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[2021] ZAGPPHC 419
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PFC Properties Proprietary Limited and Another v Commissioner, South African Revenue Services (81483/2019) [2021] ZAGPPHC 419 (17 June 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
Number: 81483/2019
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
PFC
PROPERTIES PROPPRIETARY LIMITED
First Applicant
(registration
number: 2003/026791/07)
PFC
INTERGRATION PROPRIETARY LIMITED
Second Applicant
(registration
number: 2006/038122/07)
and
THE
COMMISSIONER, SOUTH FRICAN
REVENUE
SERVICES
Respondent
JUDGMENT
JOUBERT
AJ
1.
In November 2019, the Commissioner for the South African Revenue
Services
(“
the Commissioner
”) instituted an action
against,
inter alia
, PFC Properties (Pty) Ltd and PFC
Integrations (Pty) Ltd, the second and third defendants in the action
and the applicants in this
interlocutory application (collectively
referred to herein as “
the applicants
”).
2.
The remaining defendants in the action are the Trustees for the time
being
of the PDR Trust (namely Paul de Robillard, Brita de Robillard
and Francois Petrus Jakobus le Roux), the BDR Trust (being Paul de
Robillard, Brita de Robillard and Clifford Edward Alexander), the De
Robillard Family Trust (being Paul de Robillard, Brita de
Robillard
and Clifford Edward Alexander) and the liquidators of two companies
in liquidation, Doltek Enterprises (Pty) Ltd and
Lonrho Fresh (Pty)
Ltd.
3.
The relief sought by the Commissioner in the action is set out below:
“
64.1
It is declared that Paul de Robillard is guilty of an offence/s in
terms of section 214(1) of the 2008 Companies Act.
64.2
It is declared that Paul de Robillard is delinquent in terms of
section 162(5) of the 2008 Companies Act.
64.3
It is declared that Paul de Robillard is personally liable for the
debts of Doltek in terms of section 424 of the
1973 Companies Act.
64.4
It is declared that Paul de Robillard is personally liable for the
debts of Doltek in terms of section 22 as read
with section 77 and
section 218(2) of the 2008 Companies Act.
64.5
It is declared that Paul de Robillard is personally liable for the
debts of Doltek in terms of section 155, 157
and/or section 184 of
the TAA,
alternatively
section 97 of the Income Tax Act,
further alternatively
section 48(6), 48(9) of the VAT Act;
64.6
It is declared that Paul de Robillard personally
alternatively
Paul de Robillard and the Second, Third, Fourth, Fifth, Sixth,
Seventh and Eight Defendants, jointly and severally,
further
alternatively
, Paul de Robillard and the responsible Defendants,
jointly and severally, be liable for all the debts of Doltek as
aforesaid, the
one or more paying the other or others (as the case
may be) to be absolved.
64.7
Such debts amount to R109,318,771.16 calculated as follows:
64.7.1
the sum of R78,471,311.42, comprising custom duties, value-added tax
and forfeiture charges payable to the Commissioner as
per SARS’s
letter of demand at annexure “
B
” hereto;
64.7.2
the sum of R30,847,459.74 comprising income tax and value-added tax
payable to the Commissioner as per SARS’ letter
of audit
finalization SARS at annexure “
C
” hereto.
64.8
It is declared that Paul de Robillard personally
alternatively
Paul de Robillard and the Second, Third, Fourth, Fifth, Sixth,
Seventh, and Eight Defendants, jointly and severally,
further
alternatively
Paul de Robillard and the responsible Defendants,
jointly and severally, be liable for the Plaintiff’s costs, the
other or
more paying the other or others (as the case may be) to be
absolved.
64.9
Further and/or alternative relief.”
4.
The action was instituted on 30 October 2019. The attorneys of
record
for the Commissioner is reflected in that summons to be
Klagsbrun Edelstein Bosman de Vries Inc (“
Klagsbrun
”).
5.
On 3 December 2019, the applicants entered their notice to defend the
action
and on 10 December 2019, delivered a notice in terms of rule
7. The notice reads as follows:
“
PLEASE
TAKE NOTICE
that the Second Defendant & Third
Defendant disputes the authority of Plaintiff’s attorneys of
record to act for Plaintiff
and that such attorneys may no longer act
unless the Court is satisfied that they are so authorized to act on
behalf of Plaintiff
in this action”
(
sic
),
(the
“
rule 7 notice
”).
