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[2017] ZAWCHC 85
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Singatha Afrika Management Services (Pty) Ltd and Another v City of Cape Town and Another (11031/2016) [2017] ZAWCHC 85 (22 August 2017)
Republic
of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
number: 11031/2016
Before: The Hon. Mr Justice Binns-Ward
Hearing: 8 August 2017
Judgment:
22 August 2017
In
the matter between:
SINGATHA
AFRIKA MANAGEMENT SERVICES (PTY) LTD
First
Applicant
UNATHI
NTSIKANA
HOYANA
Second
Applicant
and
THE
CITY OF CAPE
TOWN
First
Respondent
LUNGELO
MBANDAZAYO
Second
Respondent
JUDGMENT
[1]
The applicants have applied in terms of the
Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’)
for the review
and setting aside of the decision, dated 4 September
2015, by the second respondent, in an investigation conducted in
terms of
the City of Cape Town’s Policy for ‘Combatting
Abuse of Supply Chain Management System’, that they had
‘
committed an abuse of the City of
Cape Town’s Supply Chain Management System, and/or fraudulent,
and/or improper conduct by
failing to provide a valid TCC
[tax clearance certificate]
to the City
as envisaged by the Abuse Policy and
Regulation 38
’
of the
Municipal Supply Chain Management Regulations.
[1
]
The applicants are Singatha Afrika Management Services (Pty) Ltd
(‘the first applicant’ – the company’s
name
is sometimes spelt as ‘Singata’ in the papers) and the
managing director of that company, Mr Unathi Hoyana
(‘the
second applicant’). Mr Hoyana is referred to in the
impugned decision as ‘the affected person’.
The
City has been cited as the first respondent. The impugned
decision was made by the second respondent in his capacity
as the
presiding officer appointed by the City’s municipal manager in
terms of the City’s aforementioned Policy ‘to
preside and
adjudicate on allegations of abuse of the Supply Chain Management
System’ against the applicants.
[2]
[2]
The first applicant was registered on the
City’s vendor database as a supplier. Suppliers are
required to be registered
on the database in order to do business
with the City. Notwithstanding its listing on the data base
over a period of some
years, the first applicant had in fact never
actually conducted business with the City. It had, however,
reportedly regularly
done business with other state institutions.
The City’s Supply Chain Management Policy required its
municipal manager
to ensure that the database was regularly updated.
Amongst the requirements for listing, prospective suppliers were
required
to produce a valid tax clearance certificate.
[3]
It is common ground that in early 2015 the
first applicant provided the City with a tax clearance certificate
that was not registered
by the South African Revenue Service as
having been issued by the Service. This was discovered when the
City requested SARS
to authenticate the certificate provided to it by
the first applicant. The circumstances in which the City
requested the
authentication are not clear on the papers. It is
not evident whether the request was made in the context of standard
procedure
or because of a suspicion on the part of the City’s
officials that something was untoward. Certainly, by appearance
the certificate provided by the first applicant was not noticeably
distinguishable from a valid certificate.
[4]
Upon
the discovery of the apparent invalidity of the tax clearance
certificate that had been provided to it by the first applicant,
the
City gave notice to the first applicant, by letter dated 26 May
2015, that the facts at its disposal indicated that the
first
applicant had ‘
committed fraud
and/or abuse and/or improper conduct as contemplated in
Regulation 38
in that Singatha
intentionally
submitted
false information
and/or made a misrepresentation on the information submitted to the
City in order to procure contract(s) with
the City
’.
(Underlining supplied for emphasis.)
[5]
The
City’s letter also drew attention to clause 3.4 of the City’s
abovementioned Policy, pointing out that it stated
that:
Any listing in terms of paragraph 2.3 shall, at the
discretion of the City Manager, also be applicable to any other
enterprise or
other partner, manager director, or other person who
wholly or partly exercises or exercised or may exercise control over
the enterprise
of the first mentioned person, and with which
enterprise or person the first mentioned person is, or was, in the
opinion of the
City Manager, actively associated.
