Wingate-Pearse v Commissioner for the South African Revenue Service (29208/15) [2019] ZAGPJHC 218; 2019 (6) SA 196 (GJ) ; [2019] 4 All SA 601 (GJ) (17 July 2019)

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[2019] ZAGPJHC 218
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Wingate-Pearse v Commissioner for the South African Revenue Service (29208/15) [2019] ZAGPJHC 218; 2019 (6) SA 196 (GJ) ; [2019] 4 All SA 601 (GJ); 82 SATC 21 (17 July 2019)

IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION,
JOHANNESBURG)
Case
no: 29208/15
In
the matter between:
MARTIN
FRASER
WINGATE-PEARSE
Applicant
and
COMMISSIONER FOR THE
SOUTH AFRICAN
REVENUE
SERVICE
First
Respondent
JOHANNES
HENDRIKUS VAN LOGGERENBERG
Second Respondent
IVAN
VISVANATHAN
PILLAY
Third Respondent
MINISTER
OF
FINANCE
Fourth Respondent
MINISTER
OF
POLICE
Fifth Respondent
MINISTER
OF STATE
SECURITY
Sixth Respondent
NATIONAL
DIRECTOR OF PUBLIC PROSECUTIONS
Seventh Respondent
Case
Summary:
Revenue - Income Tax - Income Tax Act, 58 of 1962 (s
79(1)) - Tax Administration Act, 28 of 2011 (s 92 read with s 99(1)
and (2)
- SARS empowered to raise an additional assessment if it 'is
satisfied' of the existence of a particular state of affairs -
although
the words 'is satisfied' confer a subjective discretion on
SARS, the discretion is not unfettered and an objective approach must

be adopted to that subjective discretion - SARS, therefore, must show
that its subjective satisfaction was based on reasonable
grounds.
Furthermore, given the wording of s 79(1) of the Income Tax Act, and
presently of 92 read with
s 99(1)
and (2) of the
Tax Administration
Act, and
the subjective nature of the discretion conferred on SARS,
the scope for judicial review is limited.
JUDGMENT
MEYER
J
INTRODUCTION
[1]
This litigation emanates from additional estimated income tax
assessments, which the first respondent, the Commissioner for
the
South African Revenue Service (SARS), issued during April 2006 in
respect of the 1998 to 2005 years of assessment (the relevant
period
of assessment) of the applicant, Mr Martin Fraser Wingate­
Pearse. SARS investigated his tax affairs, established non-compliance

and estimated his alleged under-declared taxable income for the
relevant period of assessment in terms of s 78 of the Income Tax
Act,
58 of 1962 (the Income Tax Act). Where applicable, SARS re-opened the
original assessments older than three years as provided
for in s 79
of the Income Tax Act. Mr Wingate-Pearse objected to the assessments,
which objections were partially disallowed, and,
on 1 August 2007, he
filed a notice of appeal to the tax court against the partial
disallowance of his objections. The dispute
before the tax court has
not yet been finalised (the tax appeal) .
[2]
Almost a decade later, on 17 August 2015, Mr Wingate-Pearse launched
the present review application. In terms of the notice
of motion he
seeks a mix of declaratory and review orders in respect of various
alleged actions and decisions taken by SARS. He
also seeks a
declaratory order, a mandamus and a structural interdict against SARS
and the fourth respondent, the Minister of Finance
(the minister). On
19 April 2018, Mr Wingate-Pearse instituted an interlocutory
application in which he applies for his notice
of motion in the
review application to be amended and for leave to file a
supplementary founding affidavit, which affidavit was
simultaneously
filed. In terms of the proposed amendment, he further seeks,
inter
alia,
the review and setting aside of SARS'
decisions
to
issue the additional estimated assessments for the relevant period
under s 6(1) of the Promotion of Administrative Justice Act,
3 of
2000 (PAJA), an extension, in terms of s 9(1), of the 180-day period
prescribed in terms of s 7(1), a declaration that, insofar
as he
seeks the review and setting aside of the impugned actions and
decisions under the principle of legality, that the delay
in
initiating the review application was not undue, or if it is held to
be undue, that condonation be granted for the undue delay,
and for a
declaratory order that the burden to prove that SARS was entitled to
issue the additional estimated assessments rests
on SARS and that it
has the duty to begin with the leading of evidence in the tax appeal.
[3]
SARS and the minister oppose the review application. SARS also
opposes the interlocutory application: First on the grounds of

procedural irregularities. Second, it opposes the interlocutory
application on the same grounds it is opposing the review
application.
Third, that the amendment would still render the review
application subject to preliminary objections of lack of jurisdiction
and
lis pendens.
Because of the overlapping grounds of
objection, counsel agreed that I should hear and determine both
applications at the same time.
I propose to deal with the relief
claimed in terms of the notice of motion in its unamended form before
dealing with the additional
relief that is sought to be introduced in
terms of the proposed amendment. But, first the background facts,
which are largely uncontroversial.
BACKGROUND
FACTS
[4]
Mr Wingate-Pearse is a businessman. He is a shareholder,
inter
alia,
in Carnilinx (Pty) Ltd (Carnilinx), a mid-tier cigarette
manufacturer, and a member and director of various other entities
with
interests in the clothing industry. With regard to his business
activities, he states in his second supplementary affidavit:
'The mainstay of my
business activities has since the 1980s been the importation from
different European countries and the United
States of America of
second-hand clothing and the wholesale distribution of such clothing
in South Africa. I had identified suppliers
in various European
countries and the USA where I bought second-hand clothing in bulk.
These were baled and the bales stuffed into
containers that were
transported by sea to South Africa. The containers were unpacked at
warehouses where the merchandise was sold
to traders who distributed
it to points of sale, mostly in rural areas. I also pursued other
interests and my businesses and interests
were housed in various
corporate entities, to which I refer in what follows as "the
legal entities'".
[5]
SARS investigated Mr Wingate-Pearse's tax affairs from early to
mid-2002. It applied for a warrant of search and seizure in
terms of
s 740 of the Income Tax Act and s 570 of the Value Added Tax Act, 89
of 1991. (These provisions have since been repealed.
Since the coming
into force of the Tax Administration Act, 28 of 2011 (the
Tax
Administration Act), on
1 October 2012, SARS' power to apply for
warrants for search and seizure is now contained in
Part D
of Chapter
5 of that Act (sections 58 to 66).) Such application was brought in
the high court before a judge in chambers, and the
warrant for search
and seizure was issued on 30 November 2004 (the warrant). SARS
executed the warrant from 14 April to 21 April
2005. It also
conducted a search in terms of s 4 of the Customs and Excise Act, 91
of 1964, simultaneously with the execution of
the warrant. Searches
were also conducted at Mr Wingate­ Pearse's residence. On 14 July
2005, SARS supplied an inventory and
index of the documentation
seized to Mr Wingate-Pearse's mother, Ms MA Wingate-Pearse, who acted
on his behalf; approximately 2
000 documents were seized. SARS
instructed Price Waterhouse Coopers (PWC) to assist in considering
the seized documentation and
to conduct an audit in respect of
inter
alia
Mr Wingate-Pearse's tax affairs. SARS estimated that he had
grossly under-declared his taxable income for the relevant period of

assessment. SARS' estimate was based on a capital reconciliation
(colloquially known as a 'lifestyle audit') - a process by which
it
considered whether his declared income, including his non-taxable
accruals and receipts, were sufficient to have financed the
growth of
his net asset position, taking his living expenses into account.
According to SARS, it established a substantial shortfall,
indicating
that Mr Wingate-Pearse had income from sources that he failed to
declare in his tax returns for the relevant period
of assessment.
[6]
During April 2006, SARS issued additional income tax assessments to
assess Mr Wingate-Pearse to tax on the estimated under-declared

taxable income for the 1998 to 2005 years of assessment. This was
done in terms of s 78(1) of the Income Tax Act, which at the
time
provided that '[i]n every case in which any person makes default in
furnishing any return or information or the Commissioner
is not
satisfied with the return or information furnished by any person, the
Commissioner may estimate either in whole or in part
the taxable
income in relation to which the return or information is required'.
This resulted in Mr Wingate-Pearse's total assessed
tax liability
increasing from an amount of R350 142.92 to an amount of R41 725
868.29 for the relevant period of assessment.
[7]
On 27 June 2006, Mr Wingate-Pearse filed notices of objection against
the additional estimated assessments. SARS partially allowed
and
partially disallowed his objections. On 23 March 2007, SARS notified
him accordingly and, to give effect to the partial allowance,
it
issued reduced assessments to him for the relevant period. His total
assessed tax liability was reduced to R22.7 million. On
1 August
2007, Mr Wingate-Pearse filed notices of appeal to the tax court
against the partial disallowance of his objections. SARS
considered
his notice of appeal and, on 14 May 2008, issued further reduced
assessments for the relevant period of assessment.
His total assessed
tax liability was further reduced to R9 267 630. SARS filed its
statement of grounds of assessment on 13 June
2008 and Mr
Wingate-Pearse his statement of grounds of appeal on 11 March 2009.
[8]
On 31 May 2007, Mr Wingate-Pearse applied for amnesty in terms of the
Small Business Amnesty and Amendment of Taxation Laws
Act, 9 of 2006,
and the Second Small Business Amnesty and Amendment of Taxation Laws
Act, 10 of 2006. SARS granted him amnesty
on 21 February 2008. On 12
March 2009, it caused a tax judgment to be entered against him in
terms of s 91(1)(b) of the Income
Tax Act. Its amnesty unit advised
him, by letter dated 12 March 2009, that amnesty had been granted and
that the relevant statutory
provisions excluded the amounts that had
been assessed prior to the submission of his application for amnesty.
On 13 March 2009,
Mr Wingate-Pearse launched an urgent application
against SARS in this court under case number 10991/09,
inter alia
seeking an order interdicting SARS from taking collection steps
based on the tax judgment. The matter was settled and their written

settlement agreement made an order of court on 20 March 2009. In
terms of the settlement, SARS would hold back recovery steps pending

the outcome of the tax appeal and Mr Wingate-Pearse would make an
interim payment and cede,
in securitatem debiti,
his right,
title and interest in and to his shareholding and members' interest
in some eleven close corporations, which were also
parties to the
settlement agreement.
[9]
At a pre-trial conference that was held 13 September 2010 as part of
the tax appeal, Mr Wingate-Pearse informed SARS that he
intends to
raise the following points
in limine
before the tax court: (a)
whether the small business tax amnesty granted to him invalidates the
additional estimated assessments
for the relevant period of
assessment and renders the tax appeal academic; (b) whether the
search and seizure was unlawful and
any document or step taken
pursuant thereto inadmissible; and (c) whether his constitutional
rights, including his rights as a
taxpayer, were infringed through
the search and seizure and the appeal as a result incapable of
prosecution. SARS advised him of
its stance that it considered that
the tax court does not have the necessary jurisdiction to hear the
three points
in limine.
This was conceded by Mr
Wingate-Pearse, and at a further pre-trial conference that was held
on 2 November 2010, he gave notice that
he intends to request a
postponement of the tax appeal that was set down for hearing from 15
to 19 November 2010, in order to pursue
his points
in limine
in
a court with the necessary jurisdiction. The tax appeal, therefore,
was postponed and Mr Wingate-Pearse was given an opportunity
to
launch his proposed review application.
[10]
On 15 February 2011, Mr Wingate-Pearse caused a review application
under case number 10498/2011 to be issued in the North Gauteng

