THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 357/2020
In the matter between
SAMANCOR HOLDINGS (PTY) LTD FIRST APPELLANT
BHP BILLITON SA LTD SECOND APPELLANT
ANGLO SOUTH AFRICA CAPITAL (PTY)
LTD
THIRD APPELLANT
and
SAMANCOR CHROME HOLDINGS (PTY)
LTD
FIRST RESPONDENT
SAMANCOR CHROME LTD SECOND RESPONDENT
Neutral citation: Samancor Holdings (Pty) Ltd and Others v Samancor
Chrome Holdings (Pty) Ltd and Another (357/2020) [2021] ZASCA 60 (24 May
2021)
Coram: NAVSA, SALDULKER and MBATHA JJA and LEDWABA and
ROGERS AJJA
Heard: 6 May 2021
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Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand -down is
deemed to be have been at 10:00 on Monday 24 May 2021.
Summary: Arbitration – extension of time in terms of s 8 of Arbitration Act –
– proper approach and relevant considerations – delay in bringing s 8 application.
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_____________________________________________________________________
ORDER
_____________________________________________________________________
On appeal from: The High Court , Gauteng Division, Joh annesburg (Meyer J
sitting as court of first instance) : judgment reported sub nom Samancor Chrome
Holdings (Pty) Ltd and Another v Samancor Holdings (Pty) Ltd and Others
[2019] 4 All SA 906 (GJ).
The appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
_____________________________________________________________________
Rogers AJA ( Navsa, Saldulker and Mbatha JJA and Ledwaba AJA
concurring)
[1] With the leave of this court , the appellants appeal against a decision of the
Gauteng Division of the High Court (Meyer J) granting the respondents an
extension of time, in terms of s 8 of the Arbitration Act 42 of 1965, to initiate
arbitration proceedings against the appellants in order to enforce a tax indemnity
contained in the agreement mentioned hereunder. Section 8 provides:
‘Where an arbitration agreement to refer future disputes to arbitration provides that any claim to
which the agreement applies shall be barred unless some st ep to commence arbitration
proceedings is taken within a time fixed by the agreement, and a dispute arises to which the
agreement applies, the court, if it is of the opinion that in the circumstances of the case undue
hardship would otherwise be caused, may extend the time for such period as it considers proper,
whether the time so fixed has expired or not, on such terms and conditions as it may consider
just but subject to the provisions of any law limiting the time for commencing arbitration
proceedings.’
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[2] For convenience I shall, where appropriate, refer to the present respondents
as the claimants, and the present appellants as the defendants, as they were in the
arbitration proceedings giving rise to this appeal.
The sale agreement
[3] The arbitration agreement is contained in a sale of shares agreement which
the parties concluded in February 2005. Although some of the companies then had
different names, I shall use their current names. Before the implementation of the
agreement, the second respondent, Samancor Chrome Ltd (Samancor Chrome),
was a wholly -owned subsidiary of the first appellant, Samancor Holdings (Pty)
Ltd (Samancor Holdings). The second and third appellants, BHP Billiton SA Ltd
(BHP) and Anglo South Africa Capital (Pty) Ltd (ASAC) , were Samancor
Holdings’ shareholders. Samancor Chrome conducted manganese and chrome
mining businesses and held certain steel investments.
[4] In terms of the sale agreement, the first respondent, Samancor Chrome
Holdings (Pty) Ltd ( SCH), acquired the chrome business by buying the shares in
Samancor Chrome from Samanco r Holdings. This required restructuring so as to
leave Samancor Chrome as a company owning only the chrome business. The
restructuring steps (defined in the agreement as the Restructure) were: a disposal
by Samancor Chrome of its manganese business and related immovable properties
to a subsidiary of Samancor Chrome and a distribution by the latter of the shares
in the subsidiary to Samancor Holdings; a distribution by Samancor Chrome to
Samancor Holdings of the stainless steel investments and a defined amou nt in
cash; and a disposal by Samancor Chrome of any non -chrome assets remaining
after implementation of the foregoing steps. The agreement defined the chrome
business as the Chrome Operations while the non-chrome assets (including the
manganese business) were defined as the Excluded Assets.
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[5] The defined Effective Date of the agreement was 1 June 2005. In terms of
the agreement, this was the date on which the parties implemented their
agreement economically. It was not possible, however, for the restructurin g and
transfer of shares to SCH to be completed by this time. Among other things,
approval was needed from the competition authorities, and various conversions of
mining rights and approvals had to be sought in terms of the Mineral and
Petroleum Resources Development Act 28 of 2002. The defined Closing Date
would only occur once all conditions precedent were fulfilled and once the
restructuring (including the mining conversions and approvals) were obtained. In
the event, the Closing Date was 3 April 2006.
[6] I shall refer to the period between the Effective Date and Closing Date as
the interim period. During the interim period, Samancor Chrome continued in law
as the owner of the chrome and manganese businesses and the steel investments ,
with Samancor Holdings (the seller) as its shareholder . The agreement contained
provisions to give SCH (the buyer) de facto control of the chrome business during
the interim period. Legal control only occurred on 3 April 2006 when SCH
became the owner of the shares in Samancor Chrome with the chrome operations
as the latter’s only remaining business.
[7] Samancor Chrome was at all material times a registered taxpayer with 3 0
June as its financial and tax year -end. Until 3 April 2006, its income tax was
determined by the combined res ults of its manganese and chrome businesses and
its steel investments. Since economically the parties w anted to achieve a
separation from the Effective Date (1 June 2005), the agreement contained the
following indemnity in clause 24.1.5 (I quote clause 24. 1.1 as well, for reasons
that shall appear presently):
‘24.1 Subject to the provisions of clauses 23.3 to 23.9 inclusive, the Seller [Samancor
Holdings] indemnifies the Purchaser [SCH] and the Company [Samancor Chrome], with effect
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from the Effective Date , against all loss, liability, damage or expense which the Purchaser
and/or the Company, as the case may be, may suffer as a result of or which may be attributable
to:
24.1.1 the conduct of the business and/or the affairs of the Company, other than the Ch rome
Operations. Without limiting the generality of the foregoing, the business and/or affairs of the
Company, other than the Chrome Operations, for the purposes of this clause 24.1.1 shall include
(without limitation) the Excluded Assets, or any of them, and the indemnity given by the Seller
to respectively the Purchaser and the Company in terms of this clause 24.1 shall include (but
not be limited to) all loss, liability, damage or expense which may result from, relate to and/or
in any way be associated w ith the Excluded Assets, or any of them, and/or the condition and/or
use by any person for whatsoever purpose of any such asset;
. . .