The letter had in an earlier passage quoted paragraphs 2.2 and 2.3 of
the Policy as follows:
2.2 The City Manager shall take all reasonable steps
to prevent abuse of the Supply Chain Management System …
2.3 The steps referred to in Clause 2.2 above which
the City Manager may take include registering the affected person in
the City’s
Register of Tender and Contract Defaulters …
2.3.2 Rejection of the tender of an affected person
if that person or any of its representatives:
2.3.2.2 has abused the Supply Chain Management System
or has committed any improper conduct in relation to the Supply Chain
Management
System …
It furthermore pointed out that ‘
Improper Conduct
’
was defined in paragraph 1 of the Policy to mean:
‘
conduct that is tantamount
to: - fraud; corruption; favouritism; unfair, irregular and unlawful
practices; misrepresentation on
information submitted in tender
documents for the purposes of procuring a contract with the City;
misrepresentation regarding the
contractor’s expertise and
capacity to perform in terms of a contract procured via the Supply
Chain Management System; breach
of a contract procured via the Supply
Chain Management System; and failure to comply with the Supply Chain
Management Syste
m’
.
The notice letter proceeded:
Unathi Ntsikana Hoyana (“Hoyana”) is the
sole director of and exercise (sic) control over Singatha and/or is
actively
associated with Singatha. Should Singatha be
restricted the restriction will also be applicable to Hoyana in terms
of clause
3.4 of the Abuse Policy. A notice to this effect will
be addressed to the director.
[6]
The City’s notice letter
advised that the recipient was entitled to make written
representations on the allegations.
It went on to explain the
procedure that would apply going forward as follows:
16. A presiding officer will
adjudicate on
(sic)
the allegations made
based on this notice and the written submissions received (if any).
In the event that Singatha is found
by the presiding officer to have
committed any of the acts referred to above, this may result in any
quotes/tenders submitted by
Singatha being rejected for the maximum
period of five (5) years and accordingly being listed on the City’s
Register of Tender
and Contract Defaulters (being a list of persons
prohibited from being awarded any contract by the City). The
City is furthermore
required to inform National Treasury (MFMA
Circular No. 46 and No. 56
3
)
of any such restriction.
17. Please refer to the Abuse
Policy
4
with
regard to Singatha’s rights and obligations during this
process.
[Footnote
4 was a web address at which the Abuse Policy could be accessed.]
18. Please note that Singatha has
the right to obtain legal representation
.
[7]
The
City’s notice to the applicants falls to be read with the
Policy, and in particular for present purposes with paragraphs
7-11
thereof, which provide as follows:
7.
ADMINISTRATION OF HEARINGS
7.1 The City Manager shall appoint an independent and
impartial person, who may be an official of the City of Cape Town, to
preside
and adjudicate on allegations of abuse of the Supply Chain
Management System against an affected person.
7.2 The Presiding Officer will adjudicate on the
matter based on the written notice and written response and will
inform all relevant
parties accordingly should the matter, or part
thereof be referred for an oral hearing.
8.
RIGHT TO BE HEARD
An affected person shall, in
accordance with, and subject to, the procedures in terms of this
policy, be granted the right to be
heard upon receiving notice as
contemplated in terms of Clause 6 and prior to the City Manager
taking any of the steps listed in
paragraph 2.2 and 2.3 of this
Policy.
9.
ORAL HEARINGS
9.1 An affected person does not have an automatic
right to an oral hearing but may submit an application to the
Presiding Officer
to have the matter set down for an oral hearing in
instances where the Presiding Officer decided to entertain the matter
without
oral evidence being heard, or not to refer the matter for an
oral hearing.
9.2 The Presiding Officer may grant such an
opportunity in its discretion where the affected person has provided
sufficient grounds
to the Presiding Officer to refer the matter for
an oral hearing.
9.3 The Presiding Officer shall take any relevant
factor into account when deciding whether or not to grant an
application referred
to in paragraph 9.2 by an affected person.
