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[2011] ZASCA 168
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Thabo Mofutsanyana District Municipality v Steyn-Enslin & Vennote and Others (639/2010) [2011] ZASCA 168; 2012 (3) SA 179 (SCA); 74 SATC 366 (29 September 2011)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
C
ase No:
639/2010
In the matter between:
THABO MOFUTSANYANA DISTRICT
MUNICIPALITY
…....................................................................
APPELLANT
and
STEYN-ENSLIN & VENNOTE
…............................
FIRST
RESPONDENT
RUDNAT (PTY) LTD
…........................................
SECOND
RESPONDENT
AFGRI (PTY) LTD
…...............................................
THIRD
RESPONDENT
Neutral citation:
Thabo
Mofutsanyana District Municipality v Steyn-Enslin
(639/2010)
[2011] ZASCA 168
(29 September 2011)
Coram:
Mthiyane, Heher,
Maya, Bosielo and Majiedt JJA
Heard: 12 September 2011
Delivered: 29 September 2011
Summary: Regional Services
Levy in terms of Act 109 of 1985 ─ Whether municipality
entitled to demand a statement of account,
debatement or other
substantiating documents from a defaulting levy payer ─ if not,
whether common law should be developed
under s 39(2) of the
Constitution to vest it with such right.
______________________________________________________________________
ORDER
____________________________________________________________
On appeal from:
Free State
High Court, (Bloemfontein) (Mocumie J sitting as court of first
instance):
The appeal is dismissed with
costs, save that the appellant may, if so advised, within 30 days
hereof give notice of intention to
amend its particulars of claim.
____________________________________________________________
JUDGMENT
MTHIYANE JA (HEHER, MAYA,
BOSIELO and MAJIEDT JJA CONCURRING):
[1] This appeal is against the
decision of the Free State High Court (Mocumie J) upholding an
exception by the first, second and
third respondents (the
respondents) to the appellant’s particulars of claim, in which
the appellant sought against the respondents,
who were registered
regional services levypayers, an order requiring them to submit to it
a true and proper statement of account;
the debatement thereof and
other substantiating documents. The issue raised on exception is a
narrow one, namely whether the appellant’s
demand for the
submission of such accounts and the debatement thereof has any basis
in law. The attack upon the appellant’s
cause of action, as
pleaded, is that the appellant as a municipal council is not vested
with powers to estimate levies or demand
debatement of accounts from
levypayers, who are in default. That power resides with the
Commissioner of the South African Revenue
Service.
1
[2] In its particulars of claim
the appellant claimed the following relief:
‘
1.
The defendant be ordered to render to the plaintiff within sixty (60)
days from the date of the order, a true and proper statement
of
account together with substantiating documents reflecting the
correct;
total amount of all
remuneration paid or which became payable by the defendant to any
employee;
total amount of all
drawings taken by defendant;
total sum of all
income or amounts received by or accrued to the defendant in
relation to any leviable transaction or consideration
as defined
2
including but not
limited to the sale and/or letting of goods or fixed property, the
rendering of any service and/or the gross
amounts received from a
financial enterprise during any and every month, effective from 1
March 2000, any remuneration was so
paid or so became payable, any
drawings was so taken or any income was so received or so accrued as
contemplated in paragraph
9(1)(a) and (b) of R340/1987.
That the defendant
be ordered to debate the said account with the plaintiff within
sixty (60) days from the time such account
was rendered in terms of
prayer 1 above.
Payment to the
plaintiff of whatever amount appears to be due to the plaintiff upon
debatement of the account.
Payment of the
amount of
R 33 104,46 (Rudnat CC) / R184 081,29 (Steyn Enslin et
al) / R184 081,29 (Afgri Pty Ltd)
, in the event of the
defendant’s non-compliance with prayers 1, 2 and 3 above;
Payment of interest
on the aforesaid amount in prayer 3 or 4 above at a rate of:
10.5% per annum
from 1 July 2006 till 31 October 2006;
11% per annum from
1 November 2006 till 28 February 2007;
12% per annum from
1 March 2007 till 29 February 2008;
(iv) 14% per annum
from 1 March 2008 till date of payment.’
[3] The respondents excepted to
the particulars of claim on the basis that the facts pleaded did not
sustain a valid cause of action.
They contend that the legislature
has not vested the appellant with powers to estimate levies or demand
an account or debatement
of it from levypayers who are in default.
[4] The appellant’s
response was that if the appellant as a municipal council had no such
powers, the common law ought to
be developed in terms of s 39(2) of
the Constitution to vest them with such powers.
[5] The high court accepted the
respondents’ contention that no cause of action had been
disclosed in the appellant’s
particulars of claim and upheld
the exception. The appellant was granted leave to appeal to this
court, but confined to the question
of whether it was necessary for
the common law to be developed in terms of s 39(2) of the
Constitution to vest a municipal council
with powers enabling it to
demand delivery of a statement of account from levy payers and
defendants in litigation and the debatement
thereof as an extension
of the procedural remedy in litigation. This would essentially amount
to an extension of the statutory
obligation of a levypayer to provide
a declaration of its business and to provide monthly returns in
respect of the calculation
of its liability.
[6] The issue on appeal, as set
out in the heads of argument, was whether the appellant’s claim
that the respondents should
account, debate and pay the levies due to
the Regional Council Service, had any basis in law. During argument
the appellant changed
tack and confined itself to the right to press
for a return rendered by the respondents who, it argued, were obliged
to submit
it in terms of regulation 9(4).