Division of the high court (the first review application). Apart from
seeking an extension of the time period for the institution
of the
first review application in terms of s 9(1) of PAJA, or condonation
for the delay in bringing the application, and costs,
he only sought
the review and setting aside of SARS' decisions to issue the
assessments and/or not to withdraw them once amnesty
had been granted
to him and, in the alternative, for such decisions to be declared in
conflict with the constitutional principle
of legality and thus
unconstitutional, unlawful and invalid. In dismissing the first
review application on 2 May 2012, Prinsloo
J noted that Mr
Wingate-Pearse elected only to rely 'on the first of the three
grounds, clearly abandoning the other two grounds'.
[11]
The tax appeal was set down for hearing on 4 February 2013, and a
further pre-trial conference was held on 11 December 2012.
On 4
February 2013, the tax appeal was postponed due to the unavailability
of Mr Wingate-Pearse's counsel. It was again set down
for hearing
from 13 to 20 November 2014, but again postponed. It was thereafter
set down for hearing for the period 9 to 16 February
2015. At the
commencement of the hearing on 9 February 2015, Mr Wingate-Pearse
sought a ruling on the question of the onus and
the duty to begin
adducing evidence. The matter was argued before Khumalo J, who
reserved his judgment, which was handed down on
23 April 2015.
Khumalo J found against Mr Wingate-Pearse on the question of onus and
duty to begin. On 26 August 2016, Khumalo
J granted him leave to
appeal to the Supreme Court of Appeal against his judgment and
ruling. The appeal was heard on 26 August
2016, and, in striking the
matter off the roll and ordering Mr Wingate-Pearse to pay SARS' costs
including those of two counsel,
the Supreme Court of Appeal held that
an interlocutory ruling on onus and the duty to begin is not a
decision in terms of
s 129(1)
and (2) of the
Tax Administration Act,
and
not appealable .
[12]
Ms Belinda Walter, an attorney, represented Carnilinx since June
2012. From 2009, her law practice has been focusing on the
tobacco
industry: advising clients on customs and excise issues and matters
pertaining to bonded warehouses for excisable items
such as
cigarettes; assisting the State Security Agency (SSA) in initiatives
relating to crimes and syndicates, particularly in
the tobacco
industry; and, in conjunction with the SSA, she initiated the
establishment of the Fair-Trade Independent Tobacco Association

(FITA) in June 2012. Through being a shareholder in Carnilinx, Mr
Wingate-Pearse met Ms Walter in May 2013, whereafter she also

assisted him in the tax appeal, although he also retained his
attorneys of record. She met the second respondent, Mr Johann van

Loggerenberg, for the first time on 4 September 2013, in her capacity
as the chairperson of FITA. He was employed by SARS from
1999 until
his resignation on 4 February 2015. The two of them became involved
in a romantic relationship, which ended during May
2014. It is the
evidence of Ms Walter on which Mr Wingate-Pearse strongly relies in
support of his allegations that SARS employed
illegal intelligence
gathering measures against him, to which I return.
[13]
On 17 August 2015, Mr Wingate-Pearse launched the present (second)
review application. SARS caused the record to be filed for
purposes
of the review application on 14 September 2015. Although not opposing
the review application, Mr Van Loggerenberg (the
second respondent)
and the third respondent, Mr Ivan Visvanathan Pillay, filed their
answering affidavits on 2 and 7 October 2015
respectively. On 30
October 2015, Mr Wingate-Pearse demanded that the record be
amplified, which SARS did on 20 November 2015.
He then filed his
first supplementary founding affidavit on 6 April 2016. SARS filed
its answering affidavit on 28 September 2016
and the minister's
answering affidavit was filed on 9 November 2016.
[14]
The tax appeal was again set down for hearing from 22 November to 5
December 2017, and a further pre-trial conference was held
on 27
September 2017. The registrar of the tax court reduced the days for
which the tax appeal was set down to one week due to
the
unavailability of a judge to preside for longer than a week during
that period. Fourie J, who was allocated to preside in the
matter,
required an undertaking from the parties that it would be finalised
within a week, which undertaking SARS could not give.
The tax appeal
was therefore postponed.
[15]
Mr Wingate-Pearse's interlocutory application in which he applies for
the notice of motion in the review application to be
amended and for
leave to file a second supplementary affidavit, was issued on 19
April 2018. His replying affidavit in the review
application was
filed on 13 July 2018. On 10 October 2018, SARS filed its opposing
affidavit in the interlocutory application.
Mr Van Loggerenberg, who,
due to financial constraints, was unrepresented when his initial
answering affidavit was prepared and
filed, filed a further (and
proper) affidavit on 15 November 2018. On 29 April 2019, SARS filed
an interlocutory application for
a further affidavit to be admitted
in evidence, essentially to introduce the findings of the
Presidential Commission of Inquiry
headed by retired Judge Nugent
pertaining to a 'rogue unit' at SARS. This interlocutory application
is unopposed. By arrangement
with Deputy Judge President Mojapelo of
this division, the review and interlocutory applications were
specially allocated for simultaneous
hearing during the week
commencing on 20 May 2019.
[16]
On Friday, 16 May 2019, shortly before the commencement of the
hearing of the review and the interlocutory applications on
Monday,
20 May 2019, Mr Wingate­ Pearse gave notice that he was no longer
pursuing
inter alia
the declaratory order, mandamus and
structural interdict sought against SARS and the minister (paragraphs
1, 2 and 3 of the notice
of motion). Although his counsel, Adv AJ
Daniels SC, informed me that he did not hold instructions to abandon
the balance of the
relief claimed in terms of the unamended notice of
motion, he confined his argument to the relief that is sought to be
introduced
in terms of the proposed amendment, except the relief
relating to the onus and duty to begin.
RELIEF
CLAIMED
[17]
It is Mr Wingate-Pearse's case that he was a victim of what he
described as SARS' 'covert intelligence unit' that was known
as
'Tiger Group', 'Special Projects Unit' or 'SPU', 'National Research
Group' or 'NRG' or 'HRIU' (HRIU). Messrs Van Loggerenberg
and Pillay
were, according to him, linked to the HRIU. He alleges that the HRIU
was established to conduct illegal covert intelligence
operations and
that Mr van Loggerenberg, on behalf of SARS, conducted covert
surveillance operations of and concerning him and
he intercepted and
monitored his communications. He contends that the operations of the
HRIU infringed several of his constitutionally
protected rights. The
relief sought in paragraphs 1, 2, 3 and 4 of the notice of motion, so
he contends, is appropriate relief
to vindicate the rule of law.
[18]
In paragraphs 1, 2 and 3 of the notice of motion, he sought a
declaratory order that the establishment by SARS of the investigating

unit, HRIU, was without statutory authority, unlawful, inconsistent
with the Constitution and invalid, and that HRIU abused its
power and
resources by engaging in activities which it had no lawful authority
to perform. He then sought a mandamus against SARS
and the minister,
jointly and severally, to investigate and inquire into the
activities, funding and management of HRIU. He also
sought a
structural interdict against SARS and the minister to report to this
court by means of affidavit evidence on the results
of their
investigations and inquiries. In paragraph 4 Mr Wingate-Pearse seeks
a declaratory order that the conduct of SARS and
of Mr Van
Loggerenberg in respect of him 'was biased and/or prejudicial and/or
discriminatory, and accordingly inconsistent with
the Constitution
and invalid', which relief he did not abandon .
[19]
Mr Wingate-Pearse contends that the search and seizure was unlawful
and unconstitutional and that all documents obtained pursuant
thereto
were illegally obtained and all actions taken throughout the process,
illegal and invalid. He states that he and Mr Norbert
Glenn Agliotti
commenced a working relationship in 1988 and thereafter also met
socially from time to time until 1997, when he
discovered that Mr
Agliotti together with the then National Commissioner of the South
African Police Service, the late Mr Jacob
Selebi, had been competing
directly with his business interests. He states that some time after
their fall-out he discovered that
Mr Agliotti had given 'false and
maliciously motivated information' about him to Superintendent SJ
Taljaard of the Organised Crime
Unit, SAPS and also to Mr Selebi.
That false information, so he alleges, in turn was conveyed to SARS.
The relief which he seeks
in paragraphs 5 - 8 of the notice of
motion, he contends, is appropriate relief to correct the illegal
conduct of SARS. Furthermore,
as I have mentioned, he accuses SARS of
having employed illegal intelligence gathering measures against him.
[20]
In paragraph 5 of the notice of motion Mr Wingate-Pearse accordingly
seeks a declaration that the following conduct of SARS
vis-a-vis
him be declared inconsistent with the Constitution and invalid:
(5.1) in investigating him on the basis of false information provided

by Mr Selebi, Supt SJ Taljaard and Mr Agliotti and information
arising from the unlawful monitoring and interception of his
communications,
including information intercepted by Mr Van
Loggerenberg from Ms Walter; (5.2) in applying for the warrant on the
basis of that
information; (5.3) in executing the warrant; (5.4) in
making a determination in terms of s 78 of the Income Tax Act that he
had
defaulted in furnishing information or in not being satisfied
with the returns or information that he had furnished; (5.5) in
estimating
his taxable income for the 1998 to 2005 years of
assessment in terms of s 78 of the Income Tax Act in the total amount
of R25 634
610 on 19 April 2006, and in the reduced amounts of R14
014 048 on 23 March 2007 and R12 063 868 on 14 May 2008; (5.6) in
making
a determination in terms of s 79(1) of the Income Tax Act that
the amounts of income for the relevant period of assessment had not

been assessed to tax owing to fraud, non-disclosure of material facts
or misrepresentation by him; and (5.7) in utilizing any or
all of the
false and intercepted information in preparation for or during the
conduct of the tax appeal.
[21]
Paragraph 6 of the notice of motion seeks the review and setting
aside of SARS' decisions to apply for the warrant, to unlawfully

investigate Mr Wingate-Pearse and to unlawfully surveil and intercept
his communications. Paragraph 7 seeks a declaration that
the evidence
obtained by SARS on the strength of the warrant was obtained
unlawfully, unconstitutionally, in a manner that violated
his right
to privacy and is inadmissible on the basis that it will render the
tax appeal unfair to him and will be detrimental
to the
administration of justice. Paragraph 8 seeks the review and setting
aside of SARS' investigations of him, and the results
of such
investigations, where they were based on information provided by Mr
Selebi, Supt Taljaard and Mr Agliotti and obtained
as a result of the
unlawful monitoring and interception of his communications and those
of Ms Walter.
[22]
In terms of the proposed amendment, Mr Wingate-Pearse
inter alia
seeks to introduce the following additional relief:
'7.5 Declaring that:
(a)
The first respondent [SARS] has the burden to prove
that it was entitled to issue the said additional assessments in
terms of section
78 of the Income Tax Act 58 of 1962 and
section
99(1)
of the
Tax Administration Act 28 of 2011
in the tax appeal
pending in the Tax Court . . . and;
(b)
The first respondent has the duty to commence with the
leading of evidence in those proceedings.
[23]
At the eleventh hour before the commencement of the hearing of the
review and interlocutory applications, Mr Wingate-Pearse
also gave
notice that he was no longer pursuing the above-quoted relief
relating to the onus and duty to begin. That is not surprising,