9.4 The Presiding Officer must ensure that notice of
an oral hearing shall be served by a duly authorised person on all
relevant
parties within 7 (seven) days of receipt of the
representations referred to in paragraph from 5.2.3 above, and must
9.4.1 Set the date of the oral
hearing
9.4.2 Inform the affected person
of their right to legal representation
9.4.3 Include any other information which the
presiding officer may deem relevant or necessary to be included in
the notice.
9.5 The City shall be appropriately represented at
these hearings by a natural person to lead the evidence against the
affected
person.
10.
PROCEDURE AT ORAL HEARING
10.1 The procedure to be followed at an oral hearing
shall be determined by the Presiding officer.
10.2 Witnesses shall testify under oath.
10.3 Affected person(s) or their representatives
shall have the right to present their case and to cross-examine any
witnesses who
testify at the hearing.
10.4 Witnesses called by the affected person(s) shall
be subjected to cross-examination by any party who may have an
interest at
the hearing.
11.
RIGHT TO LEGAL REPRESENTATION
The onus is on the City to prove any allegations of
abuse of the Supply Chain Management System which proof shall be on a
balance
of probabilities.
An affidavit deposed to by an official from the Revenue Service, Mr
Andries Carstens, was enclosed with the City’s notice
to the
applicants. The affidavit confirmed that the tax certificate
submitted by Singatha was not reflected on the Revenue
Service’s
records as having been issued by SARS.
[8]
The applicants responded to the City notice
in a letter from their then attorneys, dated 10 June 2015, which went
as follows:
‘
Dear Sirs,
WRITTEN SUBMISSIONS FOR SINGATHA AFRIKA
MANAGEMENT SERVICES (PTY) LTD
We act for Singatha Afrika Management Services (Pty)
Ltd.
We are writing to you in response to your letter
dated 26 May 2015 addressed to our client.
In that letter you indicated that our client was
entitled to make written representations to you in response to the
allegations
made against it.
We enclose two affidavits which have been deposed to
by our client’s managing director as well as a representative
of our
client’s auditor. The contents of the affidavits
are self-explanatory, and clearly record the process which our client
followed in obtaining a tax clearance certificate.
In amplification of those affidavits, our
instructions are as follows:
1.
our client
[the
writer was clearly referring to Mr Hoyana in this paragraph, not
Singatha Afrika Management Services (Pty) Ltd]
is
a self made businessman, and is not an accounting or tax expert;
2.
our client
specifically employs the services of accountants and auditors to
assist it with all of its financial and tax obligations;
3.
in January 2015,
our client requested its auditors, being Ramathe Desai, Bhagat &
Jeena, to obtain new tax clearance certificates
for it;
4.
whilst its
previous tax clearance certificate was only to expire on 27 March
2015, it required new certificates for tendering purposes;
5.
its auditors
made a tax clearance application to SARS on 7 January 2015;
6.
several days
later, our client’s auditors sent a representative to the
offices of SARS where the certificates were handed
to them, over the
counter, by a SARS official and during SARS trading hours;
7.
the tax
clearance certificate was delivered by our client’s auditors to
our client who then began to use them;
8.
attached to this
letter are copies of our client’
s 2013
,
2014
and
2015
tax
clearance certificates. They appear to all look the same, and
our client’s auditors have no reason to suspect they
are not
genuine.
9.
Had our client’s
auditors been of the view that the 2015 certificate was not genuine,
it
(sic)
certainly would not
have handed copies to our client. In turn, our client most certainly
would not have tendered with a certificate
it suspected was not
genuine.
Our client cannot speculate as to
how it was give a tax clearance certificates
(sic)
in circumstances
where SARS’ online records suggest that no tax clearance
certificate has been issued. Our client is
not an expert in the
field. It can only presume that there has been some internal
blunder on the part of SARS, as most applications
these days are made
through SARS online e-filing system, whilst our client’s
application was delivered manually.
Our client is obviously now left in invidious
position where it is being told that it does not have “valid or
proper”
tax clearance certificates. Subsequent to the
City of Cape Town’s correspondence to it, our client has
checked the
online SARS system and has noted that there are
apparently some “issues” which have to be resolved before
further tax
clearance certificates can apparently be issued.
