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[2023] ZAFSHC 101
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National Prosecuting Authority v Dynolog Rental (Pty) Ltd t/a Dynamic Truck Rental and Others (4389/2022) [2023] ZAFSHC 101 (21 February 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been redacted
from this document in compliance with the law and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
Number: 4389/2022
Reportable:
YES
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
THE
NATIONAL PROSECUTING AUTHORITY
Applicant
and
DYNOLOG
RENTAL (PTY) LTD t/a DYNAMIC TRUCK RENTAL
(Registration
number: 20[....]07) First
Defendant
PHILIPPUS
CHRISTOFFEL WILLEM VAN
DER
BERG
Second
Defendant
BENADETTE
VAN DER BERG
Third
Defendant
PHILIPPUS
CHRISTOFFEL WILLEM VAN DER BERG N.O
BENADETTE VAN DER BERG
N.O
WEALTH
ASSOCIATES FIDUCIARY SERVICES (PTY) LTD N.O
(Registration
number: 201[....]07) First
Respondent
(In
their capacities as Trustees of Dynamic Trust
with
Trust ID: IT1[....]7)
PHILIPPUS
CHRISTOFFEL WILLEM VAN DER BERG N.O
BENADETTE VAN DER BERG
N.O
WEALTH
ASSOCIATES FIDUCIARY SERVICES (PTY) LTD N.O
(Registration
number: 201[....]07) Second
Respondent
(In
their capacities as Trustees of Phiberg Family Trust
with
Trust ID: IT1[....]6)
SEDPROP
DEVELOPMENTS (PTY) LTD
Third
Respondent
(Registration
number: 201[....]07)
HEARD
ON:
10 NOVEMBER
2022
CORAM:
MATHEBULA, J
DELIVERED
ON:
This
judgment was handed down electronically by circulation to the
parties' representatives by email and by release to SAFLII on
21
FEBRUARY 2023. The date and time for hand-down is deemed to be 21
FEBRUARY 2023 at 15H00.
[1]
This matter was initiated by way of
ex parte
application to
obtain a provisional restraining order. Before such an order could be
granted by the court, the respondents became
aware of the
application. The parties negotiated a postponement and it culminated
in the matter proceeding on opposed basis. These
turn of events did
away with the proceedings as envisaged and now the applicant seeks a
final restraint order.
[2]
The applicant is a statutory body established by law bestowed with
the power to institute and conduct criminal proceedings
on behalf of
the State.
[1]
The first
respondent is a legal entity incorporated in terms of the company
laws of the Republic. The second and third respondents
are not only
husband and wife but directors of the first respondent. All three (3)
respondents are arraigned before the Regional
Court, Bloemfontein
with a plethora of charges. These are transgressions of the
provisions of the Income Tax Act 58 of 1962,
Tax Administration Act
28 of 2011
,
Unemployment Insurance Contributions Act 4 of 2002
and
Skill Development Act 9 of 1999.
[3]
The background of this application can be summarised briefly as
follows. The case on behalf of the applicant
set out in the founding
affidavit is that the respondents stole and contravened the specified
Acts resulting in a loss running
into millions of Rands. These monies
are allegedly owed to the South African Revenue Service (SARS). The
exact figure is some kind
of a moving target because of the ever
increasing penalties and interests added to the capital amount. These
offences are alleged
to have been committed between February 2017 to
February 2020.
[4]
In the supporting affidavit it is alleged that during the
aforementioned period, the second and third respondents
were
directors. Not only that, they were also actively involved in its
affairs as evidenced by numerous payments made to them couched
as
directors’ remuneration. Some funds were also channelled into a
Trust of which both of them are Trustees and Beneficiaries.
The main
allegation is that the second and third respondents were disguising
the true financial position of the first respondent.
[5]
Turning to the very purpose of this application, movable and
immovable assets were identified said to be held
by the respondents
were enumerated. These include bank accounts, a fleet of trucks and
immovable properties in and around Bloemfontein
and Kathu. There are
also properties owned by one or two of the respondents of which the
one or others are believed to be having
an interest in it. The
primary purpose of the order sought is to preserve the assets to be
realised in due course in satisfaction
of a confiscation order.
Assuming such an order will ultimately be made.
[6]
The respondents disavow the allegations made on behalf of the
applicant. The opposition is founded on the
grounds that these
proceedings constitute an abuse of the applicable legislation, which
is used
in terrorem
and designed to intimidate them. They
allege
fraus legis
as it is not applicable and that the
charges of theft and transgressions of tax legislation are bad in
law. Their strong point is
that not all material facts were disclosed
in the papers and bank statements were incorrectly interpreted.
Lastly, that a substantial
period of twelve (12) months elapsed
before an
ex parte
application was launched against them.
Which was not supported by any evidence.
[7]
The third respondent who deposed to an affidavit on behalf of all of
the respondents, outlined the distressed
financial position of the
first respondent since 2017. In order to keep the first respondent
afloat, it traded on an overdraft.