because the issue relating to the onus and duty to begin had already
been dealt with by the tax court, which made a ruling directing
that
the burden of proof lies with the appellant in the tax appeal, Mr
Wingate-Pearce, and, on appeal to the Supreme Court of Appeal,
it was
held, as I have mentioned, that an interlocutory ruling on onus and
the duty to begin is not a decision in terms of
s 129(1)
and (2) of
the
Tax Administration Act, and
not appealable. The declaratory
relief relating to the onus and duty to begin that he sought thus
became moot and, if it has to
arise, should only arise before the tax
court and not before this court; otherwise it will lead to piecemeal
litigation. The further
anomaly is that the high court was requested
to issue binding orders concerning pending litigation, directing how
another court,
i.e. the tax court, should conduct its proceedings.
This ought not to be countenanced.
[24]
The further additional relief which Mr Wingate-Pearce seeks in terms
of the proposed amendment is the addition of a new paragraph
6.4 to
the notice of motion in which he claims the review and setting aside
of SARS' decisions to issue additional estimated assessments
for the
1998 to 2005 years of assessment and the addition of the following
new paragraph 6B:
'6B.1 Declaring that the
delay in bringing the application for the relief set out in
paragraphs 2, 5 and 6 above was not unreasonable,
alternatively, that
condonation be granted for such delay in the interests of justice;
6B.2 in the alternative to paragraph
68.1 and in the event of it being held that the acts referred to in
paragraphs 4, 5 and 6 constitute
administrative action as defined in
section 1 of the Promotion of Administrative Justice Act 3 of 2000
("PAJA") and that
the present proceedings are for judicial
review in terms of section 6(1) of PAJA;
6B.2.1. that the proceedings pending
in the Tax Court between the applicant and the first respondent under
case number 1247/2008
that were commenced with the applicant's
objection delivered on 15 May 2006 in which the issues raised in the
said paragraphs 4,
5 and 6 above were raised, are parallel
proceedings to this application and were instituted within 180 days
from:
(a)
26 April 2005, being the date on which the applicant was informed of
the application for the search warrant referred to in paragraph
5.2
above;
(b)
19 April 2005 being the date on which the warrant was executed, as
alleged in paragraph 5.3 above;
(c)
19 April 2006 being the date on which the estimated assessments
referred to in paragraph 5.5 above, were issued, alternatively
6B.2.2. that the period of 180 days
referred to in section 7(1) of PAJA be extended to 17 August 2015,
the date of the institution
of these presents.'
MATERIAL
DISPUTES OF FACTS
[25]
The central themes underlying the substantive relief claimed is
firstly the alleged illegal intelligence gathering measures
that
SARS, through its HRIU, allegedly employed against Mr Wingate-Pearse.
He relies heavily on the affidavit of Ms Walter wherein
she
inter
alia
states that Mr Van Loggerenberg told her 'in no uncertain
terms that he had, on behalf of SARS, intercepted and monitored [Mr
Wingate-Pearse's]
communications'. Secondly, he again raises the
alleged unconstitutionality and illegality of the search and seizure
operation that
followed upon the issuing of the warrant by the high
court on 30 November 2004, and the alleged inadmissibility of all
evidence
obtained as a result thereof. SARS, so Mr Wingate-Pears
argues, was not legally entitled to rely on the documents seized in
its
decision to issue additional estimated assessments for the
relevant period of assessment; such documents could not establish the

required satisfaction as contemplated in s 79(1) Income Tax Act for
SARS to make additional assessments.
[26]
But this being motion proceedings in which final relief is sought,
SARS' version should be adopted as the yardstick in determining

whether Mr Wingate-Pearse can succeed with the relief he seeks.
(Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984
(3) SA 6341.)
Motion proceedings in which final relief is sought
'cannot be used to resolve factual issues because they are not
designed to determine
probabilities'
(per
Harms JA in
National
Director of Public prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at
2900 -E). I, therefore, have to accept the facts alleged by SARS,
unless they constitute bald or uncreditworthy denials
or are palpably
implausible, far­ fetched or so clearly untenable that they could
safely be rejected on the papers. Such finding
'occurs infrequently
because courts are always alive to the potential for evidence and
cross-examination to alter its view of the
facts and the plausibility
of the evidence.
(Media 24 Books (Pty) Ltd v Oxford University
Press
Southern Africa (Pty) Ltd
2017 (2) SA 1
(SCA) at
18A-B). That test for rejecting the facts alleged by SARS is not
satisfied.
[27]
HRIU was established in 2007 and disbanded in October 2014, weeks
after Mr Tom Moyane was appointed as the commissioner for
SARS. The
seven-member unit reported to Mr Van Loggerenberg, who, in turn,
reported to one of SARS' most senior employees at the
time, Mr Gene
Ravele. The unit was later referred to in the media as the 'rogue
unit'. In support of his accusations against HRIU,
Mr Wingate-Pearse
relies on a report of a panel chaired by Adv Sikhakhane SC regarding
the establishment and activities of HRIU
(the Sikhakhane report). On
28 April 2015, the SARS Advisory Board, chaired by Judge Kroon,
issued a media statement on the Sikhakhane
report, saying that the
establishment of HRIU was unlawful. Based
inter alia
on the
Sikhakhane report, Mr Wingate-Pears accuses SARS of committing
illegal activities through HRIU, which ultimately resulted
in the
issuing of the additional estimated assessments that are the subject
of this review. He
inter alia
contends that these review
proceedings are appropriate, because '[t]he tax appeal would be
limited to the tax calculations, whilst
in truth the proverbial
elephant in the room, namely SARS' illegal conduct, would escape
scrutiny'.
[28]
However, the Commission of Inquiry into Tax Administration and
Governance by SARS appointed by President Cyril Ramaphosa and
chaired
by retired Judge Nugent (the Commission), made findings in its final
report that support SARS' stance that Mr Wingate-Pearse's
allegations
about the existence of a rogue unit within the ranks of SARS are
without a sound factual basis. The Commission found
inter alia
that there was an onslaught upon those who managed SARS founded
upon allegations once peddled by the
Sunday Times
to a
beguiled public for a year or more, about a 'rogue' unit that was
alleged to have existed within SARS; the
Sunday Times
itself
withdrew its allegations and apologised some two years later;
although the establishment of HRIU was termed unlawful by a
panel
chaired by Adv Sikhakhane SC, there was nothing in the report to
persuade the Commission why that was so; and 'the SARS Advisory
Board
chaired by Judge Kroon, reported to the Minister, and issued a media
statement, saying the unit was unlawful, but in evidence
he told the
Commission that was not a conclusion reached independently by the
Board, but had been adopted from the Sikhakhane panel,
and he had
come to realise it was wrong. Indeed, he supported the
re-establishment of capacity to investigate the illicit trades,
which
he recommends'. In his testimony before the Commission, Judge Kroon
said: 'Yes, as I have said in my report, my first comment
was that
the statement relating to the unlawfulness of the establishment of
the unit were not thought through properly and were
(sic) in fact
incorrect.'
[29]
Furthermore, when SARS conducted investigations into Mr
Wingate-Pearse's tax affairs, HRIU was not even in existence. It was,

as I have mentioned, only established in 2007, long after SARS had
investigated Mr Wingate-Pearse's tax affairs and raised the

additional estimated assessments. HRIU or Mr Van Loggerenberg was not
in any way involved in the investigation into Mr Wingate-Pearse's
tax
affairs, nor did Mr Van Loggerenberg provide any oversight. The
deponent to SARS' first answering affidavit, Mr Pieter Engelbrecht,

was involved and he did not report to Mr Van Loggerenberg. It follows
from this that Mr Van Loggerenberg was also not involved
in the tax
appeal. He left the employ of SARS on 4 February 2015. The allegation
that he somehow intercepted confidential communications
between Mr
Wingate-Pearse and his lawyer, Ms Walter, is demonstrably without
evidential basis, and so is the suggestion that he
somehow influenced
the tax appeal.
[30]
Mr Van Loggerenberg denies that he, as an official of the state,
infringed upon Mr Wingate-Pearse's constitutional rights.
He states
that he 'had no role in any respect, or any form of influence over,
the manner in which SARS dealt with the tax audits
of [Mr
Wingate-Pearse]'. According to him, he was not 'ever involved in the
investigation or audit into [Mr Wingate-Pearse's] tax
affairs' nor
'was [he] involved at all in [his] tax appeal to the Tax Court'. He
denies the allegations that he intercepted Mr
Wingate-Pearse's
legally privileged communications and he states that he 'never
indicated to Ms Walter, either "in no uncertain
terms" or
at all, that [he] had on behalf of SARS intercepted and monitored [Mr
Wingate-Pearse's) communications'. Manifestly,
Mr Wingate-Pearse has
seized,
ex post facto,
on what was at the time reported in the
public domain as irregularities in SARS (and which have since been
refuted,
inter alia
by those who made them).
[31]
It is SARS' evidence that certain officers of the SAPS' Organised
Crime Unit approached it during early to mid-2002 with information

relating to Mr Wingate-Pearse, other individuals and various entities
linked to Mr Wingate-Pears and those individuals. SARS thereafter

investigated the matter. Its investigation was based on the sharing
of information as envisaged ins 73 of the Prevention of Organised

Crime Act 121 of 1998 (POCA), and its role in the investigation was
limited to an investigation into alleged tax non-compliance.
It
identified certain risks relating to income tax, VAT and Customs and
Excise issues in regard to the taxpayers under investigation,

including Mr Wingate-Pears.
[32]
SARS made a decision to apply for the warrant, the application was
brought in the high court before a judge in chambers, and
issued on
30 November 2004. SARS executed the warrant from 14 April to 21 April
2005. The deponent to SARS' first answering affidavit,
Mr Pieter
Engelbrecht, states that he oversaw the execution of the warrant and
acted as the 'control centre' for any issues that
the SARS officials
encountered. The SARS officials executing the warrant reported to
him. SARS, according to him, at all relevant
stages acted in terms of
the warrant and the empowering legislation. Any unlawful conduct on
the part of SARS in obtaining the
warrant and in the execution
thereof is disputed.
[33]
In summary, it is SARS' case that it acted lawfully throughout the
process that ultimately resulted in the raising of the additional

estimated assessments for the relevant period of assessment. It
conducted an investigation into Mr Wingate-Pearse's tax affairs;
it
detected and established that he was not compliant in respect of his
tax affairs for the relevant period of assessment; it took
steps,
including enforcement steps, as it was permitted to do in terms of
the empowering legislation, including conducting an investigation

into Mr Wingate-Pearse's tax affairs, gathering information from
third party sources and using such information
inter alia
to
obtain a warrant for search and seizure; it issued the additional
estimated assessments after evaluation of numerous documentation

obtained during the search and seizure and an audit conducted into Mr
Wingate-Pearse's tax affairs by SARS officials with the assistance
of
PWC; and it issued the additional estimated assessments based on what
is indisputably an acceptable method of capital reconciliation.
[34]
Mr Wingate-Pearse cannot succeed with the relief he seeks once the
Plascon Evans
rule is applied and the facts alleged by SARS
accepted. The affidavits filed on behalf of SARS refute his
hypothesis that there
was a tainted process, a conspiracy full of
malice and bias, directed at him. But there are further reasons that
also compel the
dismissal of his review and interlocutory
applications and which have a bearing on the appropriate costs order
that should be made.
RELIEF
CLAIMED IN SEVERAL RESPECTS ALSO BAD IN LAW AND NOT VIABLE
Departing
premise fatally defective
[35]
I believe that the premise from which Mr Wingate-Pearse departs in
his quest to have the decisions to raise the additional
estimated
assessments set aside, is fatally defective and bad in law. The
stance adopted by him is that should the relief in paragraph
1 of the
notice of motion - a declaration that the establishment by SARS of
HRIU was without statutory authority, unlawful, inconsistent
with the
Constitution and invalid - 'be granted, it would follow that every
item of information gathered by the Unit had been obtained
illegally
and may, on first principles, not be used by any organ of state
against a person.' Thus, if an irregularity or illegality
of some
kind can be shown, Mr Wingate-Pearse felicitously pays no tax. Such
starting premise, in my view, is patently wrong and
untenable.
[36]
Even if evidence is irregularly obtained, it is for the court to
decide, upon the facts of each case, whether the circumstances
are
such that fairness requires the evidence to be excluded.
Key v
Attorney-General, Cape Provincial Division, and another
[1996] ZACC 25
;
1996 (4)
SA 187
(CC), concerns a search and seizure that was conducted in
terms of s 6(1) of the Investigation of Serious Economic Offences Act