24.1.5 any proved liability of the Company and/or any Subsidiary and/or Associate Company
for Taxation in respect of t he Excluded Assets, or any of them; and/or in respect of the Chrome
Operations, if such liability in respect of the Chrome Operations shall not have been provided
for in the Effective Date Financial Statements or disclosed in writing by the Seller to the
Purchaser in the Disclosure Letter for all periods prior to the Effective Date . . .’
The clause define d Taxation as including, among other charges, income tax, any
taxation arising from new assessments or the reopening of assessments, and any
penalties or interest as a result thereof.
[8] As appears from the opening words of clause 24.1, its provisions were
subject to clauses 23.3 to 23.9. Clause 23.4, which I shall call the threshold clause,
provided as follows:
‘Save in respect of any claim, damage, loss or expense which arises from and/or is attributable
directly or indirectly to the Restructure and/or the implementation of the Restructure, no
directly or indirectly to the Restructure and/or the implementation of the Restructure, no
liability shall attach to the Seller in respect of any breach of representation, undertaking
warranty contained in this Agreement or indemnity contained in clause 24, other than clause
24.1.1, in relation to any established claim for loss sustained by the Company or the Purchaser
which is less than US$2 000 000 … and when aggregated with other such claims or losses suc h
aggregate amount is less than US$20 000 000 …’
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[9] Clause 23.6 was a time-bar clause reading in relevant part as follows:
‘23.6 Any claim made upon the Seller in respect of any representations, undertakings or
warranties contained in this Agreement or indemnities contained in clause 24, other than clause
24.1.1 and 24.1.2, shall be wholly barred and unenforceable unless:
…
23.6.3 in respect of any Income Tax payable by or levied on the Company, proceedings in
respect thereof shall have been issued and serv ed prior to the sixth anniversary of the Effective
Date.’
[10] It follows that a claim for an indemnity concerning income tax made in
terms of clause 24.1.5 became barred and unenforceable unless proceedings were
issued and served before 1 June 2011. Since clause 43 provided for arbitration, the
relevant initiating process was determined by the arbitration rules specified in
clause 43.
[11] By contrast, a claim for an indemnity in terms of clause 24.1.1 was
excluded from the time -bars contained in clause 23.6 , so the ordinary rules of
prescription applied. The same is true of the indemnities in clauses 25.2 and 25.3
which SHP and Samancor Holdings respectively gave to Samancor Chrome in
respect of any claims, damage, loss, expense or costs suffered or incurred during
the interim period in respect of the chrome and non -chrome businesses
respectively. Samancor Holdings’ indemnity in clause 25.3.1 was as follows:
‘The Seller hereby, mutatis mutandis on the basis described in clause 25.2.1, indemnifies and
holds harmless the Company against any claims, damage, loss, expense and/or costs brought
against and/or suffered and/or incurred by the Company during the Interim Period, arising from
and/or in any way associated with and/or connected to the conduct of the business and/ or the
affairs of the Company other than the Chrome Operations …’
[12] I shall in due course deal more fully with the appellants’ submissions
regarding the interrelationship between clauses 23.6.3 and 24.1.5. At this stage,
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however, I should mention that the ap pellants’ argument, in its most extreme
form, was that the two clauses read together constituted a temporally limited
indemnity in the nature of a voetstoots clause, ie that the indemnity only applied
to claims initiated by arbitration proceedings within s ix years from the Effective
Date, and that s 8 was thus wholly inapplicable.
[13] I reject that argument. I quoted s 8 in the opening paragraph of this
judgment. Clause 23.6.3 is squarely covered by its terms. That clause read with
clause 43 of the sale agreement provides that a claim shall be barred unless (in the
language of s 8) ‘some step to commence arbitration proceedings is taken within a
time fixed by the agreement’, viz the issuing and serving of the initiating arbitral
process before the sixth anniver sary of the Effective Date. Furthermore, t he
argument that s 8 does not apply to clause 23.6.3 is diametrically at odds with the
appellants’ submissions in the arbitration proceedings, where they contended that
the availability of s 8 to ameliorate undue h ardship meant that clause 23.6.3 was
not contrary to public policy. It was on this very basis that the appellants
succeeded before the arbitration appeal panel, as I shall in due course explain.
The tax claim
[14] The claim at issue in this case arose from an additional assessment raised by
the South African Revenue Service (SARS) in September 2012 in respect of
Samancor Chrome’s tax year ended 30 June 2005. The assessment was for income
tax relating to ‘Excluded Assets ’. SARS subsequently levied penalty tax and
interest as well.
[15] Samancor Chrome, whose tax affairs in respect of its 2005 year were still
being administered by Samancor Holdings (the seller), submitted its 2005 tax
return on 30 June 2008. Without having raised any intervening queries, SARS on
7 Febru ary 2011 issued an original assessment. Although not so stated in the
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papers, it can be assumed that Samancor Chrome paid the assessed tax of
R559 784 349 and that Samancor Holdings reimbursed Samancor Chrome any
amounts attributable to the Excluded Assets.
[16] The six-year time-bar expired on 1 June 2011. On 16 August 2011 SARS
began an investigation into Samancor Chrome’s tax affairs, including its 2005 tax
year. Having received requested documentation, SARS on 7 October 2011 drew
attention to a note in the c ompany’s 2005 financial statements indicating that an
amount of R220 million, representing an impairment on investment, was said to
have been included in profit from operations, whereas only R167 million was
added back in the tax computation. A note in the tax computation stated that the
balance of R53 million ‘went through retained earnings’. The company was asked
to show where this figure appeared and why the full amount of R220 million
should not be added back in the tax computation.
[17] Samancor Chrome (now under the buyer’s control) referred SARS’ queries,
to the extent that they relate d to Excluded Assets, to the seller, Samancor
Holdings. The latter’s representatives replied on 14 December 2011. In regard to
the 2005 impairment query, they said that they were still investigating the matter.
On 15 February 2012 they reverted, stating that the non -inclusion of R53 million
in the tax calculation ‘was an oversight and there was no intention to evade the
payment of income tax’. Samancor Chrome passed this information on to SARS.
[18] On 25 July 2012 SARS issued a letter of audit findings in respect of the tax
years 2005 – 2008. Regarding the 2005 impairment issue, SARS stated that
impairment on investments is not allowed as a deduction in terms of s 11(a) of the
Income Tax Act 58 of 1962 and they would thus be adding back the impairment
of R52 575 171. SARS invited Samancor Chrome to advance mitigating
circumstances as to why additional tax (which I shall call penalty tax) should not
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be levied in terms of s 76(1)(c) of the Income Tax Act in respect of this and other
tax adjustments.
