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[2016] ZAGPJHC 246
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Sasfin Commercial Solutions (Pty) Ltd v First Rand Bank Ltd (08/36380, 37344/2015) [2016] ZAGPJHC 246 (11 August 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number:
08
/36380
Case
No.: 37344/2015
DATE:
11 AUGUST 2016
In
the matter between:
Sasfin
Commercial Solution (Pty)
Ltd
..........................................................................
Applicant
And
First
Rand Bank
Ltd
....................................................................................................
Respondent
Coram:
VALLY J
Heard:
19 MAY 2016
Delivered
11 AUGUST 2016
Summary:
Right of access to
information-PAIA-Contract-Written Agreement
ORDER
The
application is dismissed with costs.
JUDGMENT
Vally
J
Introduction
[1]
Everyone
has the right access the information held by another person if that
information is required by that person to exercise
or protect any of
her rights.
[1]
To enhance and clarify the meaning and content of this right the
legislature had enacted the Promotion of Access to Information
Act 2
of 2000 (PAIA).
[2]
Taking advantage of the provisions of PAIA
the applicant, Sasfin Commercial Solutions (Pty) Ltd (Sasfin) asks
the court to order
the information officer of the respondent,
Firstrand Bank Ltd (Firstrand) to:
“
1
.
1
in
respect
of
each
debtor
of
the
Wesbank
Division of
the respondent
for asset
f
i
nance
transactions (whether
by way
of instalment
sale or
finance
lease
),
where
there
was
a repossession
of
the
asset
financed
and
a
sale
thereof
by
or on behalf
of the
respondent
,
for which
a
claim
was
made
by the
respondent
for
input of value added tax (
"
VAT
"
)
and/or output
VAT
was
declared
to
be
paid
,
for
the
months
of
any VAT period
covered
by
the
period
1
July
2014
to
31
December
2014
,
of all
documents (including
statements
of account
for debtors,
debtors
'
ledgers and
general ledgers) evidencing
the following:
1.1.1
the
capital
amount
of
the
original
sale
or
lease
to
the debtor
;
1.1.2
the
interest and
other charges
raised
by respondent against the debtor;
1.1.3
payments
made by the
debtor or on its behalf
;
1.1.4
the
amount
realized
on
the
sale
by
the
respondent
of the asset
,
including the
gross amount and expenditure
;
1.1.5
the output
VAT
declared
in
respect
of
the
sa
l
e
on
repossession
;
1.1.6
the
input
VAT
claimed
in
relat
i
on
to
the
sale
on
repossession
or any bad
debts or loss
;
1.1.7
the
amount written
off by way of bad debt.
1.2
the
VAT
returns
and
calculations
in
respect
of
the
period
1 June
2010 to 30
June 2015
.
”
[3]
It also seeks the usual order of costs
against Firstrand. It founds its request on rights it acquired by
concluding a contract with
Firstrand.
[4]
Firstrand has a Division referred to as
Wesbank that concentrates on providing finance to third parties who
wish to obtain assets,
such as motor vehicles. The order being sought
concerns the records of Wesbank.
The contract
[5]
In 2014 Sasfin and Firstrand concluded a
written agreement (the agreement). The parties say it was concluded
on 13 June 2014. The
agreement has its origins in a proposal put
forward by Sasfin to Firstrand. In fact, the agreement consist of two
pages and is
structured in a form of a letter sent by one David
Edwards (Edwards) of Sasfin to one Arch Arnesen (Arnesen) who was the
Head of
Indirect Tax at Firstrand. The letter was sent on 13 June
2014. The contents of the letter read:
“
PROPOSAL
TO PROVIDE SERVICES
I
refer to your discussions with Nick Griesel yesterday.
As
mentioned, we had a contract with Wesbank for a VAT review accepted
by Mr Declan Jones on 28 March 2011. The agreement was for
a
comprehensive review of all VAT aspects but on commencement of the
assignment, Mr Jones instructed us to only review VAT on expenditure
as the VAT on finance transactions had been thoroughly checked in a
previous project.