117 of 1991, which section is concerned with the procurement of
information relating to suspected serious economic offences. There,

Kriegler J said this:
'[11] ... Even if one
were to accept that the section was constitutionally invalid, and
even if one were further to assume that
such invalidity in turn
rendered the prior searches and seizures unlawful, it does not follow
that the evidence obtained directly
or derivatively as a result of
such searches and seizures would necessarily be inadmissible in
criminal proceedings against the
person from whom the documents
containing, or pointing to, the evidence were seized.
…
[13] In any democratic
criminal justice system there is a tension between, on the one hand,
the public interest in bringing criminals
to book and, on the other,
the equally great public interest in ensuring that justice is
manifestly done to all, even those suspected
of conduct which would
put them beyond the pale. To be sure, a prominent feature of that
tension is the universal and unceasing
endeavour by international
human rights bodies, enlightened legislatures and courts to prevent
or curtail excessive zeal by State
agencies in the prevention,
investigation or prosecution of crime. But none of that means
sympathy for crime and its perpetrators.
Nor does it mean a
predilection for technical niceties and ingenious legal stratagems.
What the Constitution demands is that the
accused be given a fair
trial. Ultimately, as was held in
Ferreira v
Levin
[1995 (2) SA 148
(C) para 153],
fairness is an issue which has to be decided upon the facts of each
case, and the trial Judge is the person best
placed to take the
decision. At times fairness might require that evidence
unconstitutionally obtained be excluded. But there will
also be times
when fairness will require that evidence, albeit obtained
unconstitutionally, nevertheless be admitted.'
[37]
There are, of course, fundamental differences between civil and
criminal proceedings which are of considerable importance in
the
context of improperly obtained evidence. Section 35(5) of the
Constitution, 1996, which provides that '[e]vidence obtained
in a
manner that violates any right in the Bill of rights must be excluded
if the admission of that evidence would render the trial
unfair or
otherwise be detrimental to the administration of justice', has no
application to civil cases. Even prior to the advent
of the
Constitution, however, courts recognised a discretion, in a civil
case, to exclude improperly obtained evidence. (E.g.
Shell SA
(Edms) Bpk en Andere v Voorsitter, Dorpsraad van die Oranje-Vrystaat
en Andere
1992 (1) SA 906
(O) at 916-917.) Such
discretion in civil cases has also been recognised post­
constitutionally. In
Fedics Group (Pty) Ltd
and Another v Matus and Others; Fedics Group (Pty) Ltd and Another v
Murphy and Others
1998 (2) SA 617
(C) at
636D-E, Brand J said that it would be a 'retrogressive step in the
development of our law' to deny such discretion. In
Harvey
v Niland and Others
2016 (2) SA 436
(ECG)
para 47, Plasket J considered that it was clear from the case law
that in the exercise of the discretion to exclude unlawfully
obtained
evidence, all relevant factors had to be considered, including-
'. . . the extent to
which, and the manner in which, one party's right to privacy (or
other right) has been infringed, the nature
and content of the
evidence concerned, whether the party seeking to rely on the
unlawfully obtained evidence attempted to obtain
it by lawful means
and the idea that "while the pursuit of truth and the exposure
of all that tends to veil it is cardinal
in working true justice, the
courts cannot countenance and the Constitution does not permit
unrestrained reliance on the philosophy
that the end justifies the
means".'
Paragraph
4 of the Notice of Motion
[38]
The declaratory order claimed in paragraph 4 of the notice of motion
- that the conduct of SARS and of Mr Van Loggerenberg
in respect of
Mr Wingate-Pearse 'was biased and/or prejudicial and/or
discriminatory, and accordingly inconsistent with the Constitution

and invalid' - is too generalized and vague to render the relief
incompetent. It is an absurdly wide abstract declarator about

unspecified conduct being biased, prejudicial and or discriminatory
in some unspecified manner and inconsistent with an unspecified

provision or provisions of the Constitution. As was recently said by
Schippers AJA in
City Capital SA Property Holdings Ltd v Chavonnes
Badenhorst St Clair Cooper and others
2018 (4) SA 71
(SCA) para
35-
'Section 165(5) of the
Constitution provides that an order or decision of a court binds all
those to whom and organs of state to
which it applies. This Court has
held that parties who are required to comply with court orders must
know with clarity what is
required of them; otherwise they risk being
held in contempt of court. The doctrine of vagueness, which is
founded on the rule
of law, is a foundational value of our
constitutional democracy. It requires laws to be written in a clear
manner, with reasonable
certainty and not perfect lucidity. Orders of
court must comply with this standard: vague provisions in a court
order violate the
rule of law. (Footnotes omitted.)
Paragraphs
5.1, 5.2, 5.3, 6 and 8 of the Notice of Motion
[39]
The declaratory orders sought in paragraphs 5.1, 5.2 and 5.3 of the
notice of motion - that SARS' conduct in investigating
Mr
Wingate-Pearse on the basis of information provided by Mr Selebi,
Supt Taljaard and Mr Agliotti and information obtained as
a result of
the alleged unlawful monitoring and interception of his
communications, including information intercepted from Ms Walter,
in
applying for the warrant on the basis of that information and in
executing the warrant, be declared inconsistent with the Constitution

and invalid - and the review and setting aside he seeks in paragraphs
6 and 8 of SARS' decisions to apply for the warrant, to investigate

him and of the investigations and the results thereof where they were
based on such information - are moot and the judicial review
under
PAJA of preliminary steps is not permissible since they do not have
direct and external legal
effect;
they lack the attribute of
concreteness required to constitute administrative action.
[40]
SARS received information relating
inter alia
to Mr
Wingate-Pearse during early to mid-2002, whereafter it investigated
his tax affairs. The warrant was issued pursuant to an
order of the
high court, on 30 November 2004, and executed during April 2005. That
order was never set aside despite numerous threats
by Mr Wingate­
Pearse during the years that he will apply for the setting aside of
the warrant. Furthermore, he abandoned the
alleged unlawfulness of
the search and seizure as a ground of review when he initiated his
first review application against SARS
on 15 February 2011. The issues
surrounding the information that SARS had obtained prior to taking
the decision to apply for the
warrant, its decision to apply for the
warrant and the issue of the warrant have thus become academic.
Prima
facie
a delay of more than a decade in any case is unreasonable,
and it is for Mr Wingate-Pearse to show why it should not be regarded

as unreasonable; he should explain the long delay, which he dismally
failed to do. (See
Wolgroeiers Afslaers (Edms) Bpk v
Munisipaliteit van Kaapstad
1978 (1) SA 13
(A) at 43A-F.)
[41]
SARS' receipt of information relating to Mr Wingate-Pearse from
officers of the SAPS Organised Crime Unit, its decision to

investigate his tax affairs, the process of investigation or the
decision to apply for the warrant, could not in itself adversely

affect the rights of Mr Wingate-Pearce in a manner that has a direct
and external legal effect and could hardly be said to constitute
an
administrative action. In
Viking Pony Africa Pumps (Pty) Ltd t/a
Tricom Africa v Hidro-Tech Systems (Pty) Ltd and Another
2011 (1)
SA 327
(CC), Mogoeng J said this:
'[37] PAJA defines
administrative action as a decision or failure to take a decision
that adversely affects the rights of any person,
which has a direct,
external legal effect. This includes 'action that has the capacity to
affect legal rights'. Whether or not
administrative action, which
would make PAJA applicable, has been taken cannot be determined in
the abstract. Regard must always
be had to the facts of each case.
[38] Detecting a
reasonable possibility of a fraudulent misrepresentation of facts, as
in this case, could hardly be said to constitute
an administrative
action. It is what the organ of state decides to do and actually does
with the information it has become aware
of which could potentially
trigger the applicability of PAJA. It is unlikely that a decision to
investigate and the process of
investigation, which excludes a
determination of culpability, could itself adversely affect the
rights of any person, in a manner
that has a direct and external
legal effect.'
Paragraphs
5.
4,
5.
5
and
5.
6 of the Notice
of Motion
[42]
Although Mr Wingate-Pearse states that he does not intend to
challenge the correctness of the additional estimated assessments
as
part of this review application and although the declaratory relief
that he seeks in paragraphs 5.4, 5.5 and 5.6 of the notice
of motion
(that the conduct of SARS
vis-a-vis
him in making a
determination that he had defaulted in furnishing any information, in
not being satisfied with the returns or information
furnished by him
and that the amounts of income for the relevant period of assessment
had not been assessed to tax owing to fraud,
misrepresentation, or
non-disclosure of material facts on his part, and in estimating his
taxable income for the 1998 to 2005 years
of assessment in the total
amount of R25 634 61O on 19 April 2006, and in the reduced total
amounts of R14 014 048 on 23 March
2007 and R12 063 868 on 14 May
2008, be declared inconsistent with the Constitution and invalid) is
couched in review terminology
and said to be a remedy that is 'just
and equitable' to vindicate the rights allegedly violated, in
substance what he seeks here
is for this court to adjudicate upon the
merits of the additional estimated assessments, which issues should
best be decided by
the tax court, a specialist court legislated to
address disputes arising from assessments .
[43]
Mr Wingate-Pearse's affidavits establish that he is disputing the
correctness of the additional estimated assessments, claiming
that
they are materially wrong and the assessed amounts materially
overstated. Such are claims that are being asserted in the tax
appeal
and that should best be determined by the tax court. In his founding
affidavit Mr Wingate-Pearse states,
inter alia
:
'102. The tax appeal is
predicated,
inter alia,
on my submissions that, at the very
least, SARS's estimates of my income are grossly incorrect and that
as a consequence there is
not now nor was there ever any reason for
SARS to levy additional tax and penalties against me at all.
103. A further consequence of SARS's
grossly erroneous estimates is to allow SARS to presume any one or
more of fraud, misrepresentation
or non-disclosure of material facts
by me, which in turn allows SARS to avoid the effect of the three
year prescription period
on tax assessments, as contemplated in the
now repealed section 79 of the Income Tax Act 58 of 1962 and
section
99
of the
Tax Administration Act 28 of 2011
.
104. I have already described ... how
SARS had to effect very significant revisions to their estimates of
my aggregate tax liability.
105. In the process of prosecuting the
tax appeal, SARS has made further concessions in the calculation of
the estimates but has
not revised the assessments accordingly.
106. These revisions and concessions
made by [SARS] have certainly suggested to me that SARS has never had
substantiated, rational
and properly considered estimate of my income
in the years of assessment 1998 to 2005.'
[44]
And, in the second supplementary founding affidavit, he states:
'73. I have already
pointed out that SARS' estimates were, on its own version,
substantially over-stated and were thus substantially
incorrect. How
that can be categorized as responsible and reasonable administrative
conduct that qualifies under the legality requirement
of the
Constitution is impossible to comprehend. I had the right to just
administrative action that was lawful, reasonable and
procedurally
fair. SARS breached these constitutionally protected rights in the
most egregious manner possible.
…
89. Although there can be
no quarrel, in principle, with SARS utilizing so-called lifestyle
audits and capital reconciliations as
methods by which to determine
whether taxpayers understated their incomes in their income tax
returns, the capital reconciliation
that was produced by PWC on
behalf of SARS and that was adopted by SARS with respect to me is so
detective that it renders the
whole exercise invalid....'
[45]
It follows from the nature of the disputes raised here that this
court in hearing the review will have to evaluate the basis
and
merits of the assessments. Tax cases are generally reserved for the
exclusive jurisdiction of the tax court in the first instance.
But,
it is settled law that a decision of the Commissioner is subject to
judicial intervention in certain circumstances. One such
circumstance
is that the high court has jurisdiction to hear and determine tax
cases turning on legal issues. (See
United Manganese of Kalahari
(Pty) Ltd v SARS
2018 (2) SA 275
(GP) paras 18-19.) Another
exception is provided in
s 105
of the
Tax Administration Act. Prior
to its amendment and at the time when Mr Wingate-Pearse instituted
this review application on 17 August 2015,
s 105
provided that '[a]
taxpayer may not dispute an assessment or "decision" as
described in
section 104
in any court or other proceedings, except in
proceedings under this Chapter
or
by application to the High
Court for review'. A taxpayer was thus specifically compelled to make
an election in instances where
both the tax court and the high court
have jurisdiction.
Section 105
was amended by
s 52
of Act 23 of 2015
with effect from 8 January 2016, and now provides that '[a] taxpayer
may only dispute an assessment or "decision"
as described
in section 104 in proceedings under this Chapter [dispute
resolution], unless a High Court otherwise directs'. In
its amended
forms 105 thus makes it plain that 'unless a High Court otherwise
directs', an assessment may only be disputed by means
of the
objection and appeal process.
[46]
The tax court is a specialist tribunal composed of persons presiding
who possess expertise not ordinarily possessed by a high
court judge
sitting alone. The Constitutional Court in
Metcash Trading Ltd v
Commissioner, South African Revenue Service
2001 (1) SA 1109
(CC)
para 47, considered the status of the special court, the predecessor
of the tax court under the Income tax Act, and held that:
'In any event, by the
very referral of cases to that specialist tribunal, the Act can be
seen to have designated an independent
and impartial tribunal
specifically tooled to deal with disputed tax cases. The Special
Court operates to all intents like an ordinary
court and has
extensive powers to interfere with, amend or set aside decisions of
the Commissioner. Although the procedure is referred
to in the
legislation as an appeal, it is a full hearing more akin to a trial.
The relevant provisions of the Income tax Act that
establish the
Special Court and prescribe its procedure, principally contained in s
83 thereof, are eminently fair and afford a
dissatisfied vendor more
than a merely formal right of appeal. The Court is presided over by a
Judge, who sits with an accountant
and a representative of the
business community. There is a right to legal or other expert
representation, to adduce evidence or
to challenge or rebut adverse
evidence in a full-blown trial on the issues raised in the taxpayer's
notice of appeal. Withal, therefore,
a hearing before the Special
Court meets the criteria of s 34 of the Constitution.' (Footnotes
omitted.)
[47]
The fact that the determination of Mr Wingate-Pearse's tax appeal
might entail the tax court considering the legality of an