[19] Samancor Chrome forwarded the audit findings to Samancor Holdings so
that the latter could address matters pertaining to Excluded Assets. On 10 August
2012 Samancor Holdings’ representative s responded. They agreed that the
impairment on investment should be added back but urged that Samancor Chrome
request SARS to waive penalty tax and interest ‘on the basis that the omission was
not m ade with the intention to evade taxation’. Samancor Chrom e made this
request to SARS.
[20] On 27 September 2012 SARS raised an additional 2005 assessment which
increased the original assessment by taxable income of R52 575 171, and levied
tax on this amount of R15 246 800 (I shall refer to the latter as the additional tax).
On 11 October 2012 SARS raised penalty tax of R7 623 400 (ie at a rate of 50%
of the additional tax) together with interest , in terms of s 89quat(2) of the Income
Tax Act, of R17 267 001.
[21] As requested by Samancor Holdings, Samancor Chrome in Decem ber 2012
lodged an objection against the penalty tax and interest. In January 2013 SARS
agreed to reduce the rate of penalty tax from 50% to 20%. Again as requested by
Samancor Holdings, Samancor Chrome in February 2013 noted an appeal against
the penalty tax and interest. Some months later the matter was settled with SARS
on the basis that the rate of penalty tax would be reduced to 15%. No interest was
waived. In all, Samancor Chrome, as it was legally obliged to do, ended up paying
SARS R27 420 297, comp rising the additional tax of R15 246 800 plus
R12 173,497 in penalty tax and interest.
[22] In the meanwhile, on 24 November 2012 the claimants’ attorneys wrote to
Samancor Holdings calling on the latter to pay or admit liability for the additional
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tax, penalty tax and interest. They also ma de demand on BHP and ASAC wh ich
had provided suretyships for Samancor Holdings’ obligations. These letters did
not refer to any particular indemnities. The defendants’ attorneys replied by
stating that it did not appear to their clients that they had any liability in respect of
the claims and that the claimants’ attorneys had failed to set out the legal basis for
the claims. The claimants’ attorneys made further demands on 1 March 2013,
placing particular reliance on the indem nity in clause 24.1.1. Once again they
were met with a denial of liability.
The litigation history
[23] The claimants initiated arbitration proceedings in August 2013. In seeking
to recover the amount of R27 420 297, they relied on clauses 24.1.1, 24.1.5 and
25.3. The defendants served their statement of defence on 3 February 2014. They
disputed the applicability of clauses 24.1.1 and 25.3. In relation to clause 24.1.5,
they relied on the threshold clause, contending that the claims did not meet the $2
million t hreshold. They also pleaded that a claim under that clause was time -
barred.
[24] In their replication the claimants alleged that enforcement of the time -bar
would be contrary to public policy. In the alternative, and if the arbitrator were to
find the time -bar enforceable, they prayed that the arbitration be stayed to allow
them to seek an extension of time from the high court in terms of s 8. In a
rejoinder the defendants denied that enforcing the time -bar was contrary to public
policy. They also denied that c lause 23.6.3 was a clause falling within the ambit
of s 8 or that the claimants would suffer undue hardship if the time -bar were
enforced.
[25] The arbitrator heard the matter in December 2017. The only evidence was
that contained in affidavits submitted on beh alf of the claimants by Mr Wessel
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Erasmus, SCH’s Chief Financial Officer, and Mr Antonie van der Loo, Samancor
Chrome’s financial manager. In argument before the arbitrator it was common
cause that the claim fell within the scope of clause 24.1.5, the defe nces to the
claim under that clause being confined to the threshold issue and the time -bar.
Although on the pleadings the defendants had denied that s 8 was applicable to
clause 23.6.3, in argument they accepted that it was applicable . They deployed its
applicability by arguing (a) that the existence of s 8 as an antidote to undue
hardship meant that enforcement of the time-bar clause was not contrary to public
policy; and (b) that the claimants, by having not hitherto brought a s 8 application,
had by now foregone the opportunity to do so.
[26] The arbitrator issued his award on 5 February 2018. He held (a) that the
claim did not fall within the scope of clause 25.3; (b) that although the claim was
covered by the language of clause 24.1.1, that clause’s operation as a general
provision was excluded by clause 24.5 which was a special provision concerning
tax; (c) that the three components of the tax claim (additional tax, penalty tax and
interest) constituted a single claim or item of loss for purposes of the thre shold
clause and that the value thereof exceeded $2 million; and (d) that the
enforcement of the time -bar clause would be contrary to public policy. He added
that if he had found the time -bar clause to be enforceable, he would have stayed
the arbitration to allow the claimants to bring a s 8 application. He thus made an
award in favour of the claimants as prayed.
[27] The defendants pursued an appeal, which was heard by an appeal panel in
July 2018. The defendants abandoned reliance on the threshold clause. The panel
issued a preliminary award on 18 October 2018. The panel (a) agreed with the
arbitrator that clauses 24.1.1 and 25.3 were inapplicable; (b) found that in view of
arbitrator that clauses 24.1.1 and 25.3 were inapplicable; (b) found that in view of
s 8, enforcement of the time-bar clause was not contrary to public policy; (c) held
that the claimants should be afforded an opportunity to apply to the high court for
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a s 8 extension. The panel thus stayed the appeal proceedings pending the
outcome of such an application. In acceding to the claimants’ request for a stay,
the panel said:
‘We do however not express any view on the merits of such an application or on the question
whether the High Court might, in the exercise of its discretion, deny them relief on the grounds
of their delay or on some other basis.’
[28] The claimants launched their s 8 application in November 2018. In October
2019 the high court delivered judgment, granting the claimants an extension ‘until
after the applicants’ claim in the arbitration proceedings was initiated on or about
20 August 2013’ and ordering the respondent s in the application to pay the
applicants’ costs including the costs of two counsel.
The nature of the s 8 power
[29] Both sides argued the case on the basis that the power exercised by a court
in terms of s 8 of the Arbitration Act is a discretion in the str ict (true or narrow)
sense. Their view accords with the decisions of the English courts on s 27 of the
now repealed English Arbitration Act 1950, which served as the model for our s 8
(see, eg, Irish Agricultural Wholesale Society Ltd v Partenreederei MS ( The
‘Eurotrader’) [1987] 1 Lloyds Rep 418 (CA) at 421).