Again, our client is not sure how SARS issued it with
tax clearance certificates in circumstances where there are now
apparently
ongoing issues which have to be resolved before
certificates can be issued.
It has approached its auditors to address all of the
issues, and they have indicated that they should all be resolved by
the end
of June. Once those issues have been resolved, and
despite the fact that our client maintains that it already has a
valid
and properly issued tax clearance certificate, it will make a
further application for a new certificate to be issued to it.
It obviously needs to be issued with a certificate which is properly
captured on the SARS online / e-filing system so this issue
does not
arise in the future.
In conclusion, our client humbly requests that no
negative inference be drawn against it as a result of some internal
blunder on
the part of SARS. As can be seen from the attached
affidavits, our client mandated its auditors to obtain tax clearance
certificates,
which they duly did. Neither our client nor the
auditors have any reason to suspect that the certificates are not
valid or
properly issued, and cannot account for the fact that SARS
has not captured the approval online.
Our client requests an opportunity to meet with you
in order to discuss this issue and to determine how best to proceed.
Our
client is doing everything in its power to:
1
investigate the
position with the relevant SARS official; and
2
deal with the
issues which have now arisen with SARS, in order to obtain new
certificates.
Please let u know whether you are
willing to meet with our client in order to discuss this issue
further. Our client would
truly appreciate an opportunity of
discussing and resolving this matter informally rather than having a
presiding officer adjudicate
over a highly technical issue which has
arisen through no fault of our client.
[9]
The affidavit made by Mr Hoyana that was
annexed to the applicants’ attorneys’ letter read as
follows:
1.
I am an adult male businessman and the managing
director of Singatha Afrika Management Services (Pty) Ltd
(“Singatha”).
2.
The facts contained herein are both true and correct.
3.
I confirm that Singatha’s auditors are Ramatha
Desai, Bhagat & Jeena (“RDBJ”). I have been
working with
RDBJ, and in particular Mr Jithen Jeena, for many years.
4.
At the beginning of January I contacted Mr Jeena and
asked him to assist in obtaining a tax clearance certificate for
Singatha for
2015. I indicated that:
4.1 I needed additional certificates for tendering
purposes; and
4.2 The current certificate was about to expire.
5.
He said that he would assist in obtaining the
certificate.
6.
The new certificates were delivered to my office.
7.
I was incredibly alarmed to receive correspondence
from the City of Cape Town suggesting that the certificate had been
obtained
fraudulently.
[10]
The affidavit by the first applicant’s
auditor, one Jiten Jeena, that was annexed to the applicants’
attorneys’
aforementioned letter stated:
1.
I am an adult male chartered accountant, and am
practising as such from Ramatha Desai, Bhagat & Jeena (“RJBJ”).
2.
The facts contained herein are both true and correct.
3.
RDBJ are the auditors of Singatha Afrika Management
Services (Pty) Ltd (“Singatha”).
4.
Unathi Hoyana and Singatha have been clients of mine
/ RDBJ for over ten years.
5.
At the beginning of January 2015 I received a call
from Unathi requesting that we obtain a tax clearance certificate for
Singatha.
He indicated that:
5.1 his current tax clearance certificate was about
to expire; and
5.2 he needed a new tax clearance certificate for
tendering purposes.
6.
I had one a representative of RDBJ go to SARS and
deliver a tax clearance application form on or about 7 January 2015.
A copy
of the application papers are attached as”JJ1”.
7.
I obtained the certificates several days later and
arranged to get them to Unathi.
[11]
The City does not appear to have replied to
the applicants’ attorneys’ letter of 10 June 2015.
Indeed, there
is no indication in the evidence of any communication
between the City and the applicants after the despatch of the
attorneys’
letter and the receipt by the applicants of the
ruling by the second respondent that there had been an infringement
by them of
the City’s supply chain management policy.