At
a recent VAT review at another bank, we found that the VAT treatment
of certain transactions were (sic) not being recorded correctly.
We
have obtained an opinion from Gerhard Badenhorst of ENS to confirm
that our findings were valid.
From
the data obtained at our previous assignment, we were able to
establish that we may be able to effect a saving at Wesbank.
VAT
ENGAGEMENT
We
would undertake an assignment to establish whether the VAT treatment
of certain transactions were (sic) being dealt with correctly.
This
process should not require more than two days.
Should
the results of our investigation indicate that VAT had been under
claimed, we will assist in the calculation of the claim
resulting
from the incorrect accounting for a specific type of transaction,
once you have agreed with the validity of our findings.
We
will report to you on our findings and discuss with you the legal
opinion that we have obtained. We are prepared to discuss the
matter
in detail with your auditors and legal advisors, should you so
require.
We
can furthermore assist in the process of getting approval from SARS,
should this be required, in order to get approval of a refund
claim.
FEES
Our
fees will be 20% of any savings achieved.
VAT
savings for the purpose of this proposal, is defined as additional
input tax deductions achieved as a result of our VAT assignment
to
which the vendor is legally entitled. This implies that a fee will
only be payable if there is an enhanced VAT recovery as a
direct
result of our VAT assignment.
Where
the recoveries are secured by reason of a reduction of the VAT
payable in respect of a return, which still has to be submitted,
our
fee note will be raised on the submission of such return. Where,
however, the recoveries are secured by a VAT refund, our fee
note
will be raised once the company receives such refund from SARS. In
both cases our standard terms, which require payment on
presentation,
will apply. Amounts overdue are subject to interest at the prevailing
prime overdraft rate.
The
fee will only be payable in respect of reductions in VAT payable or
refunds for past periods and the current VAT period and
will not be
payable in respect of any future savings achieved as a result of
applying the findings to those future periods.
LIMITATIONS
To
carry out the above, we would require access to the relevant
information to conduct our assignment. The information required
is of
a very limited and specific nature and little time will be required
from your staff.
TIMING
We
are in a position to commence with the work at a time suitable to
both parties.
CONFIDENTIALITY
The
Parties respectively undertake and shall procure that the secrecy and
confidential nature of all information and exchange pursuant
to the
agreement or in the course of carrying out this transaction shall be
observed at all times and that such secret or confidential
information shall only be disclosed by the Parties to third Parties
to whom disclosure is required by law or approved by the other
Party
in writing or is made to a third Party in his/her capacity as an
employee, council, advisor or agent of such Party, being
himself
bound to observe confidentiality.
ENGAGEMENT
Should
you be in agreement with the proposal set out above, please sign the
attached acceptance and return to Sasfin Commercial
Solutions (Pty)
Ltd.
Regards,
David
Edwards
CEO:
Sasfin Commercial Solutions
”
(Bold in
original)
[6]
At the end of the letter, after the
signature of Edwards, the following is to be found:
“
I,
(in manuscript - Declan Jones), duly authorised hereto in my capacity
of (in manuscript - CFO Wesbank) do hereby appoint Sasfin
Commercial
Solutions (Pty) Ltd to perform the VAT services on the conditions set
out above.
”
[7]
It was countersigned by one Declan Jones
(Jones) on 8 September 2014 in his capacity as the Chief Financial
Officer. Once countersigned
it metamorphosed from a proposal into a
contract. Thus, strictly speaking the contract was concluded on 8
September 2014 and not
13 June 2014, which is when the letter
offering the services was sent.
[8]
There are really three material parts of
the contract that concern this case. Firstly, there is the portion
titled “
VAT Engagement
”,
which really captures what Sasfin would do for Wesbank (i.e. if
Wesbank accepted the offer, which we know Wesbank did).