[30] In order to succeed the appellants must thus satisfy us that the high court
(as it has variously been said) exercised its discretion capriciously or unjudicially,
or did not bring an unbiased judgment to bear, or acted on a wrong appreciation of
the facts or applicable legal principles, or did not act for substantial reasons
(Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1036 (SCA) at 1044J -
1045B; Giddey NO v JC Barnard and Partners [2006] ZACC 13; 2007 (5) SA
525 (CC) para 17 ). The appellants contend ed that the trial court had
misapprehended the relevant legal principles and misconstrued the facts. Thus it is
the reasoning of the high court that calls for particular scrutiny.
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The applicable legal principles
[31] In order to assess whether the high court misapprehended the legal
principles, it is necessary to state what they are. Section 8 of our Arbitration Act
is, as I have said, modelled on s 27 of the repealed English Arbitration Act 1950 ,
which in turn re-enacted s 16(6) of the English Arbitration Act 1934 . In England,
the power of extension is currently to be found in s 12 of the Arbitration Act
1996, the provisions of which are materially different to s 27 of the repealed Act.
In terms of s 12(3 ), the court may only grant an extension of time in one of two
circumstances: if ‘the circumstances are such as were outside the reasonable
contemplation of the parties when they agreed the provision in question, and that
it would be just to extend the time’; or if ‘the conduct of one party makes it unjust
to hold the other party to the terms of the provision in question’. South Africa has
not followed suit, and i t is unsurprising, in the circumstances, that courts in this
country have had regard to English judgments dealing with s 27: see
Administrateur, Kaap v Asla Konstruksie (Edms) Bpk 1989 (4) SA 458 (C);
Chevron South Africa (Pty) Ltd v Unical Calulo Bunker Services (Pty) Ltd [2011]
ZAWCHC 266. In the present case, both sides referred freely to English cases.
This is not to say that the two considerations specified in s 12(3) of the current
English Act are not relevant in the exercise of a court’s discretion in terms of our
s 8. The respondents’ counsel accepted that they were. They are not, however, the
only relevant considerations, and the weight to be given to them will depend on
the particular circumstances of the case and on the court’s discretionary
assessment of all relevant considerations.
[32] The language of s 8 is straightforward. The power to ext end arises if the
court is of the opinion that ‘in the circumstances of the case undue hardship would
otherwise be caused’ (my emphasis) . The hardship which the section
otherwise be caused’ (my emphasis) . The hardship which the section
contemplates is hardship to the claimant because its claim is time -barred. Every
claimant whose claim is time -barred can be said to suffer hardship through the
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loss of its claim, but the section requires something more. The court must be of
the opinion that the claimant’s hardship will be ‘undue’. The ordinary meaning of
that word conveys a hardship which is unwarranted or inappropriate because it is
excessive or disproportionate. Whether the hardship is ‘undue’ in this sense must,
as the section tells us, be determined with reference to the circumstances of the
particular case.
[33] There is noth ing in s 8 to indicate that the power of extension should only
be exercised rarely or in exceptional circumstances. There is no reason to add a
gloss to the plain language of the section. A restrictive interpretation would be
antithetical to s 34 of the Co nstitution which guarantees access to courts or other
independent and impartial tribunals in order to have justiciable disputes
adjudicated.
[34] This is the view which the English courts took of s 27 of the 1950 Act
following the landmark judgment of the Engli sh Court of Appeal in Liberian
Shipping Corporation v A King and & Sons Ltd (The ‘Pegasus’) [1967] 1 All ER
934 (CA). In Comdel Commodities Ltd v Siporex Trade SA [1990] 2 All ER 552
(HL) the House of Lords declined to read restrictions into the ordinary meaning of
s 27. Lord Bridge of Harwich said the following (557f-h):
‘The mischief which the section sets out to remedy, in my opinion, is simply the undue or
unreasonable hardship suffered by a party to an arbitration agreement who is deprived of the
opportunity to pursue a contractual claim by the operation of a restrictive contractual time limit
in circumstances in which he ought reasonably to be excused for his failure to comply with it.’
[35] Any circumstance rationally bearing on the ‘undue’ question may be taken
into account by the court. Those that occur readily to mind are: (a) the terms of
the time -bar clause and the broader contractual setting; (b) the extent of the
claimant’s delay; (c) the explanation for the claimant’s failure to bring the claim
claimant’s delay; (c) the explanation for the claimant’s failure to bring the claim
timeously; (d) the extent of the claimant’s fault, if any, in relation to the delay;
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(e) whether the defendant caused or contributed to the non -compliance and, if so,
the extent of the defendant’s fault in that regard; (f) the nature and importance of
the cl aim; (g) the extent of the prejudice, if any, suffered by the defendant in
consequence of the delay. U nsurprisingly, considerations of this kind feature in
the English cases. In Moscow V/O Export khleb v Helmville Ltd (‘The Jocelyne')
[1977] 2 Lloyds Rep 12 1 (CA) Brandon LJ summarised the guidelines laid down
in the majority judgments in The Pegasus thus (at 129):
‘(1) The words “undue hardship” in s 27 should not be construed too narrowly. (2) “Undue
hardship” means excessive hardship and, where the hardshi p is due to the fault of the claimant,
it means hardship the consequences of which are out of proportion to such fault. (3) In deciding
whether to extend time or not, the Court should look at all the relevant circumstances of the
particular case. (4) In particular, the following matters should be considered: (a) the length of
the delay; (b) the amount at stake; (c) whether the delay was due to the fault of the claimant or
to circumstances outside his control; (d) if it was due to the fault of the claimant, the degree of
such fault; (e) whether the claimant was misled by the other party; (f) whether the other party
has been prejudiced by the delay, and, if so, the degree of such prejudice.’
[36] In Comdel Commodities supra the House of Lords endorsed these
principles (558d-f), and they were applied in this country in Asla Konstruksie and
Chevron supra . See also M J Mustill and S C Boyd The Law and Practice of
Commercial Arbitration in England 2 ed (1989) at 212 -214, setting out a
somewhat fuller list of factors whi ch have been taken into account by English
courts. Libra Shipping and Trading Corporation Limited v Northern Sales Ltd
(The ‘Aspen Trader’) [1981] 1 Lloyds Rep 273 (CA) is a good illustration of their
(The ‘Aspen Trader’) [1981] 1 Lloyds Rep 273 (CA) is a good illustration of their
application. The Court of Appeal held that the trial court had failed to have regard
to relevant considerations, so that the court on appeal was entitled to assess the
matter afresh. The delay was two and a half months in relation to a clause which
required claims to be brought within three months of final discharge of cargo. The
delay was entirely the fault of the claimant. The defendant was in no way
responsible for misleading the claimant. As against this, the claim was large and
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its forfeiture would involve a great degree of hardship. T here was no prejudice to
the defendant, a factor which Brandon LJ regarded as ‘of the utmost importance in
weighing the case as a whole’ (at 280). The Court of Appeal concluded that
without an extension of time undue hardship would be caused to the claimant, and
the extension was granted.