6.
On 14 February 2020, Klagsbrun delivered a reply to the applicants’
rule 7 notice, enclosing a special power of attorney dated 13
February 2020 signed by Mr. Bavuma, an employee of the Commissioner.
The special power of attorney reads as follows:
“
I,
the undersigned,
SIPHO
EDWARD BAVUMA
employed
by the South African Revenue Service (‘SARS’) as a Group
Executive Delivery and Support at SARS’ offices
situated at
Bronkhorst Street, Brooklyn, being an officer as envisaged in section
3(1) of the Income Tax Act, Act 58 of 1952 (‘the
Income Tax
Act’) section 5(1) of the Value-Added Tax Act, Act 89 of 1991
(‘the VAT Act’) and section 11(1) of
the Tax
Administration Act, Act 28 of 2011 (‘the TA Act’),
exercising the powers conferred and the duties imposed by
or under
the provisions of the said Acts under the direction, control and
supervision of the Commissioner of SARS (‘the Commissioner’),
and being duly authorized by the Commissioner to do so, do hereby
confirm the nomination, constitution and appointment of KLAGSBRUN
EDELSTEIN BOSMAN DE VRIES INCORPORATED, 220 Lange Street, New
Muckleneuk, Pretoria, duly represented by RONKE NYAMA or any other
director, associate, professional assistant or employee of KLAGSBRUN
EDELSTEIN BOSMAN DE VRIES INCORPORATED, with the power of
substitution, and in so far as it is necessary nominate, constitute
and appoint the aforesaid KLAGSBRUN EDELSTEIN BOSMAN DE VRIES
INCORPORATED, to be the Commissioner and SARS’ lawful attorney
and agent and in their name, place and stead act as attorneys
and
indeed to do whatever may be necessary to assist the Commissioner and
SARS in his/her discretion to perform their duties in
terms of the
said Acts and the other Acts administered by the Commissioner in
relation to PAUL DE ROBILLARD and the entities with
him, including,
but not limited to, act as attorneys on behalf of the Commissioner in
case number 81483/2019 in the Gauteng Division
of the High Court,
Pretoria and in any other matter that may arise as a result of the
litigation by the Commissioner against or
issued by Paul de Robillard
against the Commissioner”,
(the
“
special power of attorney”
).
7.
The applicants continued to dispute the delegation to and authority
of
Mr. Bavuma to appoint Klagsbrun to act on behalf of the
Commissioner after receipt of the special power of attorney.
The
present application was therefore instituted on 27 February
2020.
8.
In terms of their notice of application, the applicants seek the
following
order:
“
1.
That the Respondent be and is hereby directed within five (5) days of
the granting of this Order,
to comply with the Applicant’s Rule
7 notice dated the 10
th
of December 2019.
2.
That in the event that the Respondent fails to comply with paragraph
1 supra, the Applicants
be and are hereby granted leave to enroll the
matter for the Respondent’s claim to be dismissed;
3.
That the Respondent pays the costs of the application on the attorney
and client scale;
4.
Further and or alternative relief.”
9.
The Commissioner’s answering affidavit was only served on 5
November
2020. In that affidavit the Commissioner provided, as
an annexure, a copy of a letter addressed by Klagsbrun on 19 March
2020 to the applicants’ attorneys, to which it attached a
document entitled “
Authority
in terms of
section 6(2)
of the
Tax Administration Act, 28 of 2011
” which, it
alleges, confirms that Mr. Bavuma is duly authorised by the
Commissioner to exercise the powers and duties of
a Senior SARS
official as contemplated in
section 11(1)
of the
Tax Administration
Act (referred
to herein as the “
authority
”).
10.