Sasfin would
undertake an assignment to establish whether Wesbank treated certain
of its VAT transactions correctly in terms of
the Value-Added Tax Act
89 of 1991 (VAT Act). This assignment would take no more than two
days. Secondly, Sasfin would charge a
fee of 20% of any savings on
past VAT returns if the results of the assignment showed that Wesbank
under-recovered any VAT refunds
by not dealing correctly with its Vat
Returns on certain transactions. Thirdly, once Sasfin was engaged
Wesbank would furnish it
with the relevant information, but which
information “
is of a very limited
and specific nature
” and the
provision of which will require “
little
time
” from the staff of Wesbank.
[9]
The contract must be understood in the
context of the business of Wesbank. The manner in which Wesbank
provides finance to the third
party (the customer) is by purchasing
the asset and then sells it to the customer on an instalment sale
basis, or leases it to
the customer by means of a letting
transaction. During the life of the instalment sale, or the lease
agreement, the ownership of
the asset remains with Wesbank but
possession thereof is given to the customer. The transaction of sale
or lease of the asset attracts
a VAT payment. Should the customer
default on any payment due in terms of the sale or lease agreement
Wesbank has a right to, and
often does, cancel the agreement and
repossess the asset. The asset is then re-sold to another customer.
This transaction, too,
attracts a VAT payment. However, the VAT due
on the outstanding balance of the initial (or previous, should the
asset be resold
again) sale would now be treated as input VAT for
purposes of the second (or subsequent) sale. This input VAT can be
claimed as
a credit when Wesbank completes its VAT returns where the
second (or subsequent) sale is recorded. All this is basically
standard
practice in the industry and Wesbank is not only familiar
with it but has been applying it. However, Sasfin claimed that it is
possible that Wesbank may not be calculating the input VAT correctly
and it offered Wesbank an opportunity to engage it to examine
a “
very
specific and limited
” amount of
Wesbank’s records (referred to as “
information
”
in the contract). The upliftment and provision of the records would
require the investment of “
very
little time
” on the part of
Wesbank’s staff. Finally, the contract was concluded on the
basis that the entire process would take
no “
more
than two days
”.
Events after the
conclusion of the contract
[10]
One day after the contract was signed, on 9
September 2014, one Nick Griesel (Griesel) of Sasfin wrote per email
to one Sybrand
Fouché (Fouché) of Wesbank and asked him
to supply him with:
“
VAT
return information as submitted to Firstrand for inclusion in the
VAT
return calculations for the past 60 months
.
”
Emphasis added
[11]
One Ian Cloete (Cloete) being the head of
Indirect Tax AT Firstrand responded to the email that same day. His
response is particularly
pertinent. It reads:
“
Your
email to Sybrandt refers.
We
are eager to move things along
but this
request seems a bit odd
. Firstly, there
is limited information that can be gleaned from the return itself.
Secondly, if you are checking if something particular
exists (as you
previously explained) then you should surely be able to determine
this just as easily from a single return or a
few sample returns.
One
could conclude from this opening information request that you are
either already in quantification mode, having skipped the
diagnostic
stage altogether (which implies that you have known all along about
something that does exist), or that this could be
a fishing exercise.
Both
scenarios are at odds with my understanding of your motivation for
the assignment
, but besides this, there
may be easier ways for us to provide you with the information that
you need and save hour time in the
process too, We maintain a
spreadsheet containing the data of every field of every WesBank VAT
return together with graphs that
we use to help monitor movements. In
theory we could provide you with this entire spreadsheet but if you
are looking for something
specific as contended then it should be
sufficient to provide you with the information on specific fields
only.
Please
confirm what you are looking for so that we can decide how best to
assist. The attached sample return (Aug 2013) should enable
you to
identify the specific field(s) that are of interest to you.
”
[2]
(Emphasis added)
[12]
The ink was barely dry on the contract and
the parties had already indicated that they do not understand the
contract to mean the
same thing. Worse, the response of Cloete
demonstrates that upon receiving the request of Griesel Firstrand
immediately became
suspicious of the motives of Griesel and, by
implication, of Sasfin. Further and more importantly it became
immediately apparent
that Firstrand was not willing to part with the
amount of information that Sasfin was seeking. Firstrand not only had
a different
understanding of the terms of the contract, which
understanding derived from the oral proposal put to them by Griesel
of Sasfin
before email (which eventually constituted the contract)
was sent to them but it also took the view that a very limited
information
of a one VAT return would suffice for Sasfin determine
whether Firstrand was correctly reflecting the VAT inputs in a
subsequent
sale of a repossessed asset.