[37] Delay features in two ways. First, there is the delay from when the time -bar
expired until the initiation of the arbitration proceedings or the seeking of an
extension of time. (This is the delay contemplated in consideration 4(a) mentioned
in the passage from The Jocelyne which I quoted earlier.) Second, there is the
delay from when the claimant becomes aware of the need to seek an extension
until the bringing of proceedings to obtain the extension. In England, it has been
said that because of the discretionary nature of the power conferred by provisions
such as s 27 of the 1950 Act, a claimant should seek the extension without undue
delay after becoming aware of the need for it.
[38] Delay in seeking discretionary remed ies is likewise recognised i n this
country as a factor relevant in the exercise of the discretion , in the sense that
unreasonable delay may result in the discretionary remedy being refused (see, eg,
Beweging vir Christelik -Volkseie Onderwys and Others v Minister of Education
and Othe rs [2012] ZASCA 45; [2012] 2 All SA 462 (SCA) para 34; Off-Beat
Holiday Club and Another v Sanbonani Holiday Spa Shareblock Limited and
Others [2017] ZACC 15; 2017 (5) SA 9 (CC) para 35 ). However, to the extent
that the appellants argued that delay in seek ing the s 8 remedy is a threshold
requirement which could result in a claimant being non -suited without regard to
other factors, I reject the argument. In my view, delay of this kind is simply
another factor which the court will take into account in decidi ng whether or not
non-extension w ill cause the claimant undue hardship. An unreasonable delay
non-extension w ill cause the claimant undue hardship. An unreasonable delay
may be outweighed by the importance of the claim, the absence of prejudice to the
18
defendant and other relevant circumstances of the case . This is a matter for the
trial judge’s opinion.
The high court’s decision
[39] The high court dealt with the general principles in paras 19 -29 of its
judgment, referring to the two South African cases ( Asla Konstruksie and
Chevron) and the leading English authorities . These led the high court to direct
itself, on the law, in a manner consistent with the approach I have set out above.
The appellants do not say that the high court misdirected itself in regard to these
general principles.
[40] The factors which led the high court to conclude that undue hardship would
be suffered by the claimants if an extension of time were not granted were in
summary the following:
(a) Although a court exercising its discretion in terms of s 8 is not required to
investigate the merits of the claim, the court may take the merits into account
where they are manifest. In the present case, and but for the time -bar, the
claimants’ claim for a tax indemnity was good, indeed undisputed.
(b) The claimants were not at fault in regard to the expiry of the time -bar. They
did not know of, and could not have discovered, the existence of the claim on or
before 1 June 2011. The time -bar lapsed through circumstances beyond the ir
control. (That this is so will be apparent from my earlier setting out of the facts.)
(c) The def endants were at fault because they failed to include the amount of
R53 million in Samancor Chrome’s tax return.
(d) The defendants were also at fault because they only submitted the tax return
at the end of June 2008, whereas by law they should have done so by the end of
February 2006 and whereas historically extensions beyond that eight-month
window had not exceeded a further 12 months.
19
(e) If an extension were not granted, Samancor Holdings would, by virtue of its
own conduct and fault, benefit by bein g saved a substantial amount of tax
properly attributable to it.
(f) The claim involve d a substantial amount. With mora interest, the claim
totalled about R52 million at the time of the proceedings in the high court.
(g) The defendants would not be preju diced by an extension. The only prejudice
they advanced was losing the bargain of their time -bar, which was not relevant
prejudice. No trial prejudice was claimed. (Indeed, since the claim on its merits
was undisputed, no such prejudice was conceivable.)
(h) In regard to the claimants’ delay in bringing the s 8 application, this was a
relevant factor, indeed one of great importance, in the exercise of the court’s
discretion. In the present case, the claimants had promptly raised s 8 in their
replication as soon as the defendants pleaded the time-bar. The claimants’ reasons
for not applying to the high court at that time were, in the high court’s view,
readily apparent from the history of the litigation. Abitral determinations on other
issues might have ren dered a s 8 application moot. Although the high court
considered that the claimants should nevertheless have launched their s 8
application as soon as the defendants place d reliance on the time -bar, the
defendants had suffered no prejudice by virtue of the delay, and such delay should
not in the circumstances ‘tip the balance’ in favour of the defendants.
(i) In regard to the defendants’ reliance on party autonomy and their argument
that it appeared from the time-bar clause that the parties appreciated the risk that a
tax claim might only arise after expiry of the bar, the high court recognised the
importance attached by our law to the maxim pacta servanda sunt. The high court
did not consider, however, that there was a logical and principled distinction
between a time -bar such as clause 23.6.3, where time runs from a fixed date
between a time -bar such as clause 23.6.3, where time runs from a fixed date
unrelated to the coming into existence of the claim and a time-bar where time runs
from the coming into existence of the claim (the type of contractual time -bar
20
assessed, on public policy grounds, in Barkhuizen v Napier [2007] ZACC 5; 2007
(5) SA 323 (CC)). Party autonomy notionally applied to both forms of time -bar,
but s 8 of the Arbitration Act is a statutory inroad on contractual autonomy, and to
hold that contractual autonomy sho uld prevail is inconsistent with the liberal
approach mandated in the application of s 8. The historical pattern of delay in
submitting tax returns did not justify the conclusion that the parties in the present
case foresaw that the defendants might delay submitting the 2005 tax return as
long as they did and that in such tax return they would fail to include the amount
subsequently assessed to additional tax.
[41] Of the above factors, the only matters with which the appellants take issue
are (d), (h) and (i). It is convenient to deal with (h) first.
Delay in launching application (factor (h) supra)
[42] The appellants invoked authorities to the effect that once a defendant takes
the time -bar point, a claimant should not linger in bringing its s 8 application.
They cited, in argument to us, the same authorities that the high court mentioned
in discussing this point, namely a passage from Mustill and Boyd supra at 214-15
and Irish Agricultural Wholesale Society supra at 423. The appellant s submitted
that the approach taken by the claimants in this matter was fundamentally
inconsistent with the no-delay principle and that there is nothing in South African
law to mandate a different approach. They cited Chevron supra as support for the
proposition that a claimant may bri ng a s 8 application prior to completion of
arbitration, even though the arbitrator’s decision on other issues might render the
extension of time unnecessary.