The authority referred to, reads as follows:
“
Office
of the Commissioner
AUTHORITY
IN TERMS OF
SECTION 6(2)
OF THE
TAX ADMINISTRATION ACT, ACT
28 OF
2011 TO EXERCISE ALL POWERS AND DUTIES OF A SARS OFFICIAL AS
CONTEMPLATED IN
SECTION 11(1)
OF THE
TAX ADMINISTRATION ACT, ACT
28
OF 2011
I,
the undersigned,
EDWARD
CHRISTIAAN KIESWETTER,
In
my capacity as Commissioner fof the South African Revenue Service
duly appointed as such and under the powers granted to me in
terms of
section 6(2)
of the
Tax Administration Act, Act
No 28 of 2011 (‘the
Act’), hereby confirms the authority of Sipho Bavuma, as Senior
SARS official, to exercise the
powers and duties of a SARS official
as contemplated in section 11(1) of the Act.”
11.
The Commissioner seeks:
11.1
an order dismissing the application;
11.2
a cost order
de bonis propriis
against Mr Jasat, and
11.3
an order that the applicants’ attorney (Mr. Jasat) may not
recover any fees from the applicants relating
to this application and
that Mr. Jasat be ordered to repay any fees already paid to him by
the applicants, alternatively on the
applicants’ behalf.
12.
Having read the answering affidavit of the Commissioner, together
with the annexures thereto,
the applicants’ stated the order
that they seek in their practice note as follows (although their
notice of application was
not amended):
“
6.1.1
The Applicants seek:
6.1.1
an order that KEBD be directed to comply with the applicants’
Rule 7 notice dated 10 December 2019, within 15
days of the date of
service of this order; alternatively
6.1.2
an order that it be declared that the Special Power of Attorney,
dated 13 February 2020, signed and executed by Mr.
Sipho Edward
Bavuma and the SARS Commissioner’s Delegation dated 19 March
2020, do not constitute proper authorization of
Mr. Bavuma to mandate
KEBD to act for SARS in the action.
6.1.3
an order that the Respondent pay the applicants’ costs of the
application.”
KLAGSBRUN’S
AUTHORITY
13.
Rule 7(1) provides as follows:
“
7
Power of Attorney
(1)
Subject to the provisions of subrules (2) and (3) a power of
attorney to act need not be filed, but the authority of anyone acting
on behalf of a party may, within 10 days after it has come to the
notice of a party that such person is so acting, or with the
leave of
the court on good cause shown at any time before judgment, be
disputed, whereafter such person may no longer act unless
he
satisfied the court that he is authorised so to act, and to enable
him to do so the court may postpone the hearing of the action
or
application.
…
.”
14.
Eksteen J
stated as follows in
Firstrand
Bank Limited v Fillis and Another:
[1]
“
[11]
What was in issue in that matter was the authority to lodge the
petition, not the authority to depose to an affidavit.
It is
important to recognise that the
Pretoria
City Council
matter concerned a petition to the Supreme Court Appeal which was
decided in 1962 in accordance with the Rules of Court which applied
at the time. The authority to prosecute any action in the High Court
is governed by rule 7 of the Uniform Rules of Court. Prior
to 1987
the rule required the attorney acting on behalf of a plaintiff to
file a power of attorney with the registrar before the
issue of
summons. The extent of the mandate of the attorney was to be set out
in this document. Where the power of attorney was
signed on behalf of
the party giving it proof of the authority to sign on behalf of such
party had to be produced to the registrar
who then noted it.
[12]
In 1987 the Uniform Rule of this Court were considerably
revised. In terms of the revised rule 7 of the Uniform
Rules of Court
a power of attorney establishing the authority to act on behalf of a
litigant need no longer be filed as a matter
of course. If, however,
an attorney’s authority to act on behalf of a party is
challenged, then in terms of rule 7 of the
Uniform Rules of Court,
the attorney is required to satisfy the Court that he is properly
authorised to act on behalf of the litigant.
Until he has done so he
is precluded from acting further. In order to do so he is required to
produce proof of his mandate, usually
a power of attorney, and, where
necessary, an appropriate resolution authorising the signature of the
power of attorney.”
15.
The test is therefore whether the court is satisfied that Klagsbrun
has shown that it is
authorised to represent the Commissioner in
these proceedings. The rule does not require that the
applicants be satisfied,
or that the authority be established on a
balance of probabilities.
16.
