and a document, being the 'written agreement which was made an order of Court' was executed as being the purported record of the said verbal agreement.

(3)

By mistake common to both parties the said written agreement did not correctly set out the true agreement between the parties and/or the aforesaid common continuing intention of the parties, in that: -

(a)

It failed to provide that the defendant should pay all taxes due in South Africa in respect of the moneys payable by the defendant to the plaintiff in terms of the said verbal agreement.

(b)

It failed to provide that the defendant should pay all income tax

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(including any additional income tax leviable by reason of the fact that the plaintiff was to receive the sum of £150 per month free of tax) and surtax payable to the Government of the United Kingdom in respect of the amounts payable by the defendant to the plaintiff in terms of the said verbal agreement.'

Plaintiff accordingly claimed a rectification of the order of Court which embodied the written agreement.

After the evidence of the plaintiff had been completed counsel for the parties informed ROPER, J., who heard the case, that they wanted the Court to decide the legal issues between the parties. These issues appear from the extracts which I have quoted above from the defendant's plea, and included the claim by the plaintiff for rectification of the order of Court, but at the trial the defendant withdrew his contention that he was not liable in respect of British surtax. The learned Judge said: -

'During the course of the trial it was agreed between counsel for the parties that these legal issues should be decided by the Court and that the accountants employed by the parties would thereupon settle the whole account between the parties in so far as it was not admitted by either party; the plaintiff undertaking to furnish the defendant with the basic information available to her.'

ROPER, J., came to the following conclusions: -

1.

On the issue whether the defendant is liable under the agreement to refund to the plaintiff the additional income tax paid to the Government of the United Kingdom, he found in favour of the plaintiff. On this point he added that if he had taken the view that clause 4 of the agreement only imposed on the defendant an obligation to pay ordinary income tax, he would have been prepared to order rectification in terms of the plaintiff's alternative declaration.

2.

On the issue whether the defendant is entitled to recover from the plaintiff sums of South African income tax paid by him as her representative taxpayer on the amounts due to her under the agreement, he found in favour of the contention of the defendant.

3.

3. On the issue whether the amount of British Income Tax for which the defendant is liable is the amount remaining after deduction of British Income Tax Relief, or the whole amount without such deduction, he found in favour of the contention of the defendant.

4.

On the issue...