Commissioner for Inland Revenue v Pretorius (206/84) [1985] ZASCA 97; [1986] 1 All SA 336 (A) (25 September 1985)

Commissioner for Inland Revenue v Pretorius (206/84) [1985] ZASCA 97; [1986] 1 All SA 336 (A) (25 September 1985)

The court found that Pretorius acquired the sectional title unit not by virtue of his status as a beneficiary under the trust deed, but pursuant to a separate contractual arrangement (Annexure 'E') with the trustees of Orchid Trust. The trust deed did not confer an automatic right to transfer; rather, the right arose from the agreement between Pretorius and the trustees. Consequently, the transaction fell within the definition of 'transaction' under the Transfer Duty Act and was subject to transfer duty. The exemption in section 9(4)(b) did not apply because Pretorius was not 'entitled thereto' under the trust instrument but under a separate contract.

Citation
[1985] ZASCA 97
Parties
Appellant: Commissioner for Inland Revenue; Respondent: Abraham Johannes Pretorius
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
25 September 1985
Case Number
206/84
Procedural Posture
Civil Appeal / Appeal From Declaratory Order in Transvaal Provincial Division
Outcome
Appeal upheld. The order of the court a quo is set aside and replaced with dismissal of the application with costs.
Judges
Corbett, Joubert, Grosskopf, Galgut, Nicholas
Legal Topics
Transfer Duty Exemption, Trust Property Transfer, Sectional Title Units, Interpretation of Trust Deed
Tax Law Land and Property Transfer Duty Exemption Trust Property Transfer Sectional Title Units Interpretation of Trust Deed

Case Brief

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Parties

Commissioner for Inland Revenue

Appellant

Abraham Johannes Pretorius

Respondent

Procedural Posture

Civil Appeal / Appeal From Declaratory Order in Transvaal Provincial Division

Legal Issues

  1. 1 Whether Pretorius was exempt from transfer duty under section 9(4)(b) of the Transfer Duty Act for the transfer of a sectional title unit from Orchid Trust.
  2. 2 Whether the transfer to Pretorius arose from the trust deed or from a separate contractual arrangement.

Ratio Decidendi

The court found that Pretorius acquired the sectional title unit not by virtue of his status as a beneficiary under the trust deed, but pursuant to a separate contractual arrangement (Annexure 'E') with the trustees of Orchid Trust. The trust deed did not confer an automatic right to transfer; rather, the right arose from the agreement between Pretorius and the trustees. Consequently, the transaction fell within the definition of 'transaction' under the Transfer Duty Act and was subject to transfer duty. The exemption in section 9(4)(b) did not apply because Pretorius was not 'entitled thereto' under the trust instrument but under a separate contract.

Court Disposition

Appeal upheld. The order of the court a quo is set aside and replaced with dismissal of the application with costs.

Orders

  • The appeal is upheld with costs, including costs for two counsel.
  • The order of the court a quo is altered to: 'The application is dismissed with costs.'