The bases on which the applicants continue to dispute that the
special power of attorney
and the authority issued by the
Commissioner do not constitute sufficient evidence of Klagbrun’s
authority on the following
bases:
16.1
the Commissioner’s authority dated 19 March 2020 (to which the
applicants refer to as a “
delegation
”) was
provided after the institution of the rule 7 interlocutory
application;
16.2
when the special power of attorney dated 13 February 2020 was
furnished, the Commissioner did not offer any
evidence to indicate
that the Commissioner had delegated any powers to Mr. Bavuma;
16.3
the authority dated 19 March 2020 simply purports to confirm “
the
authority of Sipho Bavuma, as Senior SARS official, to exercise the
powers and duties of a SARS official as contemplated in
section 11(1)
of the Act
”, and
16.4
the applicants argue that this statement does not constitute a
delegation under
section 6(2)
of the
Tax Administration Act, as
read
with
section 6(1)
thereof, providing for the Commissioner’s
powers, nor does it establish Mr. Bavuma as being a person who was or
is entitled
to exercise the Commissioner’s power on his behalf,
as is contemplated in terms of
section 11(1)
of the
Tax
Administration Act. Further
, the applicants contend, the
document does not specifically authorise Mr. Bavuma to have
instituted the action or to have mandated
Klagsbrun to do so on
behalf of the Commissioner.
The
date on which authority must be shown to exist
17.
The parties
agreed that
rule 7
does not require a litigant to satisfy the court
that its legal representative had the requisite authority at the
commencement
of performing his legal duties on behalf of his client
and that it would be sufficient for such authorisation to be shown to
exist
at the time of the consideration of the application.
[2]
18.
There is therefore no merit in the first complaint that the authority
was only provided
after the institution of this application.
Mr.
Bavuma’s Special Power of Attorney
19.
The rule
does not prescribe the specific manner in which an attorney would be
required to produce proof of its authority.
Possible means
include a written power of attorney, a resolution by a company.
It is also open to a party to apply for an
order, such application
obviously being underpinned by the necessary proof, for an order
authorising the person to act on behalf
of the party concerned.
[3]
20.
The basis on which the applicants disputed Klagsbrun’s
authority to act when presented
with the special power of attorney of
Mr. Bavuma, was that:
“
12.5
Annexure ‘FJ4’ falls short of providing the necessary
information and documentation authorizing Bavuma to
sign the special
power of attorney and to instruct Klagsbrun.
12.6
Neither proof of any delegation of power in favour of Bavuma nor his
acceptance of such delegation has been attached.”
21.
In
Eskom
v Soweto City Council
it was stated:
[4]
“
The
care displayed in the past about proof of authority was rational.
It was inspired by the fear that a person may deny that
he was party
to litigation carried on in his name. His signature to the
process, or when that does not eventuate, formal
proof of authority
would avoid undue risk to the opposite party, to the administration
of justice and sometimes even to his own
attorney. (Compare
Viljoen v Federate Trust Ltd
1971 (1) SA 750
(O) at 752D – F
and the authorities there quoted.)
The
developed view, adopted in Court
Rule 7(1)
, is that the risk is
adequately managed on a different level.
If the attorney is
authorised to bring the application on behalf of the applicant, the
application necessarily is that of the applicant.
There is no
need that any other person, whether he be a witness or someone who
becomes involved especially in the context of authority,
should
additionally be authorized. It is therefore sufficient to know
whether or not the attorney acts with authority.
As
to when and how the attorney’s authority should be proved, the
Rule-maker made a policy decision. Perhaps because
the risk is
minimal that an attorney will act for a person without authority to
do so, proof is dispensed with except only if the
other party
challenges the authority. See
Rule 7(1).
Courts should
honour that approach. Properly applied, that should lead to the
elimination of the many pages of resolutions,
delegations and
substitutions still attached to applications by some litigants,
especially certain financial institutions.”
(Emphasis
added.)
22.
It appears therefore that all that was required of Klagsbrun is to
satisfy this court as
to its authority to represent the
Commissioner. It did not need to go beyond an authority issued
to it by the Commissioner
(as its client) or an official of the
Commissioner in order to ensure that, that person was duly authorised
so to instruct the
attorneys. The queries raised by the
applicants in respect of Mr. Bavuma’s authorisation to provide
the power of attorney
is beyond what an enquiry in terms of
rule 7
requires.
23.