She was quick to point out that
the first respondent was not trading recklessly. In addition, the
second and third respondents
as well as their Trusts advanced monies
to it to sustain its liquidity. She revealed the many plans set in
motion to ease the situation.
Among them was to sell the portion of
the property known as 7 De Bloem Avenue, Bloemfontein. The sale was
delayed as a result of
the slow decision from the Municipality
pertaining to the application for subdivision of the said property.
[8]
It would appear that the respondents are not at odds with the amount
claimed by SARS. They are doing everything
in their power to
extinguish the debt. These efforts were conveyed to the court
a
quo
to grant them extension to settle it. These were interrupted
by this application.
[9]
The case for the respondents is that there is no factual basis to
allege that the respondents are involved
in racketeering activities,
money laundering or any gang related activities in regard to the
charges. Therefore, the provisions
of the Prevention of Organised
Crime Act 121 of 1998 (POCA) are not applicable to their case. I
agree. The case made is that the
allegations of theft are contrived
and bad in law. The point is that there were no physical deductions
of monies and all these
were book entries. Therefore, the monies for
Value Added Tax (VAT) and Pay As You Earn (PAYE) were not capable of
being stolen.
Reference is also made to allegations being made about
the payment of directors’ fees which they are entitled to in
terms
of the
Companies Act 71 of 2008
. This is provided for in the
law and it is a long shot to even raise this aspect to demonstrate
the commission of any offence.
Papers do not reveal any elaborate
scheme on the part of the respondents to disguise any payments using
the monies belonging to
SARS.
[10]
The affidavit of the third respondent avers that crucial information
was withheld from the court and dispute the assertion
that there were
any monies in the bank accounts. Also that the motor vehicles
referred to are subject to a finance agreement with
finance houses
namely Wesbank and Doorlean Investments. Only one motor vehicle is
fully paid and owned by the first respondent.
The first respondent
only has possession of the other motor vehicles while the ownership
vests with the financier until the debt
has been paid in full. These
are undisputed facts.
[11]
Both counsel made compelling submissions and it is imperative that
they are repeated here. Counsel for the applicant
submitted that
there is one argument determinative of this case i.e. whether there
is evidence upon which a court can on reasonable
grounds find that
the respondents may at a later stage be convicted of any offence(s).
Once it was answered positively that was
sufficient and the question
of an exact amount was not relevant for the purpose of the
proceedings before this court. This submission
is clearly wrong. That
is an important element of the offence of theft.
[12]
Counsel articulated with succinct eloquence all the provisions of
different Acts allegedly contravened by the respondents.
In this
matter the respondents have failed to ring-fence the monies for their
tax obligations and that constituted theft. On the
prevailing facts,
she argued, they could be found guilty of theft. On their own
version, the respondents outrightly admitted that
they used the
monies due to SARS for their operational expenses. Counsel for the
applicant countered the argument and submitted
that POCA does apply
in this matter. Her argument was simply that the amounts withheld
from SARS qualified as proceeds of unlawful
activities. In addition,
the respondents were creating a dispute of fact where there is none
to create confusion.
[13]
In rebuttal, counsel for the respondents argued strongly that it was
only the first respondent who had not complied with
its tax
obligations. That granted did not automatically mean that the
applicant will secure a conviction. The most important point
made was
that none of the statutory offences levelled against the respondents
were in existence at the stated period. Therefore,
the conduct
sustaining the charges did not constitute an offence at the time.
[14]
The next contention was that the court must look at the
actus reus
of each and every accused person to conclude that there was
evidence required to secure a conviction. In this matter the second
and third respondents were not charged in their capacity as
directors. Counsel pointed out that the applicant has not made out a
case in the papers concerning the offence(s) that may lead to
conviction. It must be sufficiently stated in the papers what are
those “any other offences” that they might be found
guilty of.
[15]
He submitted that the second and third respondents are also taxpayers
and it is common cause that they are tax compliant.
He differed with
counsel for the applicant that the amount is irrelevant. The case
that the respondents are called to meet is failure
to pay not
theft/fraud. He emphasised that the provisions of one Act cannot be
used to achieve something dealt with in another
Act.
[16]
He pointed out that in this matter the second and third respondents
were being punished for the omissions of others.
All the same the
failure to pay was not wilful, but due to difficult business climate
that existed at the time. The cardinal point
made was that some
offences either did not exist or were repealed. Therefore, the
application should be dismissed with costs on
a punitive scale.
[17]
The general rule is that final relief may only be granted if those
facts as stated by the respondent, together with those
facts stated
by the applicant that are admitted by the respondent, justify the
granting of the order.
[2]
The
exception to this general rule can occur where the allegations or
denials are so far-fetched that the court is justified in
rejecting
them only on the papers. The robust approach to the determination of
disputes of fact in certain circumstances allows
more discretion in
ordering final relief on consideration of affidavits filed. This is
the best approach that will be followed
in this matter.
[18]
In motion proceedings an applicant must set out all the material
facts of the case in the founding affidavit. Both counsel
analysed it
correctly that the question is whether there is evidence on
reasonable grounds for believing that the respondents may
at a later
stage be convicted of any offence. Certainly this does not assume
that because a charge sheet has been issued and served
then that on
its own fulfil the requirement that someone will be convicted. Those
charges must be sustained by evidence.