[43] The appellants argue d that undesirable consequences would flow from
allowing a claimant first to run an arbitration to completion before bringing its s 8
application. A defendant might incur all the time and expense of defending an
21
arbitration on its merits, only to find that a s 8 application is refused, thus
rendering the arbitration proceedings irr elevant. A claimant is required , so it was
contended, to make an election at the outset whether to approach the high court
for an extension or to place its faith in a favourable decision from the arbitrator on
other points. Having chosen the latter, the claimant cannot fall back on the former.
The fact that a defendant has not suffered prejudice in consequence of the delay is
not in principle germane.
[44] As I observed earlier, delay in launching proceedings is a relevant factor,
but it is not a threshold requi rement. It is part of the global assessment of all
relevant circumstances influencing the exercise of the court’s discretion. This is
the way in which the high court approached the matter in the present case, and it
was right to do so.
[45] I reject the argumen t that prejudice is irrelevant. Because one is dealing
with the global assessment, the absence of prejudice is a relevant consideration,
and indeed a court exercising its discretion might properly afford it great weight. I
refer here to both forms of delay previously mentioned, viz delay after the lapsing
of the time-bar and delay after becoming aware of the need for a s 8 extension. In
assessing whether unreasonable delay should be overlooked in the context of
other discretionary remedies (inter alia in pre-constitutional common law review),
our courts always had regard to whether the other party ha d been prejudiced by
the delay. And the high court was correct to say that it is not relevant prejudice
that a defendant will, if an extension is granted, be fac ed with a claim which
would otherwise be barred; such ‘prejudice’ is inherent in every case of extension.
Relevant prejudice is prejudice to the defendant’s ability to resist the claim by
virtue of the passage of time.
22
[46] The appellants’ submissions about the undesirable consequences which
might flow if a claimant could follow the approach which the claimants did in the
present case are hypothetical. It is the facts of the particular case to which regard
must be had. Naturally one can suppose cases in which th e delay inherent in the
approach which the present claimants followed could cause substantial prejudice
to a defendant, and such prejudice would then be relevant. In the present case,
however, the defendants in the event suffered no relevant prejudice. The y did not
dispute the clause 24.1.5 claim on its merits. Their threshold argument in relation
to clause 24.1 5, and their applicability arguments in relation to clauses 24.1.1 and
25.3, were matters of interpretation, not disputed fact , and there was only a single
day of argument before the arbitrator and before the appeal panel. To the extent
that any part of the proceedings before the arbitrator or the panel are thought to
have been rendered unnecessary by the granting of an extension of time, the panel
will be entitled to take this into account in making its final costs award.
[47] As I understand the high court’s decision, it did not find that the claimants
were right to wait until the panel’s decision before bringing their s 8 application.
The high court considered that they should have brought their application
promptly after the defendants filed their statement of defence in February 2014,
and Chevron indicates that such an application would have been permissible
despite the fact that an arbitral decision on other issues might in due course render
the extension of time irrelevant.
[48] It is unnecessary to decide whether the high court was correct in finding, on
the particular facts of this case, that the claimants were at fault in not bringing
their s 8 applica tion as soon as the defendants pleaded the time -bar. The high
court’s legal approach was one which favour ed the appellants and accorded with
court’s legal approach was one which favour ed the appellants and accorded with
their submissions on the correct legal position. The high court was nevertheless
entitled to have regard to the claimants’ explanation for having adopted the course
23
they did, even if it was misguided. The claimants delayed because both they and
the defendants were pursuing contentions before the arbitrator which might render
a s 8 application academic: (a) the claimants might succeed on clause 24.1.1 or
clause 25.3, neither of which was subject to a time -bar; or (b) the claimants might
succeed on clause 24.1.5 by persuading the arbitrator that enforcement of the
time-bar was contrary to public policy; or (c) the defendants might persuade the
arbitrator that the claim based on clause 24.1.5 should fail on the threshold issue.
[49] The claimants succeeded before the arbitrator on issues (b) and (c), hence
the award in their favour. If the defendants had not pursued an arbitrat ion appeal,
that would have been the end of the matter without the need for a s 8 application.
Having obtained success on issues (b) and ( c), the claimants understandably
defended their success on appeal, but the panel reversed the arbitrator on issue (b),
which is when the claimants found it necessary to pursue a s 8 application. The
absence of litigation prejudice to the defendants was even more clear -cut by that
stage, because all the issues other than an extension of time had already been
determined in the arbitration.
[50] Counsel for the appellants did not suggest in argument that the appellants
had suffered any trial prejudice by virtue of the delay. As I have said, any
unnecessary costs incurred in the arbitration by virtue of the failure to bring the
s 8 application earlier is a matter which can be addressed by the panel in its costs
award.
[51] Counsel’s remaining argument as to prejudice was that if the claimants had
brought their s 8 application shortly after February 2014 (when the defendants
pleaded the time-bar), they would not have been able to tell the court that their
claim was undisputed, since the defence based on the threshold clause would not
yet have been determined in arbitration proceedings. By only bringing their
24
application after the appeal panel had issued its interim award, the claimants could
argue that their claim was uncontested save for the time -bar clause. The fact that
their claim was practically undisputed was a factor which the high court took into
account.
[52] Prejudice in this attenua ted form was not alleged in the appellants’
opposing papers nor is there any indication that they r elied on it in argument
before the high court. It was not even mentioned in the appellants’ heads of
argument in this court. On the contrary, the written arg ument criticised the high
court for finding that the absence of prejudice was a relevant factor. It has rightly
not been suggested that the claimants deliberately held back their s 8 application
in order to secure this supposed advantage. In stating that t he claim was
practically undisputed, the high court appears to have been making the point that
it was undisputed that the additional tax, penalties and interest had been imposed
in the amount s alleged, that the levied amounts related to Excluded Assets , and
that they fell within the ambit of clause 24.1.5. The high court’s exercise of its
discretion would not have been in the least affected if the threshold defence ,
which turned on a narrow question of interpretation, had still been a live issue.
[53] Counsel for the appellants raised the ‘floodgates’ spectre if claimants were
permitted to run time -barred arbitrations before bringing s 8 applications. Our
decision in the present case does not signal the permissibility of such an approach;
it turns on the specifi c and in some respects peculiar circumstances of th is case.
The floodgates argument is, moreover, exaggerated. A claimant could only run an
arbitration on its merits by alleging and satisfying the arbitrator that the time -bar
clause is unenforceable. Absent such a finding, the arbitrator would simply uphold
the time-bar defence and dismiss the claim without entering upon the merits.
25
[54] I thus do not consider that the high court was guilty of any legal or factual
misdirection in assessing the claimants’ delay i n launching their s 8 application.