[12]
The presiding officer’s ruling
commenced by noting that the submission of ‘
an
invalid TCC, not issued by SARS, constitutes an abuse of the City’s
Supply Chain Management System and/or fraudulent conduct,
and/or
improper conduct, which is sanctionable in terms of
Regulation 38
…
’. The ruling then
proceeded to rehearse the history described earlier in this
judgment. The rehearsal included
a summary of the content of
the affidavits by the official from SARS (Mr Andries Carstens) who
stated that the tax clearance certificate
presented by the first
applicant had not been issued by the Revenue Service, on the one
hand, and by the second applicant and a
partner at the first
applicant’s auditors setting out how the certificate had been
obtained in an apparently regular manner,
on the other. The
ruling then set out various pertinent provisions from the City’s
Supply Chain Management Supply Policy,
the Abuse Policy and
regulation 38.
The presiding officer’s finding was
set out at paragraphs 17-23 of the ruling document as follows:
FINDING
17. Mr Andries Carstens’ affidavit verified
under oath that the TCC submitted by Singatha to the City was not
issued by SARS.
This constitutes proof on a balance of
probabilities that Singatha committed an abuse of the City’s
SCM System which amounts
to improper conduct and it is therefore
reasonable for the City to rely on the contents thereof.
18. The submission of an invalid TCC, not issued by
SARS is a serious matter, and constitutes an abuse of the City’s
SCM System.
Singatha cannot rely on the averment that they are
not experts in the field and they should have verified that the TCC
was in fact
issued by SARS, prior to submission to the City.
19. Singatha failed to furnish the City with evidence
that the TCC was in fact issued by SARS. Singatha avers that
subsequent
to the City’s notice, they checked the SARS online
system and noticed that there are issues which have to be resolved
before
further TCC’s can be issued.
20. The City would be failing in its duty to prevent
abuse of its SCM System if a supplier that submitted such an invalid
TCC was
permitted to do business with the City without any
consequences. This would place the City at serious risk of
exposure to
fraud.
21. It should be noted that when it is confirmed by
SARS in an affidavit that it did not issue a TCC, it is accepted that
the TCC
is invalid as the affidavit provided constitutes prima facie
proof that the TCC is invalid.
22. The remainder of Singatha’s response is
devoted to factors in mitigation of any sanction that may be imposed
which will
be considered at the appropriate time.
23. I therefore find it to be
proven on a balance of probabilities that Singatha and the affected
person has
(sic)
committed an abuse
of the City of Cape Town’s Supply Chain Management System
and/or fraudulent and/or improper conduct by
failing to provide a
valid TCC to the City as envisaged by the Abuse Policy and Regulation
38.
[13]
The applicants have sought to impugn the
finding on various of the grounds provided for in terms of s 6(2)
of PAJA. In
view of the conclusion to which I have come it is
necessary to mention only the following:
1.
That
the action was procedurally unfair.
2.
That
the action was taken because irrelevant considerations were taken
into account and relevant considerations were not considered.
3.
That
the action was not rationally connected to the information before the
administrator and the reasons given for it by the administrator.
4.
That
the power exercised by the presiding officer was so unreasonable that
no reasonable decision maker would have exercised the
power in that
manner.
[14]
The applicants made a number of allegations
in support of their contention that the action was affected by
procedural unfairness.
Again, in view of the conclusion to
which I have come, it is not necessary to treat of them all.
The applicants complained
that the presiding officer did not address
their request for a meeting and implied that in the event of the
matter proceeding formally,
as it did, without their request for a
meeting having been acceded to, the enquiry should have been referred
to an oral hearing
because their attorneys’ letter of 10 June
set forth sufficient grounds to indicate that an oral hearing was
indicated.
[15]
In my judgment the applicants’ point
in this respect is well made. It is appropriate to preface the
discussion on the
question of procedural fairness with the trite
observation that any question concerning what would be fair in the
circumstances
has to be approached with appropriate flexibility,
astute to the peculiar circumstances of the given case; cf. e.g
Joseph and Others v City of Johannesburg
and Others
2010 (4) SA 55
(CC), at
para. 56.
[16]
The attorneys’ letter (which was not
addressed to a presiding officer, but had been placed before him by
the City as the applicants’
response to the notice given in
terms of the Abuse Policy) clearly articulated a request that the
matter be dealt with in discussion
before
a reference to a presiding officer in terms of the Abuse Policy.