administrative decision, that was integral to the making of the
additional estimated assessments, does not deprive that court of
its
jurisdiction to decide the tax appeal. In
South Atlantic Jazz
Festival (Pty) Ltd v Commissioner, South African Revenue Service
2015
(6) SA 78
(WCC) at 89E-90C, Binns-Ward J said this:
'PAJA regulates the
bringing and determination of review applications in terms of s 6 of
the statute; it is not directed at the
bringing and determination of
appeals in terms of the tax laws administered under the TAA. The
appellant in the current matter
was exercising a right of appeal to
the tax court against the assessments; it was not seeking the review
and setting­ aside
of a decision in terms of s 16(2)(f) of the
VAT Act. The fact that the determination of the appeal might entail
the tax court in
considering the legality of an administrative
decision, that was integral to the making of the assessments, does
not deprive the
court of its jurisdiction to decide the appeal. To
interpret and apply the legislation, as requiring the dichotomous
procedures
enjoined in the argument advanced on behalf of the
Commissioner, would in many cases defeat the very purpose of the
establishment
of the specialist tax court. The jurisdiction of the
tax court to determine tax appeals is conferred without any
limitation in
s 117(1) of the TAA. The court must be taken to have
been invested with all the powers that are inherently necessary for
it to
fulfil its expressly provided functions.'
[48]
This, in my view, is not a case in which this court ought to exercise
the discretion to grant the declaratory relief sought
in the
paragraphs of the notice of motion under consideration. It is trite
that the granting or refusal of declaratory relief is
discretionary.
It is a discretion that must be exercised with due regard to the
circumstances of a particular case. (See
United Manganese of
Kalahari
para 21.) The tax court, consisting of a judge of the
high court, an accountant and a representative of the commercial
community,
is best suited at first instance to deal with the tax
dispute relating to the merits of the additional estimated
assessments. The
tax dispute here hinges almost exclusively on the
factual findings SARS had made as part of the capital reconciliation
in determining
MrWingate-Pearse's alleged undeclared taxable income.
It is a technical assessment that Mr Wingate-Pearse wishes this court
to
undertake, also in the absence of proper evidence. Proof of the
claim that the additional estimated assessments are materially wrong

and the assessed amounts materially overstated is dependent on
evidence which has not been fully and adequately ventilated in the

affidavits. (See
United Manganese of Kalahari
paras 25-26.)
Paragraph
5. 7
of the Notice of
Motion
[49]
The relief which Mr Wingate-Pearse seeks in paragraph 5.7 of the
notice of motion that the conduct of SARS
vis-a-vis
him in
utilizing any or all of the information set out in paragraph 5.1 of
the notice of motion in preparation for or during the
conduct of the
tax appeal, be declared inconsistent with the Constitution and
invalid, ought not be countenanced. If permitted,
it will invariably
lead to piecemeal litigation. A further anomaly is that a parallel
court is requested to issue binding orders
concerning pending
litigation in the tax court, directing what evidence it should admit
or refuse. The tax court is the appropriate
forum that may decide the
question in due course.
Paragraph
7
of the Notice of
Motion
[50]
The declaration which Mr Wingate-Pearse seeks in paragraph 7 of the
notice of motion (that the evidence which had been obtained
by SARS
as a result of the issue and execution of the warrant, was obtained
unlawfully, unconstitutionally, in a manner that violated
his right
to privacy and is inadmissible on the basis that it will render the
tax appeal unfair to him and will be detrimental
to the
administration of justice) is not only factually unsustainable when
the
Plascon Evans
test is applied to the factual disputes
in
casu,
but a continuation of his flawed premise of departure that
evidence is to be excluded if any irregularly is shown to exist in
the
obtaining thereof. Furthermore, a declarator that evidence which
may be adduced in the tax appeal is inadmissible
inter alia
on
the basis that 'it will be detrimental to the administration of
justice', is beggars description. In
Key
the applicant brought
an urgent application in which he contended that a pending criminal
case against him had been built up on
the basis of documents
unlawfully seized during unlawful searches of his offices, consequent
interviews with witnesses and a report
prepared by investigative
accountants to whom the documents were made available and he
consequently sought an order,
inter alia,
declaring that such
evidence is inadmissible and may not be used against him in the
criminal proceedings. In concluding that he
was not entitled to the
order sought, the Constitutional Court held that (para14) -
'[i]f the evidence to
which the applicant objects is tendered in criminal proceedings
against him, he will be entitled at that stage
to raise objections to
its admissibility. It will then be for the trial Judge to decide
whether the circumstances are such that
fairness requires the
evidence to be excluded.'
Additional
paragraph 6.4 in terms of the proposed amendment
[51]
In the additional paragraph 6.4, which Mr Wingate-Pearse proposes to
introduce in terms of the amendment, he seeks the review
and setting
aside of SARS' decisions to issue the additional estimated
assessments for the relevant period, first on the ground
that the
jurisdictional requirement for the issuing of additional assessments
had not been met, and, second that the requirement
of
audi alteram
partem
had not been satisfied prior to the issuing of the
additional estimated assessments.
[52]
Prior to its amendment by the
Tax Administration Act 28 of 2011
, s
79(1) of the Income Tax Act partly provided that '[i]f at any time
the Commissioner is satisfied- (a) that any amount which
was subject
to tax and should have been assessed to tax under this Act has not
been assessed to tax; or (b) that any amount of
tax which was
chargeable and should have been assessed under this Act has not been
assessed . . . he shall raise an assessment
or assessments in respect
of the said amount or amounts, notwithstanding that an assessment or
assessments may have been made upon
the person concerned in respect
of the year or years of assessment in respect of which the amount or
amounts in question is or
are assessable . . . Provided that the
Commissioner shall not raise an assessment under this subsection (i)
after the expiration
of three years from the date of the assessment
(if any) in terms of which any amount which should have been assessed
to tax under
such assessment was not so assessed or in terms of which
the amount of tax assessed was less than the amount of such tax which
was properly chargeable, unless- (aa) the Commissioner is satisfied
that the fact that the amount which should have been assessed
to tax
was not so assessed or the fact that the full amount of tax
chargeable was not assessed, was due to fraud or misrepresentation
or
non-disclosure of material facts . . . '.
[53]
The Commissioner's satisfaction that any amount which should have
been assessed to tax under an assessment was not so assessed
or in
terms of which the amount of tax assessed was less than the amount of
such tax which was properly chargeable, was, in terms
of s 79(1)(a)
and (b) of the Income Tax Act, a prerequisite for the Commissioner's
power to raise an additional assessment. The
taxpayer, however,
enjoyed statutory immunity from further assessment once three years
had expired since the original assessment,
because the proviso to s
79(1) prohibits the Commissioner from raising an additional
assessment after the lapse of three years,
unless he or she 'is
satisfied' that the non-assessment was caused by the taxpayer's fraud
or misrepresentation or non-disclosure
of material facts.
Section 92
of the
Tax Administration Act empowers
SARS to make an additional
assessment if it 'is satisfied' that an assessment does not reflect
the correct application of a tax
Act to the prejudice of SARS or the
fiscus,
but such assessment may, in terms of s 99(1)(b) read
with s 99(2)(b),
inter alia
not be made, in the case of
self-assessment for which a return is required, five years after the
date of assessment of an original
assessment by way of
self-assessment by the taxpayer, unless the fact that the full amount
of tax chargeable was not assessed due
to fraud or intentional or
negligent misrepresentation or non­ disclosure of material facts.
[54]
Mr Wingate-Pearse argues that the 'satisfaction' contemplated in s
79(1) of the Income tax Act, and now ins 92 read with
s 99
of the
Tax
Administration Act, sets
a very high hurdle for SARS to jump before
it may re-open an original assessment and issue an additional one.
SARS, he argues,
must be satisfied on reasonable grounds, which test
according to him is objective, that the original assessment is
'wrong'. SARS,
he argues, re-opened the assessments for the relevant
period of assessment on the basis that the full amount of the tax
chargeable
was not assessed due to fraud, material misrepresentation
or non-disclosure of material facts on his part. SARS' allegations of