[13]
Within a few hours of receiving Cloete’s
email Griesel responded thereto. In his reply he attempts to allay
the concerns of
Cloete as well as explain why he requires so much
information – five years of VAT returns of WesBank. His reply
reads:
“
I
fully understand your concerns.
I
can firstly assure you that I am not busy with a fishing exercise at
all. I requested to see the VAT returns over the past five
years to
establish firstly whether there has been any material change to the
VAT return since 2009/10. I received only three VAT
returns at the
time of my previous review.
As
I mentioned there are two aspects that I wanted to confirm, the one
minor and the other more important.
The
first aspect is Imported Services. From the VAT returns it appeared
as though Output VAT was declared on the full value of the
imported
service. I wanted to establish whether that was in fact the case or
whether it may have been an exception.
The
other aspect involves the accounting for Instalment Credit
Agreements. I herewith include a spreadsheet with my understanding
of
the accounting entries based on the limited information that I have.
Can you please confirm whether my understanding is in fact
correct or
please indicate how it is done in the general ledger.
Once
I have received confirmation or correction of these accounting
entries, I propose to comment on that and at the same time supply
you
with Gerhard Badenhorst’s opinion. That will enable you to
assess and consider his opinion prior to having a meeting
wand
handing over to you.
”
[14]
This response certainly allayed some of the
concerns of Cloete. The next morning, 10 September 2014, he responded
by saying that
Firstrand will revert to Griesel on the accounting
entries and then explained how Firstrand dealt with tax on imported
services.
Finally, he said that the input tax “
was
calculated centrally
” and
therefore Griesel “
would not have
picked this up from the Wesbank return.
”
Later that morning he sent Griesel another email. This time he wrote,
inter alia
:
“…
it
appears that you have also misunderstood how we process repossession
input tax claims.
The
repossession input tax deduction is limited to the outstanding cash
value (R54 000.00 in your example) and not the unrecovered
balance after applying the proceeds of the sale to the ICA account
(i.e. the R20k per your example). Furthermore, paragraph (i)
of the
second proviso to s22(1) specifically prohibits any 22(1) bad debt
claim where repossession has taken place, There can therefore
be no
further ‘top-up’ bad debt deduction, even if the
repossession input tax deduction does not cover the full outstanding
case value … but as explained, this is not the case.
We
will ask the WesBank’s systems people to confirm this so that
we can provide you with the necessary comfort/assurance,
but it does
appear at this stage that we have all been chasing our tails for
nothing.
It is not clear how you were
going to determine any of this from all the returns that you asked
for, so I am glad we did not go
down that route.
”
(Emphasis added)
[15]
It is clear from this email that Firstrand,
through Cloete, had come to the conclusion that the information
sought by Griesel would
be of no assistance as WesBank’s
calculation of the input VAT on the resale of the repossessed asset
was based on the outstanding
cash value of the asset. This he
believed was the correct way to calculate the input VAT. Within an
hour Griesel responded to this
email where he in essence reaffirmed
(is reiterated a better word) his request for the information. He
explained why he requested
the information. His explanation was:
“
The
purpose of requesting all the VAT returns (which I do not believe was
an unreasonable request), was in order for me to get an
overall view
of VAT declared and claimed and more importantly whether there were
any abnormal adjustments or spikes as you referred
to during the
period.
I
would like to ensure that I understand you correctly. Use the
information from the August 2013 VAT return as an example. In this
month an amount of R10,561,809 VAT was declared on Repo Sales and the
VAT on Bad Debts amounted to R 13, 827,499. Is it then correct
to
assume that the amount debited to Bad Debts amounted to R 23 256 358
(difference of R 13,827, 499 and R 10,561,809
divided by 14%)?