The weight to be attached to this consideration in the globular assessment was a
matter for the high court.
Appellants’ lateness in submitting the 2005 return (factor (d) supra)
[55] The appellants submitted that the high court misdirected itself factually on
the following two questions: (a) whether it was reasonably foreseeable, when the
sale agreement was concluded in February 2005, that a tax claim might only
become known to the buyer after the expiry of the six -year time-bar; (b) whether
there was a culpable delay by the seller in submitting Samancor Chrome’s 2005
tax return which caused or contributed to the buyer’s inability to learn of the tax
claim until after expiry of the time -bar. These two questions, it may be noted,
raise issues which could conceptually be located within the first and second
considerations respectively specified in s 12(3) of the current English legislation.
As I said previously, considerations of this kind are relevant but not exhaustive
when a South African court considers a s 8 application.
[56] Under the current heading of this judgment, I shall consider the second of
the two criticisms identified in the preceding paragraph. Although the evidence
bearing on the two criticisms overlaps to some extent, it is convenient to deal with
the other criticism at a later stage, in the context of the appellants’ submissions
concerning the nature of the time-bar clause at issue in this case.
[57] The appellants contend ed that the high court misdirected itself factually
when it criticised Samancor Holdings for being ‘excessively late’ in submitting
the 2005 tax return and in finding that the historical pattern of delay had been 12
months after financial year -end rather than the 28 months which actually
occurred. Our attention was drawn to a passage in Mr Erasmus’ founding affidavit
26
where he stated that the due date for the submission of the 2005 tax return was the
last day of February 2006 but that ‘[o]ver the subsequent years the timeline for
submission of income tax retu rns has been extended to 12 months after financial
year-end’. The appellants’ argument was that the phrase ‘over the subsequent
years’ referred to a time later than the conclusion of the sale agreement in
February 2005. There was no evidence, they submitte d, that the historical
position, as at February 2005, was that the delay in submitting tax returns was
only 12 months after financial year-end.
[58] The question of the historical pattern as at February 2005 is relevant to
assessing what the contracting parties might reasonably have foreseen when they
concluded the sale agreement in February 2005 (a matter I consider later, under a
separate heading). However, the high court’s factor (d) was not concerned with
foreseeability but with the appellants’ culpability i n causing the claimants only to
become aware of their claim after the time -bar expired. If, after February 2005, a
12-month extension became the norm, it would not be unreasonable to criticise
the appellants for failing to meet this norm. On the evidence, the due date for the
2005 tax return was either the end of February 2006 or – if the 12 -month
extension applied – the end of June 2006 or perhaps the end of February 2007.
(Mr Erasmus’ replying affidavit suggests that the 12 -month extension he had in
mind may have been 12 months in addition to the initial eight-month extension, ie
a total extension of 20 months, rather than 12 months after year -end, since he
postulated that in accordance with the 12 -month extension the 2005 return should
have been submitted by the end of February 2007.)
[59] In regard to the historical pattern as at February 2005, one knows from the
founding affidavit that by the time the agreement was concluded the 2003 tax
founding affidavit that by the time the agreement was concluded the 2003 tax
return had been submitted. This means that the 2003 return had been submitted by
not later than 20 months after year -end. Neither side provided information as to
27
the delay in submitting earlier tax returns. The appellants, to whom the
information would have been known, did not say that their tax returns had
routinely been submitted more than 20 months after financial year-end.
[60] In regard to culpability, giving the appellants the benefit of the 12 -month
extension, as the high court did, is to their advantage. Their position would only
be worse if they should have submitted the tax return by the end of February
2006. The best case for the appellants is that the 2005 return should have been
submitted by the end of February 2007, whereas it was in fact submitted at the end
of June 2008, some 16 months later. If all subsequent event s had occurred 16
months earlier than they did, the claimants would have known by October 2010
that Samancor Holdings had erroneously omitted R53 million from Samancor
Chrome’s 2005 tax return; by March 2011 they would have known of SARS’
audit findings; a nd by April 2011 they would have known that Samancor
Holdings agreed that the amount of R53 million had to be added to Samancor
Chrome’s taxable income. This would have left enough time to make the income
tax claim before the time-bar expired on 1 June 2011.
[61] In my view, therefore, the high court did not misdirect itself by finding that
Samancor Holdings was ‘excessively late’ in submitting the 2005 tax return. The
appellants were culpable not only in regard to this delay but also in submitting a
tax return which omitted the income of R53 million. Both of these matters could
legitimately be taken into account by the high court in exercising its discretion.
Nature of clause 23.6.3 and foreseeability (factor (i) supra)
The nature of clause 23.6.3
[62] The appellant s argued that the clause 23.6.3 time -bar is fundamentally
different to the time -bar clauses considered in cases such as Barkhuizen, where
time starts to run when a claim arises. A time-bar set with reference to a date such
28
as the effective date of an agre ement necessarily holds the risk that the time -bar
might expire before the claim arises or before it comes to the notice of the
claimant.
[63] In Barkhuizen the question was whether enforcement of a contractual time -
bar was contrary to public policy. In the present matter, that was a question for the
arbitrator and the appeal panel. The high court, and we , are concerned with a
different question, namely an extension of time in terms of s 8. In this context, it
is not unusual for extensions of time to be sought in relation to time -bar clauses
set with reference to dates unrelated to the arising of claims. Indeed, all the
English cases to which we were referred are cases of this kind, where time
typically ran from the discharge of cargo.
[64] In such cases it is possible, as occurred in the present matter, that a claimant
will only become aware of the existence of a claim after the time-limit has
expired, and indeed there are English cases where this was the position . The
English courts did not say that s 27 did not ap ply in such situations or that party
autonomy should make extensions of time in such cases rare or exceptional (see,
eg, Sparta Navigation Co v Transocean America Inc (The ‘Stephanos’) [1989] 1
Lloyds Rep 506 (QB) at 509). On the contrary, the circumstance that time expired
before the claimant could reasonably have become aware of the claim was
regarded as a strong factor in favour of granting an extension . (See, eg, Eastern
Counties Farmers Ltd v J & J Cunningham Ltd; Grimsdale & Sons Ltd (Third
Party); Ho lland Colombo Trading Society Ltd (Fourth Party) [1962] 1 Lloyds
Rep 261 (CA) at 263; Atlantic Shipping Co Ltd v Tradax Internacional SA (The
‘Bratislava’) [1977] 2 Lloyds Rep 269 (QB) at 271; Establissments Soules & Cie
v International Trade Development Co Ltd [1979] 2 Lloyds Rep 122 at 137-138.)