fraud, misrepresentation and non-disclosure, he argues, 'are very
heavy allegations that require substantial evidence' and are
'not
lightly inferred', which evidentiary burden he contends has not been
met. He relies on the decisions in
Natal Estates Ltd v Secretary
for Inland Revenue
1975 (4) S_A 177 (A) at 208 and
Secretary
for Inland Revenue v Trow
1981 (4) SA 821
(A) at 8251-8268, as
authority in support of the meaning of the phrase 'is satisfied' ins
79(1) of the Income Tax Act, and now
in s 92 read with
s 99(1)
and
(2) of the
Tax Administration Act, which
he propounds.
[55]
Mr Wingate-Pearse, in my view, reads too much into
Natal Estates
and
Trow.
Those judgments do not support his argument on
how the jurisdictional prerequisite of SARS' satisfaction for its
power to make an
additional assessment must be met; whether the
jurisdictional fact is objective or subjective. Both judgments
concern similar,
but repealed, provisions and rather suggest that the
required jurisdictional fact is subjective. In
Natal Estates
Holmes JA said that-
, ... because three years
had expired since the original assessment, the taxpayer enjoyed
statutory immunity from further assessment.
If the Secretary wished
to displace that immunity, it was for him to state that he was
'satisfied' that the non-assessment in question
was caused by the
taxpayer's fraud or misrepresentation or non-disclosure of material
facts. This is because the proviso to sec.
79(1) of the Act, read
with para (a) thereof, prohibits the Secretary from raising an
additional assessment, after the lapse of
three years, unless he is
so satisfied.' And in dismissing the appeal by the then Secretary for
Inland Revenue in
Trow,
Wessels JA agreed with the reasoning
of the court
a quo
that 'in the absence of any other evidence
before the Court a
quo
establishing the required satisfaction
either directly or inferentially' the immunity had not been
displaced. In the circumstances
of that case it was held-
'... that the additional
assessment could only have been raised if the Commissioner were to
have satisfied himself (1) that there
had been a non-disclosure of
material facts by the taxpayer, and (2) that the fact that the profit
in question was not assessed
to tax prior to the expiration of the
relevant period of three years was
due
to
such non-disclosure, ie that the non-assessment was causally related
to the non-disclosure of material facts.'
[56]
Cora Hoexter
Administrative Law in South Africa
2nd Ed at
296-297, states:
'Whether a jurisdictional fact is
objective or subjective involves the interpretation of the empowering
legislation. Subjective
jurisdictional facts are generally
identifiable by the language used, such as 'if satisfied that'. The
point of including such
clauses in legislation is to confer very wide
and 'free', 'unfettered' or unguided discretion, and thereby to
minimize the scope
of judicial review. In fact, subjectively phrased
clauses operate as a kind of overt ouster clause and, in the
pre-democratic era,
were often a more effective technique than a
conventional ouster clause for restricting a court's jurisdiction.
While they tended
to react contrarily to a crude attempt to oust
their jurisdiction altogether, the courts felt constrained to
acknowledge instances
in which Parliament had clearly vested a
discretion exclusively in the administrator.'
(Footnotes omitted.)
[57]
The pre-constitutional judgment of Rabie CJ,
Kabinet van die
Tussentydse Regering vir Suidwes-Afrika v Katofa
1987 (1) SA 695
(A), on the subjectively phrased clause 'is satisfied' was
extensively followed in older South African cases. (See Professor
Hoexter
(supra)
at 299 fn 308.) There it was held that that
phrase appearing in delegated legislation conferred a subjective
discretion on the Administrator-General
of South West Africa to
arrest and detain certain persons. The administrator's onus of
showing that his action was legally taken
could be discharged by
asserting that he was 'satisfied' that the detainee was a person as
described in the legislation; his
ipse dixit
that he allowed
the detainee to be arrested and detained because he was so satisfied
is sufficient. It would then be up to the applicant
to show that the
administrator had failed to apply his mind to the decision to arrest
and detain, or that it was tainted with bad
faith or an ulterior
motive (at 735E-J).
[58]
But, as was said by Jafta AJ in the majority judgment in
Walele v
City of Cape Town
[2008] ZACC 11
;
2008 (6) SA 129
(CC) para 60, since the advent
of the constitutional era more than the decision-maker's
ipse
dixit
is now required if the subjective prerequisite of his or
her being satisfied that a state of affairs exists, is challenged. In
this
regard he said: 'In the past, when reasonableness was not taken
as a self-standing ground for review, the [decision-maker's]
ipse
dixit
could have been adequate. But that is no longer the
position in our law. More is now required if the decision-maker's
opinion is
challenged on the basis that the subjective precondition
did not exist. The decision-maker must now show that the subjective
opinion
it relied on for exercising power was based on reasonable
grounds.'
[59]
Professor Hoexter
(supra),
at 300-302, in my respectful view
correctly, points out that s 33(1) of the Constitution implies that
the court must be satisfied
of the lawfulness of administrative
action, including any factual assumptions on which the action is
based and that the constitutional
principle of legality is to the
same effect in relation to the exercise of public powers that do not
amount to administrative action.
She also states:
'The effect of
Walele
is to make all jurisdictional facts objectively justiciable,
whatever their wording. Does this mean that the use of subjective
language
now makes no difference at all – that the words chosen
by the legislature are, in fact, irrelevant? While there may be
support
for this approach, my own view is that subjective language
will still be capable of signaling the legislature's desire for
deference
on the part of the courts in particular cases. That is as
it should be. After all, the demise of parliamentary sovereignty does

not mean that the courts are now entitled to ignore the wishes of the
legislature. On the contrary, the voice of the legislature
actually
deserves to be taken more, not less, seriously than it used to be in
the pre­ democratic era. The real challenge for
our courts is to
achieve an appropriate balance between heeding that voice and
protecting the rights of affected persons.'
(Footnotes omitted.)
[60]
In
Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs
and Tourism and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC), O'Regan J said the
following about what will constitute a reasonable decision and about
judicial deference:
'[45] What will
constitute a reasonable decision will depend on the circumstances of
each case, much as what will constitute a fair
procedure will depend
on the circumstances of each case. Factors relevant to determining
whether a decision is reasonable or not
will include the nature of
the decision, the identity and expertise of the decision-maker, the
range of factors relevant to the
decision, the reasons given for the
decision, the nature of the competing interests involved and the
impact of the decision on
the lives and well-being of those affected.
Although the review functions of the Court now have a substantive as
well as a procedural
ingredient, the distinction between appeals and
reviews continues to be significant. The Court should take care not
to usurp the
functions of administrative agencies. Its task is to
ensure that the decisions taken by administrative agencies fall
within the
bounds of reasonableness as required by the Constitution.
[46] In the SCA Schutz JA
held that this was a case which calls for judicial deference. In
explaining deference he cited with approval
Professor
Hoexter's
account as follows:
'(A) judicial willingness
to appreciate the legitimate and constitutionally-ordained province
of administrative agencies; to admit
the expertise of those agencies
in policy-laden or polycentric issues; to accord their interpretation
of fact and law due respect;
and to be sensitive in general to the
interests legitimately pursued by administrative bodies and the
practical and financial constraints
under which they operate. This
type of deference is perfectly consistent with a concern for
individual rights and a refusal to
tolerate corruption and
maladministration. It ought to be shaped not by an unwillingness to
scrutinise administrative action, but
by a careful weighing up of the
need for - and the consequences of - judicial intervention. Above
all, it ought to be shaped by
a conscious determination not to usurp
the functions of administrative agencies; not to cross over from
review to appeal.'
(Footnotes
omitted.) Schutz JA continues to say that '[j]udicial deference does
not imply judicial timidity or unreadiness to perform
the judicial
function'. I agree. The use of the word 'deference' may give rise to
misunderstanding as to the true function of the
review Court. This
can be avoided if it is realised that the need for Courts to treat
decision-makers with appropriate deference
or respect flows not from
judicial courtesy or etiquette but from the fundamental
constitutional principle of the separation of
powers itself.'
[61]
Although the words 'is satisfied' used ins 79(1) of the Income Tax
Act - and now ins 92 read with
s 99(1)
and (2) of the
Tax
Administration Act
- confer a subjective discretion on SARS, I accept
that the discretion is not unfettered, and an objective approach must
be adopted
to that subjective discretion. SARS, therefore, must show
that its subjective satisfaction was based on reasonable grounds. The

raising of an additional assessment in the case of income tax, as was
said by Ponnan JA in
Commissioner, South African Revenue Service v
Pretoria East Motors (Pty) Ltd
2014 (5) SA 231
(SCA), para 11,
'must be based on proper grounds for believing that there is
undeclared income or a claim for a deduction or allowance
that is
unjustified'. But, given the wording of s 79(1) of the Income Tax
Act, and presently of
s 92
of the
Tax Administration Act, and
the
subjective nature of the discretion conferred on SARS, the scope for
judicial review is limited. (See
Laingville Fisheries (Pty) Ltd v
Minister of Environmental Affairs and Tourism
[2008] ZAWCHC 28
(30 May 2008) paras 74-6.)
[62]
SARS, as I have mentioned, explained that as a result of information
received from certain officers of the SAPS' Organised
Crime Unit,
inter alia,
relating to Mr Wingate-Pearse, it investigated him
for alleged tax non-compliance, which investigation revealed income
tax non-compliance
on his part. It applied for the warrant, executed
it and, in the process, seized approximately 2 000 documents, which
revealed
under-declaration by Mr Wingate-Pearse of income for the
relevant period of assessment. It instructed PWC to assist in
considering
the seized documentation and to conduct an audit in
respect of his tax affairs. SARS estimated - based on a capital
reconciliation
indicating that he had income from sources that he had
failed to declare in his income tax returns submitted for the
relevant period
- that he had grossly under-declared his taxable
income for the relevant period of assessment. Thus, SARS' additional
estimated
assessments were issued after evaluation of numerous
documentation obtained during the search and seizure and an audit
conducted
into Mr Wingate-Pearse's tax affairs by SARS' officials
with the assistance of PWC and it raised the additional estimated
assessments
based on an acceptable method of capital reconciliation.
This resulted in Mr Wingate-Pearse's total assessed tax liability
increasing
from an amount of R350 142.92 to an amount of R41 725
868.29. Applying the
Plascon Evans
test to the factual
disputes
in
casu, it must be accepted that the additional
estimated assessments were issued pursuant to due process involving
the engagement
of external expertise from PWC.
[63]
To say, as Mr Wingate-Pearse does, in substantiation of his criticism
of SARS' methodology in raising the additional estimated
assessments,
that the fact that SARS had reduced the amounts of the additional
estimated assessments after he had lodged his objections
and filed an
appeal against the partial disallowance of his objections, is
indicative that the additional estimated assessments
were a result of
guesswork, is wholly unfounded. There is nothing untoward when SARS
reduces a taxpayer's assessment when new information
comes to light.
Section 93
of the
Tax Administration Act now specifically
provides
for instances where SARS may issue a reduced assessment. Such is the
scheme of the Act.
[64]
The resultant substantial increase in Mr Wingate-Pearse's assessed
tax liability for the relevant period of assessment inferentially

establishes SARS' required satisfaction that the full amount of tax
chargeable was not assessed due to fraud or material
misrepresentation
or non-disclosure of material facts, and the
statutory immunity enjoyed by him from further assessment was thus
displaced. Having
regard to the subjective nature of the discretion
conferred on SARS and the limited scope for judicial review as well
as the principles
enunciated in
Bato Star,
and giving due
weight to the finding made by those with special expertise in
taxation and accountancy, SARS' decision to issue the
additional
estimated assessments can, in all the circumstances, not be said to
be one that a reasonable decision-maker could not
reach. SARS'
required subjective satisfaction has been shown to have been founded
on reasonable grounds.
[65]
Mr Wingate-Pearse also seeks the review and setting aside of SARS'
decisions to issue the additional estimated assessments
for the
relevant period on the ground that SARS has breached the principle of
audi alteram partem.
In terms of this complaint SARS has
allegedly raised the additional estimated assessments without taking
Mr Wingate-Pearse's responses
into account. There is, in my view,
also no merit in this ground of review. There was at the time when
SARS raised the additional
estimated assessments no statutory right
afforded to a taxpayer to be informed of audit findings before an
assessment is raised
and to respond in order to avoid the assessment.
Such rights are now afforded to a taxpayer in terms of
s 42
of the
Tax Administration Act.
[66
]
Furthermore, on SARS' version it substantially complied with the
common law requirement of
audi alteram partem.
Mr
Wingate-Pearse was granted opportunities to comment on the additional
estimated assessments and, where he provided grounds that
SARS
considered sound, these were accepted by SARS. In addition, he was
invited to evaluate the documents in possession of SARS
and to engage
with it, which he declined. There have also been several engagements
by means of exchanges between SARS' experts
and audit team and Mr
Wingate-Pearse's experts and audit team regarding matters that are
the subject of the assessments, which
engagements were terminated by
him.
[67]
Mr Wingate-Pearse can also not succeed with his claim for the review
and setting aside of SARS' decisions to issue the additional