[19]
Counsel for the applicant was at pains to explain exactly what
offences the respondents may be convicted with. It must
be clear to
the respondents the exact terms of the case they are invited to meet.
Clearly this submission is unhelpful and does
not advance the case of
the applicant. If counsel could not herself divulge the offences
referred to, it is a long task for the
court to make such assumption.
[20]
The respondents are not charged with theft of the VAT. It was also
correctly conceded in line with the judgment of the
Spilg J in
Grayston
Technology Investment (Pty) Ltd and Another v S
[3]
that VAT and PAYE are incapable of being stolen. In this matter, on
the respondents’ version, there was no money to even
cover the
key expenses of the first respondent. It was
inter
alia
kept
afloat by loans provided by the other respondents. There were no
funds to ring fence for the purposes of paying the tax liability.
It
stands to reason that there is no evidence upon which the respondents
may be convicted of the common law offence of theft.
[21]
The first respondent is the taxpayer that failed to meet its tax
obligations. It is a separate entity on its own. The
other taxpayers
are tax compliant. There is no evidence on the papers, as counsel for
the respondents correctly argued, that they
did anything to be
visited with the criminal charges. They mentioned the names of the
people who were managing the affairs of the
first respondent. It is
insufficient, without facts, to lay the omission of others at their
feet. The fact that they received directors’
fees does not, on
its own, make them a party to any crime. They are entitled to
directors’ fees as directors of the first
respondent.
[22]
It also transpired that there are fundamental defects on the charge
sheet. The provisions of the legislation relied upon
were either not
in operation at the stated period or repealed. To illustrate this
point
section 234(2)(k)
of the
Tax Administration Act 28 of 2011
was
not in existence at the relevant period. It was only inserted into
section 234 during January 2021.
Section 234(p)
of the
Tax
Administration Act was
also repealed.
[4]
Lastly
section 17
of the
Unemployment Insurance Contributions Act 4
of 2002
was repealed.
[5]
There
is no such offence. The neglectful manner the charge sheet is drawn
is indicative of a very weak case advanced by the applicant.
[23]
The primary purpose of this application is to coax the first
respondent to settle its tax liability.
Section 163
of the
Tax
Administration Act 28 of 2011
has similar provisions as POCA. The
slight difference is that the former is designed to recover debts to
SARS while the latter
deals with forfeiture of assets. On the facts
of this matter, there is no justification to approach this court
relying on the provisions
of POCA. There are no allegations that the
respondents are involved in racketeering, money laundering or gang
related activities.
This is a business entity that fell on hard times
and was unable to meet its obligations. I agree with counsel for the
respondents
that it is an abuse of the process. The point is that
there are many criminal and administrative penal sanctions that can
be imposed
in transgressions of this nature.
[24]
This application was brought more than a year after the summons was
issued in the Magistrate’s Court. The first
court appearance of
the respondents was on 1 September 2021. There is no morsel of
evidence in the papers as to why it was suddenly
necessary to launch
the application or what took the applicant so long to proceed with
it. It is also not the case of the applicant
that the respondents
will dissipate any assets to the detriment of SARS. The sudden haste
is unexplainable. This application ought
to fail in its entirety.
[25]
Counsel for the respondents urged me to award costs on an attorney
and client scale. In
Plastics Convertors Association of South
Africa (PCASA) obo Members and Others v National Union of Metal
Workers of South Africa
and Others
at paragraph 46 the Court
stated the following: -
“
[46]
…
The
scale of attorney and client is an extra-ordinary one which should be
reserved for cases where it can be found that a litigant
conducted
itself in a clear and indubitably vexatious and reprehensible
conduct. Such an award is exceptional and is intended to
be very
punitive and indicative of extreme opprobrium”.
[6]
[26]
Although this application is lacking in substance, there are no
cogent reasons to award costs on the punitive scale.
There is nothing
convincing that the applicant acted in a high handed manner in
bringing the application. What is apparent is that
the law was not
well researched to sustain the application. The facts were equally
weak. A usual costs order will suffice.
[27]
The following order is made: -
27.1. The
application is dismissed with costs.
M.A.
MATHEBULA, J
APPEARANCES:
Counsel
on behalf of the Applicant: Ms
S. Khumalo
Instructed
by: Director
of Public Prosecutions
BLOEMFONTEIN
Counsel
on behalf of the Respondents: Adv.
L.J. Lowies
Instructed
by: J.
Malan Attorneys
C/O Blair Attorneys
BLOEMFONTEIN
[1]
Section 20(1)
of the
National Prosecuting Authority Act 32 of 1998
,
as amended.
[2]
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634H.
[3]
[2016] 4 All SA 908
(GJ).
[4]
See section 35 of the Tax Administration Laws Amendment Act 24 of
2020.
[5]
See section 271 of Act 28 of 2011.
[6]
(2016) 37 ILJ 2815 (LAC).