The
accounting entries would then be:
Bank
86,003,301.86
ICA
75,441,492.86
VAT
Repos
10,561,809.00
VAT
Bad Debts
13,827,499.00
Bad
Debts
23,326,358.00
ICA
37,153,857.00
The
amount of Bad Debts as calculated above seem very low compared to
actual Bad Debts in the general ledger.
You
seem to have come to the conclusion that this exercise (
which
does not require much time from anybody
)
was fruitless but
I would certainly like
to understand the above aspects better
before I can come to the same conclusion.
I
include (an) opinion herewith which covers sections 22, 10(16) and
16(3) quite clearly. His opinion in respect of s22 seems to
differ
from yours.
”
(Emphasis added)
[16]
The opinion of an attorney was attached to
the email. It is of note that Griesel does not claim that the
information sought is exactly
what was agreed to in the contract.
Instead he claims to want the information so that “
he
would like to understand
” the
aspects concerning the approach to Bad Debts. Rather than resolving
the dispute regarding the necessity of amount of
information being
sought by Sasfin from Firstrand, the contents of this email only
exacerbated that dispute. A few hours after
receiving the email
Cloete responds saying that the opinion of the attorney was no
revelation to them and that the opinion was
consonant with
Firstrand’s interpretation and application of s 22(1) of the
VAT Act. He proceeded to engage Griesel on Griesel’s
understanding of how Firstrand factored in the bad debts it endured
as a result of the repossession in the calculation of the VAT
refund
it claimed. The email is lengthy and closes with the following
paragraph:
“
To
conclude,
your mandate is to check if
something very specific
is an issue and
then following that through, if applicable (
not
mine or analyse data to identify possible anomalies
).
I think we agree that the imported services issue can now be
dismissed but with regards to your main issue please explain what
part of (the attorney’s) opinion I am missing so that we can
establish if there is any more work to be done
.”
(Emphasis added)
[17]
Cloete was concerned, and transparent about
his concern, that Griesel was straying from the terms of the contract
and that, in fact,
he was “
min(ing)
or analys(ing) data
” rather than
“
check(ing) if something very
specific was an issue.
” An hour
later, Griesel replied to the email stating, inter alia:
“
I
understand that my mandate is to check a specific issue. I will
explain the issue fully below.
All
I require is to establish what accounting entries are being processed
in the general ledger when an ICA account becomes bad
and a decision
is made to repossess an asset.
I would
think to provide me with the standard accounting mapping for that
should be easy. The alternative would be to provide me
with a small
sample of the actual accounting entries for accounts where assets
were repossessed and written off as a bad debt.
”
(Emphasis added)
[18]
Thus, on 10 September 2014 there was some
fairly intense communications between Griesel and Cloete.
[19]
On 22 September 2014 one Trevor Barber
(Barber) of Firstrand sent Griesel an extract of three random
repossession accounts to analyse.
Griesel analysed these three
samples.
[20]
He met with Cloete, Barber and others from
Firstrand on 4 November 2014 to discuss the finding that emerged from
his analysis. His
finding was that Firstrand had “
under-claimed
on VAT in two of them and over claimed in the remaining one.
”
The discussion at the meeting revealed that the problem which
presented itself one day after the contract, i.e. on 9 September
2014, had not abated. Griesel’s account of the discussion is
recorded in an email he sent to Cloete the next day. The material
contents of the email reads:
“
You
indicated that you felt that the differences found in the calculation
of VAT in the 3 sample transactions were insignificant
and that you
could see no reason to look into my enquiries about the accuracy of
the VAT calculations on bad debts any further.
…
“
I
accepted that the small sample did not prove anything conclusive. I
pointed out that my analysis of the 4 VAT returns that I have,
led me
to believe that was a substantial risk that Input VAT on Bad Debts
may be underclaimed. You answered by saying that one
could not only
look at 4 VAT returns to determine the accuracy of the calculations
and also made it clear that you would not provide
me with more VAT
returns as I requested, as you suspected me of conducting “a
fishing exercise”.