The City was within its rights to decline to entertain the
request,
but its failure to respond to the attorneys’ letter meant that
the applicants were not informed that the matter
had been referred to
a presiding officer and consequently not alerted to the need to
request that officer to give them an oral
hearing. In my
judgment, the omission in the peculiar circumstances to advise the
applicants that their attorneys’
request had been declined and
that the matter had been referred to an identified presiding officer
with whom they might communicate
to exercise their right in terms of
paragraph 9 of the Abuse Policy to submit an application for an oral
hearing gave rise to material
procedural prejudice.
[17]
Furthermore, I consider that the City’s
Abuse Policy falls to be construed and applied with appropriate
regard to its foundation
in regulation 38 of the Supply Chain
Management Regulations promulgated under the
Local Government:
Municipal Finance Management Act 56 of 2003
. Paragraph 2 of the
City’s Abuse Policy, part of which has been quoted earlier in
this judgment,
[3]
mirrors the wording of
regulation 38(1)(a).
It is clear,
however, from reg. 38(1)(b) that the character of the relevant duty
placed on the municipal manager (qua accounting
officer) in terms of
the regulation is investigative.
Regulation 38(1)(b)
provides:
A supply chain management
policy must provide measures for the combating of abuse of the supply
chain management system, and must
enable the accounting officer-
…
(b)
to investigate
any allegations against an
official or other role-player of fraud, corruption, favouritism,
unfair or irregular practices or failure
to comply with the supply
chain management policy, and when justified-
(i) take appropriate steps against such official or
other role-player; or
(ii) report any alleged criminal conduct to the South
African Police Service.
(Underlining
supplied for empahsis.)
[18]
The ‘adjudicative’ role given
to a presiding officer in terms of the City’s Abuse Policy has
to be construed in
a manner that gives effect to the obligation
imposed on the City’s municipal manager in terms of reg. 38.
Thus understood,
the presiding officer’s role is effectively to
act as the agent of the municipal manager in conducting the
investigation
mandated by the regulation. It follows that in
order to properly discharge that function the presiding officer is
required,
if the material before him or her demands it in order for
the investigation to be properly undertaken and determined, to
proceed
with an oral hearing
mero motu
,
even in the absence of a request therefor in terms of paragraph 9 of
the policy. It seems to me that paragraphs 7.2 and
9.1 of the
Abuse Policy in point of fact give express recognition to this
incident of the presiding officer’s functions.
[19]
The explanation put up on the applicants’
behalf in their attorneys’ letter supported by the accompanying
affidavits
was such that it could not be rejected without further
investigation and in the absence of oral evidence. It is
well-established
in judicial practice that material disputes of fact
are rarely amenable to determination on paper. It is only in
cases in
which the decision that has to be made is essentially
provisional or interim in effect
[4]
that a court will make any determinations of such disputes on the
probabilities as they appear to it on the papers, and without
hearing
oral evidence. The approach is founded on principles of mixed
procedural and substantive legal character, in which
fairness - as a
manifestation of natural justice - figures prominently. I can
think of no reason to distinguish the approach
from that required of
a presiding officer in the discharge of the adjudicative function
under the City’s Abuse Policy.
[20]
The presiding officer would have been
entitled to infer as a matter of probability that the tax clearance
certificate submitted
by Singatha had been falsified and presented
fraudulently if the information provided in the affidavit of a SARS
official that
the certificate had not been issued by the Revenue
Service had not been responded to. As the presiding officer
indeed noted
in his finding, the content of Mr Carstens’
affidavit constituted prima facie evidence. Prima facie
evidence becomes
sufficient evidence if nothing is offered to counter
its effect. The potentially conclusive effect of prima facie
evidence
is defused when the evidence is answered. If an answer
is provided, the adjudicator must be in a position to rationally
prefer
the one version to the other in order to determine the
matter. When it is not possible to prefer one version to the
other,
the decision must go against the party that carried the onus,
in this case the City.