estimated assessments for the relevant period, because, as I have
mentioned earlier in this judgment,
s 105
of the
Tax Administration
Act, p
rior to its amendment on 8 January 2016, provided that a
taxpayer may not dispute an assessment in any court or other
proceedings,
except in proceedings under the dispute resolution
provisions of that Act
or
by application to the High Court for
review, and after its amendment, only in proceedings under the
dispute resolution provisions
'unless a High Court otherwise
directs'. A taxpayer disputing an assessment was thus specifically
compelled to make an election
in which
forum
to institute
proceedings in instances where both the tax court and the high court
have jurisdiction and, with effect from 8 January
2016, such taxpayer
requires the direction of the high court to dispute an assessment
outside the dispute resolution provisions
of the
Tax Administration
Act. Here
, Mr Wingate-Pearse is attempting to dispute the estimated
assessments in the tax court
and
in the high court, which
cannot be countenanced.
Additional
paragraph 68 in terms of the proposed amendment: Undue delay and
extension in terms of
s
9(2)
of PAJA of the 180-day period prescribed in terms of
s
7(1)
[68]
In terms of the proposed additional paragraph 6B, Mr Wingate-Pearse
seeks a declaration that, insofar as he seeks the review
of SARS'
impugned actions and decisions under the principle of legality, the
delay in the initiation of the review application
was not
unreasonable, or if the delay is held to be undue or unreasonable,
that condonation be granted for the delay in the interests
of
justice, and, insofar as he seeks the review of the impugned actions
and decisions under PAJA, an extension in terms of
s 9(2)
of PAJA of
the 180-day period prescribed in terms of
s 7(1).
SARS takes issue
with the inordinate delay in initiating this review application. It
argues that the delay is unreasonable and
ought to non-suit Mr
Wingate-Pearse.
[69]
In
Khumalo and another v MEG for Education, KwaZulu-Natal
2014
(5) SA 579
(CC) para 44, Skweyiya J said this:
'Nevertheless, it is a
long-standing rule that a legality review must be initiated without
undue delay and that courts have the
power (as part of their inherent
jurisdiction to regulate their own proceedings) to refuse a review
application in the face of
an undue delay in initiating proceedings
or to overlook the delay. This discretion is not open-ended and must
be informed by the
values of the Constitution. However, because there
are no express legislated time periods in which the MEC was required
to bring
her application, there is no requirement that a formal
application for condonation needs to have been brought.'
[70]
Insofar as Mr Wingate-Pearse's review application is brought under
PAJA, an extension of the 180-day period for instituting
the review
application is required in terms of s 9(2) of PAJA. The issue of
unreasonableness is pre-determined by the Legislature;
a delay
exceeding 180 days is unreasonable
per
se. A court is then
only empowered to entertain a review application under PAJA if the
interests of justice dictate an extension
in terms of s 9.
[71]
In
Opposition to Urban Tolling Alliance v South African National
Roads Agency Ltd
[2013] 4 All SA 639
(SCA) para 26, Brand JA said
the following:
'At common law,
application of the undue delay rule required a two-stage enquiry.
First, whether there was an unreasonable delay
and, second, if so,
whether the delay should in all the circumstances be condoned (see eg
Associated Institutions Pension Fund and
others v Van Zyl and others
2005 (2) SA 302
(SCA) at paragraph 47 [also reported at
[2004] 4 All SA 133
(SCA)-
Ed]). Up to a point, I think, s 7(1) of PAJA requires the same
two-stage approach. The difference lies, as I see it, in
the
Legislature's determination of a delay exceeding 180 days as
per
se
unreasonable. Before the effluxion of 180
days, the first enquiry in applying s 7(1) is still whether the delay
(if any) was unreasonable.
But after the 180-day period the issue of
unreasonableness is pre-determined by the Legislature: it is
unreasonable
per se.
It
follows that the court is only empowered to entertain the review
application if the interest of justice dictates an extension
in terms
of s 9. Absent such extension the court has no authority to entertain
the review application at all. Whether or not the
decision was
unlawful no longer matters. The decision has been "validated"
by the delay (see eg
Associated Institutions
Pension Fund (supra)
at para 46). That of
course does not mean that, after the 180-day period, an enquiry into
the reasonableness of the applicant's
conduct becomes entirely
irrelevant. Whether or not the delay was unreasonable, and if so, the
extent of that unreasonableness
is still a factor to be taken into
account in determining whether an extension should be granted or not
(see eg
Camps Bay Ratepayers' and Residents'
Association v Harrison
[2010] 2 All SA 519
(SCA) at paragraph 54).'
[72]
In
South African National Roads Agency Ltd v Cape Town City
2017
(1) SA 468
(SCA), the Supreme Court of Appeal considered the question
how the judicial discretion on whether to condone a delay and extend

the 180-day period in terms of s 9 of PAJA should be exercised. In
this regard Navsa JA said the following (para 80):
'In
Tasima (Pty) Ltd v Department
of Transport
[2016] 1 All SA 465
(SCA) ([2015] ZASCA 200) paras
29-30 this court observed that in considering whether to extend the
180-day period in terms of s
9, a court would be guided by what the
interests of justice dictate. In order to determine that question,
regard should be had
to all the facts and circumstances. This equates
with how the judicial discretion on whether to condone a delay was
exercised before
the advent of PAJA. There is no maximum period
provided for in PAJA and the cases in which the 180-day period was
extended are
diverse in relation to the period of delay. Simply put,
whether one is considering condoning a delay either under the
provisions
of PAJA or beyond it, the same determining criterion
applies, namely the interests of justice. Viewed thus, a definitive
classification
of the nature of the impugned decision is not strictly
necessary, particularly if regard is had to the challenge essentially
being
one of legality.'
(Footnotes omitted.)
[73]
In
Buffalo City Metropolitan Municipality v Asia Construction
(Pty) Ltd
[2019] ZACC 15
, Theron J, who wrote the majority
judgment, said the following:
'[50] The approach to undue delay
within the context of a legality challenge necessarily involves the
exercise of a broader discretion
than that traditionally applied to
section 7 of PAJA. The 180-day bar in PAJA does not play a pronounced
role in the context of
legality. Rather, the question is first one of
reasonableness, and then (if the delay is found to be unreasonable)
whether the
interests of justice require an overlooking of that
unreasonable delay.
[51] The second difference between
PAJA and legality review for the purposes of delay is that when
assessing the delay under the
principle of legality no explicit
condonation application is required. A court can simply consider the
delay, and then apply the
two-step Khumalo test to ascertain whether
the delay is undue and, if so, whether it should be overlooked.
[52] The second principle relating to
delay under legality is that the first step in the Khumalo test, the
reasonableness of the
delay, must be assessed on, among others, the
explanation offered for the delay. [This applies equally to assessing
the delay of
PAJA reviews.] Where the delay can be explained and
justified, then it is reasonable, and the merits of the review can be
considered.
If there is an explanation for the delay, the explanation
must cover the entirety of the delay. But, as was held in Gijima,
where
there is no explanation for the delay, the delay will
necessarily be unreasonable.
[53] Even if the unreasonableness of
the delay has been established, it cannot be "evaluated in a
vacuum" and the next
leg of the test is whether the delay ought
to be overlooked. This is the third principle applicable to assessing
delay under legality.
Courts have the power in a legality review to
refuse an application where there is an undue delay in initiating
proceedings or
discretion to overlook the delay. There must however
be a basis for a court to exercise its discretion to overlook the
delay. That
basis must be gleaned from the facts made available or
objectively available factors.'
[74]
Mr Wingate-Pearse's review application was launched almost a decade
after SARS had conducted the investigation into his tax-affairs
and
had raised the additional estimated assessments for the relevant
period, during April 2006. He failed to seek condonation for
the
delay when his review application was initiated on 17 August 2015,
but delayed another two years and eight months before instituting
the
interlocutory application in which he sought to amend the notice of
motion and supplement his founding affidavit in order also
to seek an
extension of the 180-day period for instituting the review
application in terms of s 9(2) of PAJA and condonation for
his
failure to initiate it without undue delay insofar as it is brought
under the legality principle. Insofar as the review application
is
brought under PAJA, the delay of almost a decade, as I have
mentioned, is unreasonable
per
se. However, as was held in
Van
Zyl, an enquiry into the reasonableness remains relevant and the
extent of the unreasonableness a factor to be taken into account
in
determining whether an extension should be granted or not.
Application of the undue delay rule in a legality review requires,
as
a first step, an enquiry into the reasonableness of the delay. It is
thus to the question of the reasonableness of the delay
that I first
turn.
[75]
An acceptable explanation, let alone one that covers the entire
period of the inordinate delay, is lacking. The high-water
mark of
the explanation proffered by Mr Wingate-Pearse for the delay in
initiating the review application and the further delay
of two years
and eight months before instituting the interlocutory application in
which he for the first time seeks an extension
of the 180-day period
for instituting the review application under s 9(2) of PAJA and for
this court to overlook the delay if it
is held to be undue or
unreasonable, is that he is essentially raising the same grounds of
review in these proceedings as were
raised by him in his statement of
grounds of appeal in the tax appeal that was filed on 1 August 2007,
amongst others that-
'[t]he exercise and
performance of raising estimated assessments by the Respondent on the
Appellant in terms of Section 78 of the
Income Tax Act in respect of
the 1998 to 2005 years of assessment
are
so
unreasonable that no reasonable person could
have
so
exercised the
power or performed that function in the circumstances
on
the basis that the aforesaid assessments are based on the
Respondent's assumption of the Appellant's movement in net asset
position,
living and other expenditure, foreign exchange transactions
and losses and largely unfounded, incorrect and without merit and do

not support the decision by the Respondent that the Appellant has
under-declared his income for the following reasons....' (Emphasis