“
I
would like to make it quite clear that I am not interested in some
“fishing exercise”. My only concern is the accuracy
of
Input VAT on Bad Debts. …
The
only reason why I requested the complete VAT returns and not for
extracts explained above was because I am fully aware that
your staff
are very busy and I did not want them to conduct an exercise that I
could do easily
.
You
did agree however, that I could present a written motivation of my
views to you, that you would consider it and respond to it.
You
furthermore agreed that a further sample of at least 10 transactions
would be provided to me, including some form 2011 and older
before
some system changes were implemented.
I
undertake to submit the abovementioned written explanation and
motivation to within 3 days of receiving the additional sample
of
transaction.
”
(Emphasis added)
[21]
It is important to note that Griesel
clearly understood that the contract did not entitle Sasfin to the
detailed VAT returns of
WesBank for five years. He claimed to have
only sought this initially because he knew that Firstrand’s
staff were very busy.
[22]
Cloete responded the same day to Griesel’s
email. He agreed that he committed Firstrand to provide a further 10
random samples
for Griesel “
to
interrogate
” and recorded his
understanding of the discussion as well as of the contract. He wrote,
inter alia
:
“
Against
this backdrop I was just pointing out that your restricted mandate
from the beginning was to check if a very specific problem
which you
believed existed (and which was supported by the (attorney’s)
opinion you provided) did in fact exist.
Even
if the high-level tests suggested a
potential
problem, this does not extend this mandate into a full investigation.
It
now appears that there is no specific technical aspect needs to be
confirmed after all. You were not in a position to take us
through
your calculations or theory when we met yesterday but requested that
you be allowed to do so at a future date. We agreed
to this on the
understanding that you would send us your paper in advance
”
(Emphasis added).
[23]
On 21 November 2014 Griesel met Cloete and
others from Firstrand once again. Nothing of material emerged from
this meeting.
[24]
On 2 December 2014 Griesel sent Cloete and
Barber a spreadsheet reflecting his findings on one of the samples
sent to him. On 4
December 2014 he emailed his findings on six
further samples. His analyses revealed that there were minor
differences between his
calculations and those of Firstrand.
According to his calculations of the first three samples Firstrand
over-claimed a net amount
of R24.00, while his calculations of the
other six samples showed an even smaller variance between his
calculation and that of
Firstrand.
[25]
Griesel met Cloete on 22 January 2015 to
discuss the findings of Griesel. At this meeting Cloete informed
Griesel that he disagreed
with Griesel’s calculation of VAT in
respect of bad debts.
[26]
On 29 January 2015 Griesel presented his
report. The Summary of his report reads:
“
Differences
were found in the calculation of VAT in respect of all 9
transactions.
Individually the
differences are insignificant
but in
the bigger picture, the numbers are large. It is also important in my
view that calculations such as these should be done
with absolute
accuracy. There is also a risk of penalties on amounts over claimed.
Should
you decide to proceed with an in depth review of VAT calculation on
Bad Debts, we should be able to complete the review within
approximately 2 months.
”
(Emphasis
added)
[27]
Apart from stating that the individual
differences between his calculation of WesBank’s input VAT and
WesBank’s own
calculation being “
insignificant”
,
he agreed that the initial contract did not entitle Sasfin to the VAT
returns of WesBank for five years prior to the date of the
contract.
Moreover, of fundamental importance is his statement: “
Should
you decide to proceed with an in depth review of VAT calculation on
Bad Debts, we should be able to complete the review within
approximately 2 months.
” This is
really an invitation to Firstrand to conclude a new contract or to
amend the existing one. If accepted it would
result in two crucial
changes to the existing one: firstly, it would result in an “
in
depth review of VAT calculation on Bad Debts
”,
and secondly, Sasfin would now be given two months, rather than the
two days referred to in the contract, to complete the
task.