29
[65] The appellants’ argument comes close to postulating that a time-bar such as
clause 23.6.3 does not fall within the scope of s 8 at all because the parties must
be taken to have contemplated the very hardship whic h occurs when the
‘guillotine falls’ before the claimant could reasonably have been aware of the
claim. The high court was correct to reject this argument as unprincipled. Clause
23.6 is plainly a time-bar clause falling squarely within the ambit of s 8.
[66] There is a distinction between a time -bar clause and a temporally limited
indemnity. An insurer’s obligation to indemnify is usually limited, temporally, to
events occurring during a specified period. This temporal limit on the insurer’s
indemnity obligation is quite different from any time -limits which the policy may
impose in regard to the institution of legal proceedings. Clauses 25.2 and 25.3 of
the sale agreement were temporally limited indemnities . They covered events
occurring between the Effective Da te and the Closing Date . They were not time -
bar clauses requiring arbitration to be initiated within a specified time, and s 8
could thus not have been invoked to extend the temporal span of those
indemnities. Clause 24.1.5, by contrast, was formulated in a temporally unlimited
way and made subject to a separate time-bar clause requiring the claimant to take
a step to commence arbitration within a specified period of time . This inevitably
brought s 8 into play.
[67] As with all time -bar clauses, the purpose of c lause 23.6 was to give the
parties finality . See Sparta Navigation supra at 509 where Saville J said the
following in rejecting an argument that the well-known Centrocon time-bar clause
did not apply to a claim which only arose after the time-bar expired:
‘On this construction [the one preferred by the judge] , whether or not the claimant has a valid
or sustainable claim (ie a cause of action) during the stipulated period and whether or not he
or sustainable claim (ie a cause of action) during the stipulated period and whether or not he
knew or ought to have known during that period that he had or might have a claim of any nature
are quite immaterial considerations. The commercial sense of such a construction is to my mind
obvious – at the end of the stipulated period the parties will know where they stand in the sense
30
of knowing what claims (if any) a re outstanding against each other: and the difficulties and
uncertainties often inherent in trying to deal with claims only long after the event would be
largely, if not wholly, averted.’
[68] But all time-bar clauses, where arbitration is concerned, are subje ct to s 8,
so the contractual purpose of finality cannot override an assessment of undue
hardship. In Sparta Navigation Saville J, despite having formulated the purpose of
the time-bar clause as quoted in the preceding paragraph, granted an extension on
an application brought about 20 months after the time-bar lapsed.
Foreseeability
[69] Earlier in this judgment I foreshadowed the appellants’ criticism of the high
court’s treatment of the question whether it was reasonably foreseeable, when the
sale agreement w as concluded in February 2005, that a tax claim might only
become known to the buyer after the expiry of the six -year time -bar Although
clause 23.6.3 is subject to s 8, I accept that a court exercising its discretion under
that section may take into accoun t (a) the extent to which the parties could have
foreseen that a claimant might only learn of claims after the expiry of the time-bar
and (b) the likelihood of claims only arising or coming to the notice of a claimant
after the expiry of the time -bar. This may bear upon the question whether
enforcing the time-bar would cause ‘undue hardship’.
[70] In the present case, t he circumstances affecting the date on which the
claimants could reasonably acquire knowledge of tax claims would be (a) the date
of submission of the relevant tax return; (b) the date of the issuing of the original
assessment; (c) the accuracy of the tax return and thus the risk of additional
assessments.
[71] I have already dealt with the evidence bearing on the submission of tax
returns. There is evi dence as to the practice which came into existence at some
31
unspecified time after 2005, and evidence that the 2003 tax return was submitted
by not later than February 2005. There is also evidence that the due date for the
submission of tax returns as at Fe bruary 2005 was eight months after year -end.
There is no evidence of any historical pattern of the submission of tax returns later
than 20 months after year-end.
[72] In regard to dates of assessments, when the agreement was concluded
Samancor Chrome’s most recent tax assessment was for its 1998 year. This means
that if the company’s 1999 tax return was submitted by February 2001 (20 months
after year-end), there was still no assessment four years later. There is no evidence
that those representing the claimant were aware of these facts when the agreement
was concluded, but if they were, it might have suggested that a 2005 tax return
submitted in February 2007 might only become the subject of an assessment
during the course of 2011. If the assessment were issued after 1 June 2011, an
income tax indemnity would be time -barred, but s 8 would still have been
available in case of undue hardship. Mr Erasmus , with hindsight, thought that six
years was optimistic. However, he was not involved in negotiating the agreement .
The appellants in their opposing papers disputed the admissibility of his opinions
on this score. They did not supply evidence of their own as to the information
available to the contracting parties about the historical pattern of submission and
assessment.
[73] Ultimately, I do not think that very much turns on these extrapolations. A
lengthy time-bar was provided. In the event, it was not long enough to enable the
claimants timeously to pursue a large claim for an otherwise undisputed tax
indemnity. One does not need evidence to know that a time-bar clause of this kind
holds the potential to bar a claim of which the claimant might only learn after the
time-bar has expired. That is equally true of the time-bar clauses considered in the
time-bar has expired. That is equally true of the time-bar clauses considered in the
English cases. I do not think that the evidence justifies the conclusion that the
32
parties foresaw it as likely that the six -year time -bar would prove to be
inadequate, though I accept that they could have foreseen this as a possibility. For
that possibility, s 8 was available to ameliorate undue hardship.
[74] In the event, SARS’ original assessment on the 2005 return was issued in
February 2011, about two years and seven months after filing. But for Samancor
Holdings’ failure to include the sum of R53 million in the tax computation,
matters would have been adjusted between the parties in terms of clause 24. 1.5
before the time-bar expired. The claimants were not at fault. The defendants were
at fault, both in submitting the tax return late and more importantly in failing to
ensure that all income attributable to Excluded Assets was included in the return.
They suffered no prejudice by virtue of the delay beyond 1 June 2011 or beyond
the date on which the claimants became aware that an extension of time might be
needed. The high court was clearly entitled to reach the conclusion which it did.
[75] I make the following order: The appeal is dismissed with costs, including
the costs of two counsel.
______________________
O L ROGERS
ACTING JUDGE OF APPEAL
33
APPEARANCES
For Appellants F Snyckers SC (with him J Wilson SC)
Instructed by Mervyn Tabacks Inc, Johannesburg
Webbers Attorneys, Bloemfontein
For Respondents A Subel SC (with him B M Gilbert)
Instructed by Brian Kahn Inc, Johannesburg
Claude Reid Inc, Bloemfontein