added.)
[76]
It is common cause that SARS' legal representatives repeatedly made
it clear, as is stated by Mr Wingate-Pearse, 'in the run-up
to the
aborted Tax Court hearings' in discussions with his lawyers as well
as in open court that they would object to the raising
of any matter
in the tax appeal concerning the alleged illegality of the actions
and decisions of and processes followed by SARS
and infringements of
his constitutionally protected rights, because those issues fall
outside the ambit of the tax appeal. Whether
correct or incorrect
(and I need not decide the question), the same stance was again
adopted by SARS at the pre-trial conference
which preceded the
scheduled hearing of the tax appeal from 22 November to 5 December
2017 and in discussions when it was postponed
due to SARS' inability
to give the presiding judge an undertaking that the hearing would be
finalised within the week. Mr Wingate­
Pearse states that he 'was
advised that there is a prospect that SARS' legal team might be
correct and that the Tax Court does
not have the jurisdiction to deal
with the issues raised [in this review application]'. The
interlocutory application was therefore
instituted and the second
supplementary affidavit filed, on 4 April 2018.
[77]
Mr Wingate-Pearse contends that a distinction should be drawn between
the constitutional and the administrative review relief
he seeks. He
has two major complaints about his treatment by SARS: The first
concerns the additional estimated assessments, which
SARS issued
during April 2006 in respect of the 1998 to 2005 years of assessment.
He argues that the decision to issue the additional
estimated
assessments constituted unlawful administrative action, which he, in
terms of the additional relief included in his proposed
amendment,
seeks to have reviewed and set aside in terms of PAJA. These issues
are referred to by him as the 'administrative issues'.
He also
challenges the additional estimated assessments, contending they are
in any event materially wrong and the assessed amounts
grossly
overstated. This, he states, is a matter for the tax court to decide.
His second complaint concerns the alleged illegal
intelligence
gathering measures that SARS had employed against him as a result of
which he challenged the constitutionality of
the establishment of
HRIU and its conduct. These issues are referred to by him as the
'constitutional issues'.
[78]
According to Mr Wingate-Pearse, the constitutional issues were the
main focus when the review application was instituted during
August
2015, and the administrative issues were originally a secondary
topic. He had intended to traverse the administrative issues
in the
tax court. However, because of the stance adopted by SARS that it
would object to him traversing the administrative issues
in the tax
court and the advice he received that SARS was probably correct, the
amendment of the notice of motion in the review
application is sought
in order for this court to determine his challenge of SARS' decision
to issue the additional estimated assessments
on administrative law
grounds. Furthermore, he argues that the proceedings pending in the
tax court are 'parallel' proceedings
to these review proceedings and
were commenced on 15 May 2006 (when his objection was delivered in
which the issues raised in paragraphs
4, 5 and 6 of the notice of
motion had been raised) within 180 days from 26 April 2005 (the date
upon which he was informed of
the warrant), 19 April 2005 (the date
on which the warrant was executed) and 19 April 2006 (when the
additional estimated assessments
were issued), and he seeks a
declaratory order to that effect, contending that '[w]hat has
occurred here is simply the transfer
of that issue [the
administrative issues] from the Tax Court to this court'. This
contention is fallacious; the initiation of a
tax appeal in the tax
court can by no stretch of the imagination be said to equate to the
initiation of review proceedings nor
does a tax appeal constitute
review proceedings under PAJA or under the legality principle. Mr
Wingate-Pearse's calculation that
15 May 2006 was within 180 days
from 19 and from 26 April 2005, is also patently erroneous.
[79]
Mr Wingate Pearse's attempt at an explanation neither explains the
delay of almost a decade in initiating this review application
and
the further substantial delay before seeking an extension of the
180-day period or condonation, nor does it justify the delays.
He
does not explain why he did not initiate review proceedings in the
high court within a reasonable time and no longer than 180
days after
SARS had issued the additional estimated assessments for the relevant
period of assessment, why he abandoned the grounds
of review relating
to the alleged unlawfulness of the search and seizure and the
infringement of his constitutional rights when
he instituted his
first review application against SARS on 15 February 2011, and why he
did not in that review application raise
the further grounds of
review that are presently being raised by him in these review
proceedings. There is also no satisfactory
explanation proffered why
he, only when the hearing of the tax appeal did not proceed during
the period 22 November to 5 December
2017, elected to seek the review
and setting aside of the decisions to raise the additional estimated
assessments under PAJA in
this court, and not before, and why he only
then elected to seek an extension of the prescribed 180-day period or
condonation.
[80]
Where the delay is not satisfactorily explained and justified, as in
this case, it is not reasonable. Having regard to all
the
circumstances of this case and given the extent of the
unreasonableness of the delay, the lack of merits of the challenges

under PAJA and under the legality principle, the sound judicial
policy and public interest requirement that there be finality and

certainty in matters, and the prejudice to SARS in its ability to
address Mr Wingate-Pearse's contentions evidentially as a result
of
the inordinate delay (see
Khumalo
paras 47-8), I am also
unable to hold that the interests of justice dictate that an
extension in terms of s 9 of PAJA should be
granted or that the undue
delay should be overlooked. There is no sound basis established for
condoning or overlooking the undue
or unreasonable delay.
COSTS
[81]
Finally, the matter of costs. No good grounds exist for a departure
from the general rule that costs follow the event, in other
words
that the successful party should be awarded its costs. I am unable to
hold that the litigation was undertaken to assert constitutional

rights. It was undertaken rather to assert the financial interest of
Mr Wingate-Pearse. I am not persuaded, therefore, that the
rule that
unsuccessful litigants who have sought, in good faith, to vindicate
constitutional rights, ought not to have costs awarded
against them,
should find application in this case. (See
MEG for Local
Government, Environmental Affairs and Development Planning, Western
Cape and another v Hans Ulrich Platz NO and another
(495/2017)
[2017] ZASCA 175
(1 December 2017).) SARS as the overall successful
party is clearly entitled to its costs.
[82]
What has to be considered though, is SARS' request that costs should
be awarded on the scale applicable as between attorney
and client. In
support of the claim that SARS had been vexed by these proceedings,
Mr Gauntlett SC QC relied on the following oft-cited
passage in
In
Re Alluvial Creek, Ltd
1929 CPD 532
at 534-535 (Gardiner JP):
'... It seems to me
therefore very unfortunate, in view of the settlement which was
arrived at on his behalf, that Mr. Keyser should
again have come to
Court in this matter and have put the liquidators to a lot of
expense.
An order is asked for
that he pay the costs as between attorney and client. Now sometimes
such an order is given because of something
in the conduct of the a
party which the Court considers should be punished, malice,
misleading the Court and things like that,
but I think the order may
also be granted without any reflection upon the party where the
proceedings are vexatious, and by vexatious
I mean where they have
the effect of being vexatious, although the intent may not have been
that they should be vexatious. There
are people who enter into
litigation with the most upright purpose and most firm belief in the
justice of their cause, and yet
whose proceedings may be regarded as
vexatious when they put the other side to unnecessary trouble and
expense which the other
side ought not to bear. That I think is the
position in the present case.'
[83]
In
Nel v Waterberg Landbouwers Ko-operatiewe Vereeninging,
1946
AD 597
at 607, Tindall JA demonstrated that the award of attorney and
client costs is not so much intended as a penalty to be imposed but

rather where justice requires that the winning party should not be
out of pocket because of the limitations inherent in the usual
party
and party order. (See
Marsh v Odendaalsrus Cold Storages Ltd
1963
(2) SA 263
(W) at 270C-G.)
[84]
This is such a case where the proceedings are vexatious in effect.
SARS has been put to unnecessary trouble and expense which
it ought
not to bear. This conclusion is inevitable when regard is had to the
manner in which Mr Wingate-Pearse elected to prosecute
the review
application,
inter alia:
in instituting it almost a decade
after the alleged events had occurred and the alleged actions and
decisions had been taken by
SARS and in only seeking condonation for
the inordinate delay almost three years after the institution of the
review application,
without giving an acceptable explanation for the
inordinate delays, let alone one that covers the entire period of the
delays,
and despite him having launched a review application
previously (during February 2011) in which he did not raise all the
grounds
of review that are presently raised and elected to abandon
grounds of review relating to the lawfulness of the search and
seizure,
the admissibility of the evidence so obtained, the alleged
infringements of his constitutional rights and the consequences
thereof
that he now seeks to raise again; in seeking final relief
despite the material disputes of fact that have arisen on the papers;

and, in claiming relief which in several respects is bad in law and
not viable. Justice, in my view, requires that SARS should
not be out
of pocket in respect of the expenses caused to it by this litigation.
[85]
The Minister of Finance at the time, Minister Pravin Gordan, opposed
the relief sought against him in paragraphs 1, 2 and 3
of the notice
of motion. In his answering affidavit, he states
inter alia
as
follows:
'4. This application is
solely directed at the first to third respondents. The founding
affidavit does not level a single substantive
or (even) procedural
allegation against me. The case therefore has nothing to do with me.
Despite this, however, the applicant
has in prayers 2, 3.1, 3.2 and
3.3 of his notice of motion sought relief against me. There being
nothing in the founding affidavit
justifying the relief sought in
these prayers, I oppose the granting of the relief sought against me.
5. The foundation of the
applicant's case against me (paragraph 26 of the founding affidavit),
and my joinder, are misconceived,
regard being had to the provisions
of section 216 (read with section 92) of the Constitution, and 2 of
the South African Revenue
Service Act 34 of 1997 ("the SARS
Act"). I am advised this is further a matter for legal argument.
6. My executive
responsibilities as Minister of Finance entail as a matter of law, in
particular, I am advised, that as a matter
of important
constitutional and statutory-law principle I do not have the power to
intervene in SARS' handling of individual tax
cases. But that is
exactly what the applicant is asking this Court to do in the relief
he seeks. This whole application is, at
base, about the applicant's
tax dispute with SARS. The relief sought against me is in aid of that
main dispute: it is subsidiary
to it, and is part of that dispute.
That means that the applicant seeks my interference with SARS'
handling of an individual tax
dispute. Nor by law do I have access to
confidential 'taxpayer information' in terms of Chapter 6 of the
Tax
Administration Act. My
joinder ignores these fundamentals, and is
manifestly not pursued for any
bona fide
legal
reason.'
[86]
It is not surprising that Mr Wingate-Pearse gave notice, even though
belatedly, that he was no longer pursuing the declaratory
and
interdictory relief regarding HRIU. By doing so he effectively
withdrew the review application against the minister. However,
he did
not offer to pay the minister's costs of opposition. Rule 41(1)(a) of
the Uniform Rules of Court provides that '[a] person
instituting any
proceedings may at any time before the matter has been set down and
thereafter by consent of the parties or leave
of the court withdraw
such proceedings, in any which events he shall deliver a notice of
withdrawal and may embody in such notice
a consent to pay costs; and
the taxing master shall tax such costs on the request of the other
party. The minister's consent was
not obtained for the withdrawal of
the proceedings against him nor did Mr Wingate-Pearse offer to pay
his costs of opposition.
The review application falls to be dismissed
also as against the minister and costs should follow the event also
on the scale as
between attorney and client. It was unreasonable to
have drawn the minister into the dispute and litigation between Mr
Wingate-Pearse
and SARS. SARS, initially, and later on President
Ramaphosa, initiated investigations into the allegations of a 'rogue
unit' within
SARS.
ORDER
[87]
In the result, the following order is made:
(a) The review application is
dismissed with costs on the attorney-and-client scale, which costs
shall include:
(i)
the first respondent's costs of opposition, including those of two
counsel; and
(ii)
the fourth respondent's costs of opposition, including those of two
counsel whenever incurred.
(b) The interlocutory application
dated 4 April 2018 is dismissed and the applicant is to pay the first
respondent's costs of opposition
on the attorney-and-client scale,
including those of two counsel.
_________________________
P.
A. MEYER
JUDGE OF THE HIGH COURT
Date
of hearing: 20 May 2019
Date
of judgment: 17 July 2019
Applicant's
Counsel: AJ Daniels SC (assisted by CT Picas)
Instructed
by: KWP Attorneys, Bordeaux, Randburg
First
Respondent's Counsel: JJ Gauntlett SC QC (assisted by HGA Snyman SC
and L Sigogo)
Instructed
by: MacRobert Inc, Brooklyn, Pretoria
C/o
Tasneem Moosa Inc., Houghton, Johannesburg
Fourth
Respondent's Counsel: JJ Gauntlett SC QC (assisted by L Sisilana)
Instructed
by: State Attorney, Johannesburg