3
Counsel for the appellant further
argued as follows: The right to claim levies includes the right to
have the return rendered by
a levypayer in terms of regulation 9(4).
The appellant requires the return in order to determine the amount of
levies owing to
it by the respondents. The scheme of the regulations
is such that if a levypayer failed to submit a return, the council is
entitled
to make an assessment of what is owed to it. If regulation
13(1), (discussed below), forbids the submission and production of
the
taxpayer’s books, records, accounts or other documents, at
the instance of the council, the court should use its common law
power to order the payer, to furnish the return. If the common law is
deficient, it should be developed in terms of s 39(2) of
the
Constitution, to vest the court with the power to order a reluctant
levypayer to submit such a return.
[7] It was never the appellant’s
case, on the pleadings, that it required the submission of a return
by the respondents. The
appellant’s claim, as indicated in
particulars of claim to which exception was taken, was for a
statement of account, debatement
of it and other documents reflecting
the amounts owing to the appellant. What hindered the appellant in
its demand for the production
of the required documents was
regulation 13(1) which reads as follows:
‘
13
Powers of council and Commissioner
A council shall be
responsible for the administration of the provisions of this
Schedule, but shall not be empowered to require
any person to
produce any books, records, accounts or other documents in relation
to any regional services levy and regional
establishment levy or to
require any levypayer to substantiate any return submitted by him
in connection with any such levy.’
[8] On the case as pleaded,
especially having regard to the fact that the matter came before the
high court on exception,
4
the appeal cannot succeed in
light of the provision of regulation 13(1).
[9] Upon realising the
difficulties posed by regulation 13(1), the appellant resorted to
demanding, not a statement of accounts
and debatement but a ‘return’.
In this regard regulation 9 is relevant. It provides:
‘
(3)
Every payment of regional services levy or regional establishment
levy shall be accompanied by a return in such form as the
council may
determine.
Every person who
is registered as a levypayer under the provisions of paragraph 10,
shall within the period allowed by subparagraph
(1) or (2) furnish
the council with the return referred to in subparagraph (3) in
respect of every month or other period, as
the case may be, whether
or not any relevant levy is payable in respect of such month or
period.’
[10] The respondents do not
dispute that the appellant was entitled to the return in terms of
regulation 9(4) but submit that this
was not the appellant’s
pleaded case. Their contention is borne out by the pleadings. Had it
been otherwise the matter might
have ended without the present
appeal. There is nothing preventing the appellant from seeking a
mandamus in respect of the return.
The respondents conceded as much
in argument.
[11] However, during argument it
also became clear that the appellant is not sure what amount, if any,
is owing to it by the respondents.
The dilemma in which the appellant
found itself was that it no longer has the power to estimate the
amount of levy owing to it.
The regulation which empowered it to do
so, (regulation 11(1)) was struck down by this court in
City of
Tshwane Metropolitan Municipality v Cable City (Pty) Ltd
2010 (3)
SA 589
(SCA) as being invalid for inconsistency with the empowering
provisions. Regulation 11(1) read as follows:
‘
Where
any registered levypayer has failed to furnish any return referred to
in paragraph 9(4) within the relevant period allowed,
the council
concerned may estimate the amount of any levy which, in its opinion,
is probably payable in respect of the relevant
month or period, and
may make an assessment of the amount of the unpaid levy.’
[12] The mere submission of a
return would consequently not prove a certain solution to the
appellant’s difficulties. In the
circumstances the statute
provides the remedy viz an assessment by the Commissioner in terms of
regulation 13.
[13] The argument in favour of
the development of the common law in terms of s 39(2) of the
Constitution, though not abandoned,
was not pressed by counsel for
the appellant. I think Mocumie J, in her short pithy judgment,
handled the question of whether the
common law should be developed in
a sound and judicious way. I cannot fault this aspect of her
judgment. The law on the subject
is perfectly clear. A municipal
council is not empowered to assess levies owed to it. If it wishes to
have them assessed it has
to request the Commissioner to conduct an
assessment as required by regulation 13. There is no valid reason for
this court to develop
the common law when the wording of the
legislation on the subject is clear and sufficient. To do so would be
to embark on overzealous
judicial reform against which the
Constitutional Court has warned (
Carmichele v Minister of Safety
and Security
[2001] ZACC 22
;
2001 (4) SA 938
(CC) para 55).
[14] It follows that there is no
merit in the appeal and, in my view, the exception was correctly
upheld by the high court.
[15] In the result the following
order is made:
The appeal is dismissed with
costs, save that the appellant may, if so advised, within 30 days
hereof give notice of intention to
amend its particulars of claim.
___________________
K K MTHIYANE
JUDGE OF APPEAL
APPEARANCES
For Appellant: KJ Kemp SC (with
him C Ploos van Amstel SC)
Instructed by:
Podbielski Mhlambi Inc, Welkom
Honey Attorneys, Bloemfontein
For 1
st,
2
nd
and
3
rd
Respondents: FWA Danzfuss SC
Lovius Block, Bloemfontein
1
See
s 12(1A)(dA)(iii) and (iv) of the Regional Services Council Act 109
of 1985.
2
See
paragraph 1 of the regulations promulgated under R340/1957.
3
Calculation
and payment of Regional Services Levy and Regional Establishment
Levy GN R340, 17 February 1987.
4
Burger
v Rand Water Board & another
2007
(1) SA 30
(SCA) para 4.