[28]
That was the last time Cloete or anyone
else from Firstrand communicated with Griesel. The new proposal of
Griesel did not find
favour with Firstrand. Firstrand decided that
the process envisaged in the contract had been exhausted. It decided
to terminate
the contract. Cloete was unsure as to whom he should
communicate this decision to so he sent an email to Jones of Sasfin
seeking
clarity on the role of Griesel. In this email he specifically
informed Jones that Firstrand wished to terminate the contract, (“
end
the engagement
” in Cloete’s
words) He was informed by Jones that the contract was with Sasfin and
that Griesel while not an employee
of Sasfin acted for and on behalf
of Sasfin in this matter. Cloete accepted this.
[29]
On 2 March 2015 Jones was sent, per email,
a termination letter, the material contents of which read:
“
We
wish to advise that Mr Griesel has completed his review and that the
specific concern which gave rise to the appointment proved
to be
unjustified.
Accordingly,
we regard the matter as finalised and the engagement terminated.
”
[30]
Sasfin did not contest this interpretation
of Firstrand. Neither Griesel nor Jones responded to this letter. It
did not claim that
Firstrand had no right to terminate the contract
or that Firstrand breached the contract by not providing it with the
full record
of all the VAT Returns of Wesbank from 2010 to date of
contract, or even just by failing to provide it with more samples of
the
VAT Returns of WesBank during this period. However, on 23 July
2015 Sasfin, through its attorneys, requested in writing the
information
referred to in [1] above. It claims that this
information, which is exclusively in the possession of Firstrand, is
required by
it in order for it to be able to exercise its rights. The
right Sasfin relies upon is the right “
to
claim an amount against
”
Firstrand, but as it is unsure whether it actually has a case against
Firstrand, it “
seeks to protect
itself by determining whether or not it should institute action
against.
” The information was
requested in terms of s 53 of the PAIA. Firstrand, we know, have
refused to provide it.
Sasfin’s
claim that it ‘requires’ the information
[31]
Sasfin’s
claim against Firstrand is contractually based. It is founded on an
alleged breach of contract by Firstrand. This
alleged breach, it
says, empowers it with a ‘right’ – the right to
seek damages it may have suffered as a result
of Firstrand’s
alleged breach. To establish its ‘right’ in these
circumstances Sasfin only has to put up facts
to show that it has a
prima
facie
right to the information. Furthermore, as Sasfin claims that it
‘requires’ this information in order to establish whether
it actually has a claim, it need not show that the information it
seeks is ‘essential’ or ’necessary’
[3]
for it to pursue its claim. The information need only be “
reasonably
required
”.
[4]
It
must, nevertheless, lay a proper foundation for why the information
is reasonably required.
[5]
Accordingly, to determine whether Sasfin actually mounts the hurdle
of showing that it has a
prima
facie
right to the information and that it ‘requires’ the
information to pursue this claim it is necessary to have regard
to
the above facts.
[6]
[32]
Sasfin claims that Firstrand breached the
contract by failing to provide it with all the necessary information
for it to perform
its obligations. As it was unable to complete the
exercise it was contracted to do, it suffered a loss. It says that
while Firstrand
provided it with some samples which allowed it to
commence performing its obligations these samples were too small for
it to meaningfully
complete the exercise. Firstrand, it claims,
obstructed it by only willing to relinquish a small sample of the
information data,
when the amount of information that was to be
provided is not limited in the contract.
[33]
Sasfin’s claim about the contract not
limiting the amount of information to be provided is, however, not
entirely correct.
The contract specifically states that the “
process
should not require more than two days
”
and “
(t)he information required is
of a very limited and specific nature and little time will be
required from your staff.
” While
the contract did not specify the exact amount of information that
would be needed by Sasfin, it certainly recorded
that it would be
“
very limited and specific
”.
This is understandable for the issue was not whether Firstrand may
have miscalculated all the input VAT it reclaimed over
the years, but
whether Firstrand adopted a correct approach in its calculation of
the input VAT. The approach it adopted can be
gleaned from one, or if
need be a few, of the VAT returns submitted by Firstrand to the South
African Revenue Services. There is
no need to examine each and every
VAT return submitted by Firstrand to establish the approach adopted
by Firstrand. Sasfin’s
version, to quote, from the founding
affidavit
is that
“
(t
)he
agreement was concluded on the basis of a specific issue of principle
(based on the opinion one (the attorney) which, if applied
to the
(Firstrand) would result in a considerable VAT saving.