[21]
The nature of the allegation put to the
applicants (which has been quoted in paragraph [4]
above)
implied conduct involving fraudulent or at least negligent
misrepresentation on their part. The response provided by
the
applicants presented a version that was inconsistent with any
fraudulent intent or even culpability on their part. In
the
context of all the information before the presiding officer when he
made his decision, the affidavit of the SARS official amounted
to no
more, in substance, than proof that a record of the clearance
certificate in contention was not reflected on the Revenue
Service’s
system. There does not appear to have been any evidence before
the presiding officer concerning the procedures
entailed in the
issuance of tax clearance certificates or as to how, when issued,
they come to be captured on the Revenue Service’s
records.
The applicants’ response to the City’s notice was to
advise that the certificate had been obtained in
a routine manner and
in circumstances in which neither they, nor Singatha’s
auditors, had had any reason to suspect that
there was anything
irregular about it. The response suggested that the staff of
SARS in Durban had issued the certificate
‘over the counter’,
but that its issuance had not been captured on SARS’s
computerised system.
[22]
Moreover, on the version put up by the
applicants they would have had no motive to provide a false
certificate to the City.
They had not done any business with
the City in the past despite Singatha having maintained its name on
the suppliers’ database
for some years, and the submission of
the certificate was a matter of compliance with a routine requirement
and unrelated to any
particular intended bid for a contract with the
City.
[23]
In the circumstances, if the only evidence
against the applicants was - as would appear to have been the case -
the affidavit by
the SARS official, the presiding officer should have
appreciated that it was insufficient, without more, to reject the
applicant’s
version of the facts as actually or even just
probably untrue. If, on the other hand, there was evidence
against the applicants
concerning the issuance of the certificate
beyond that contained in the SARS official’s affidavit, its
nature is not apparent
on the record; and it was not disclosed to the
applicants with an opportunity for them to respond, as basic
considerations of fairness
would have required.
[24]
It is true that the applicants’
response to the notice in terms of the Abuse Policy indicated that
there were unresolved issues
concerning Singatha’s tax affairs
at the time the tax clearance certificate was issued. The
nature of these issues,
whether the applicants or their auditors were
aware of them, and whether it would not have been practically
possible for a SARS
employee to have issued a clearance certificate
in the face of them was not explored. The tenor of the
applicants’
response suggested that it had been unaware of the
issues and that the issuance of a certificate that was not captured
on the system
was an ‘internal blunder’ on the part of
SARS. The presiding officer was in no position, without further
investigation,
to reject the applicants’ version of the facts,
or the submissions advanced on the strength of it. In my
judgment,
his determination of the enquiry adversely to the
applicants without such further investigation was both procedurally
and substantively
irregular. In consequence, his decision was
also one to which a reasonable decision maker could not have come in
the circumstances.
[25]
These conclusions would be sufficient on
the merits of the case to impel granting the review sought by the
applicants, but it is
appropriate to address a further aspect of the
finding. It relates to the applicants’ contention that
the decision
was not rationally connected to the information before
the presiding officer and the reasons given for it by him.
[26]
An analysis of the presiding officer’s
reasoning shows that his finding was premised on a view that the
evidence contained
in the SARS affidavit resulted in an onus being
placed on the applicants to show that the tax clearance certificate
had in fact
been issued by SARS. The presiding officer’s
view was fundamentally misdirected. There was no shifting
onus.
The onus of proof remained on the City.
Furthermore, the issue was not whether the certificate had been
validly issued.
It was not disputed that it had not been
captured on SARS’s system. The issue raised on the
allegations the applicants
were called upon by the City’s
notice to answer was whether the applicants had fraudulently, or at
least negligently, misrepresented
the certificate to be a valid tax
clearance certificate.
[27]
The
presiding officer’s finding suggests that he misconceived the
nature of the allegations he was called upon to adjudicate,
and also
that he failed to take into account of the information provided by
the applicants in making his decision. As already
discussed,
the information put up by the applicants precluded a finding that
they had acted fraudulently or negligently.