”
This theme is continued in the replying affidavit, where the
following is said:
“
..it
was simply a question of whether or not the principles that are set
out in the founding affidavit regarding VAT were properly
applied
.”
The
proposal was not an offer to audit or examine each and every return
submitted by Firstrand. It was an offer to examine the “
limited
and specific
” information to
establish whether the approach adopted by Firstrand was legally
sound. Sasfin referred to this as an issue
of principle. It is this
offer that was accepted and no other. To achieve this there is no
need, nor does the contract call, for
an examination of each and
every VAT return submitted by Firstrand (whether for the five years
referred to in the notice of motion
or for however long), prior to
the conclusion of the contract. Moreover, nowhere in the
contract is there any stipulation
that Firstrand was to provide all
the information sought so that Sasfin could examine them all to see
if there was a significant
amount that Firstrand could reclaim for
Input VAT with regard to all sales of repossessed assets by WesBank.
The contract does
not entitle Sasfin to any more information than was
already furnished to it by Firstrand.
[34]
Thus, in my judgment the facts revealed
thus far do not allow for the conclusion that Sasfin has succeeded in
presenting a
prima facie
case though open to doubt that it has a right to the information. It
has not shown, even on the low threshold of a
prima
facie
case though open to doubt, that
Firstrand had incorrectly calculated the Input VAT it claimed for
sales of repossessed assets by
WesBank. At best for Sasfin it was
only able to show that there were minor discrepancies between the way
it calculated this Input
Vat and the way Firstrand did. On Sasfin’s
own version the discrepancies were not significant. In my judgment it
was furnished
with sufficient information to conduct the exercise it
contracted for.
[35]
It is particularly noteworthy that when the
exercise contracted for was complete and failed to yield the result
anticipated by Sasfin,
Sasfin, through Griesel, proposed a new
contract: one that involved “
an in
depth review of VAT calculation on Bad Debts
”
and that would take “
approximately
2 months
” to complete. Firstrand
made clear that it was not in the market for this contract. Hence,
the case that Sasfin wants to
make out is the one that does not
exist. There has been no breach of the contract to provide
information to allow for “
an in
depth review of VAT calculation on Bad Debts
”,
for there is no such a contract. In a sentence, there can be no
breach of a non-existent contract.
[36]
Once
Sasfin fails to make out a
prima
facie
case that it has a right to the information then
caedit
questio
:
it has to fail in its quest to have Firstrand compelled to provide
it. Put differently, it has failed to show that the information
is
reasonably required in order to protect or exercise a right.
[7]
[37]
In the result, the application is to be
dismissed. Both parties, correctly, agreed that costs should follow
the result.
Order
[38]
The application is dismissed with costs
Vally
J
Date
of hearing: 19 May 2016
Date
of judgment: 11 August 2016
For
the applicant: PJ Van Blerk SC
Instructed
by: JS Salant Attorneys
For
the respondent: RM Pearse and S Kazee
Instructed
by: Norton Rose Fullbright South Africa Inc
[1]
Section
32(1)(b) of the Constitution of the Republic of South Africa Act 108
of 1996 (the Constitution)
[2]
All
quotations from correspondences between the parties’
representatives are verbatim. Grammatical and other errors have
been
left intact.
[3]
Unitas
Hospital v Van Wyk and Another
[2006] ZASCA 34
;
2006 (4) SA 436
(SCA) at
[16]
[4]
Id
at [17]
[5]
Clutchco
(Pty) Ltd v Davis
2005 (3) SA 486
(SCA) at [12]
[6]
Id
at [6], where the following is said: “Generally speaking, the
question whether a particular record is ‘required’
for
the exercise or protection of a particular right is inextricably
bound up with the facts of that matter.”
[7]
Clutchco
(
supra
)
[13]