In order to give
the prima facie import of the evidence in Mr Carstens’
affidavit a conclusive effect, the presiding officer
had to be able
to find and articulate a rational basis to reject the countervailing
effect of the evidence in the applicants’
case. He did
not even attempt to do so, and instead appears (in para. 20 of the
ruling) to have approached the determination
of the matter on the
assumption of some form of strict liability. It is also not
apparent on the information before the presiding
officer where he
came by the notion that there had been a duty on the applicants in
the circumstances to confirm with SARS that
the tax certificate had
been validly issued. Absent some special provision (to which,
if it exists, no attention was drawn)
the applicants would be
entitled to rely on the presumption that all was in order on the
basis of the doctrine expressed in the
maxim ‘
omnia
praesumuntur rite esse acta donec probetur in contrarium
’.
[5]
[28]
The result of the presiding officer’s
misdirections was that that the decision was not rationally connected
to the information
before him and the reasons given for it.
[29]
The applicants also complained, justifiably
in my view, that it does not appear from the decision in what respect
they were found
guilty of abusing the City’s supply chain
management policy. The framing of the determination
incorporating a series
of alternatives reflected in the employment of
two sets of ‘and/or’ and a reference to ‘improper
conduct’,
which in its defined form,
[6]
offers an even wider range of alternatives bears out their
complaint. The apparent failure of the presiding officer or the
municipal manager to refer the matter to the police, as required in
terms of reg. 38(1)(b)(ii) of the Supply Chain Management
Regulations, would appear to suggest that the finding was not
intended to impute any criminal conduct to the applicants.
But
who knows? The manner in which the finding was worded fudged
the precise character of the abuse that the applicants were
found to
have perpetrated.
[30]
The applicants applied only for the review
and setting aside of the presiding officer’s ruling. They
did not seek any
consequential relief. Granting an order in the
bald terms sought by the applicants would not be appropriate.
It is
clear that an investigation into their conduct in relation to
the submission of a tax clearance certificate that was not reflected
on the official records was warranted. As indicated, the nature
of the applicants’ response is such that a determination
cannot
properly be made without further investigation, and probably not
without oral evidence. In the circumstances it would
be
appropriate, if the ruling were to be reviewed and set aside, to
remit the matter for reconsideration by the presiding officer.
[31]
The application for review was brought
outside the time limit provided in terms of s 7(1) of PAJA.
In their amended notice
of motion, the applicants prayed for relief
in terms of s 9 of the Act extending the period prescribed in
terms of s 7
to the date of the institution of these
proceedings. The first respondent did not contend that it had
suffered any prejudice
as a result of the delay and left the question
of whether the applicants should be granted the indulgence in the
hands of the court.
In all the circumstances of the case I am
persuaded that it is in the interests of justice that relief in terms
of s 9 should
be granted.
[32]
The following order is made:
(a) It is directed in terms of
s 9
of the
Promotion of
Administrative Justice Act 3 of 2000
that the period of 180 days
referred to in s 7 of the Act is extended to the date upon which
the proceedings in case no. 11031/16
were instituted.
(b) The ruling in terms of the City of Cape Town’s Policy on
‘Combating Abuse of Supply Chain Management System’
made
against the applicants by the second respondent, dated 4 September
2015, is reviewed and set aside.
(c) The allegations of abuse of the City’s Supply Chain
Management System against the first and second applicants are
remitted
to the second respondent for reconsideration in the light of
the court’s judgment.
(d) The first respondent is directed to pay the applicants’
costs of suit.
A.G. BINNS-WARD
Judge of the High Court
[1]
Published under GN 868 in Government
Gazette No. 27636, dated 30 May 2005.
[2]
See paragraph 7 of the Policy quoted
in paragraph [7]
below.
The Policy is also accessible on the City of Cape Town website.
[3]
At paragraph [5]
above.
[4]
Such as in applications for interim
relief or in respect of applications for provisional sequestration
or liquidation.
[5]
All things are presumed to have been
done in due form, unless proof is offered to the contrary.
[6]
The definition is quoted in paragraph [5]
above.