In my view, therefore, the special power of attorney provided in
response to the
rule 7
notice constituted sufficient proof to satisfy
me that Klagsbrun had been authorised to represent the Commissioner
in the institution
of the main action.
The
document issued by the Commissioner
24.
The applicants’ complaint in respect of the authority provided
by the Commissioner
dated 19 March 2020 is, as stated above, as
follows:
24.1.
The document, in terms of its wording does not constitute a
delegation under
section 6(2)
of the
Tax Administration Act. Section
6(2) provides as follows:
“
Powers
and duties which are assigned to the Commissioner by this Act must be
exercised by the Commissioner personally but he or
she may delegate
such powers and duties in accordance with section 10”
; and
24.2.
The document does not establish Mr. Bavuma to be a person who was or
is entitled to exercise the Commissioner’s
power on his behalf,
as contemplated in terms of
section 11(1)
of the
Tax Administration
Act. Section
11(1) provides:
“
No SARS
official other than the Commissioner or a SARS official duly
authorised by the Commissioner may institute or defend civil
proceedings on behalf of the Commissioner….”
25.
In argument, counsel for the Commissioner pointed out that counsel
for the applicants proceeds
from the incorrect point of view that the
document provided by the Commissioner, as part of its answering
affidavit, constitutes
a “
delegation
” as provided
for in
section 11(2)
of the
Tax Administration Act.
>
26.
This authority, the Commissioner contends, constitutes acceptable
proof that Klagsbrun has
been authorised to represent the
Commissioner in the main action and further, that Mr. Bavuma, the
SARS official, was duly authorised
by the Commissioner to furnish
Klagsbrun with a power of attorney.
27.
In
Unlawful
Occupiers of the School Site v City of Johannesburg
[5]
the
Supreme Court of Appeal held, with reference to the decision in
Ganes
v Telecom Namibia Limited
[6]
(in
turn citing with approval the
Eskom
decision (
supra
))
held:
[7]
“
[16]
However, as Flemming DJP has said, now that the new
rule 7(1)
-remedy
is available, a party who wishes to raise the issue of authority
should not adopt the procedure followed by the appellants
in this
matter, i.e. by way of argument based on no more than a textual
analysis of the words used by a deponent in an attempt
to prove his
or her own authority. This method invariably resulted in a costly and
wasteful investigation, which normally leads
to the conclusion that
the application was indeed authorised. After all, there is rarely any
motivation for deliberately launching
an unauthorised application. In
the present case, for example, the respondent's challenge resulted in
the filing of pages of resolutions
annexed to a supplementary
affidavit followed by lengthy technical arguments on both sides. All
this culminated in the following
question:
Is it
conceivable that an application of this magnitude could have been
launched on behalf of the municipality with the knowledge
of but
against the advice of its own director of legal services? That
question can, in my view, only be answered in the negative.
”
(Emphasis added.)
The
relevant quotation from the
Eskom
judgment has already been
set out above.
28.
Certainly, when the special power of attorney is to be duly
considered with the wording
of the authority provided by the
Commissioner as part of the answering evidence in this application, I
am satisfied that such authority
exists.
29.
I do not agree with the interpretation that this document does not
satisfy the requirements
of a “
delegation
” in
terms of the
Tax Administration Act. On
its clear wording, the
document does not purport to be a delegation. It simply states
to be an “
authority
”. It “
confirms
the authority of Sipho Bavuma…. to exercise the powers and
duties of a SARS official as contemplated in section
11(1) of the
Act
”. It is signed by the Commissioner himself.
30.
Section 11(1) has been quoted above.
31.
On its clear wording, the authority falls within the scope of section
11(1).
32.
In addition to the above, Klagsbrun has also provided details of how
its firm has also represented
the Commissioner in proceedings related
to this action, including several insolvency enquiries where the
applicants were involved.
33.
As was stated in
Unlawful Occupiers
(
supra
) at para
[16]:
“…
..
Is
it conceivable that an application of this magnitude could have been
launched on behalf of the municipality with the knowledge
of but
against the advice of its own director of legal services? That
question can, in my view, be answered only in the negative.”
34.
Having reasonably considered the evidence before me, it also appears
to me to be inconceivable
that it would have been possible for
Klagsbrun to institute the action and be able to obtain supporting
documents, such as it has
been able to do, from the Commissioner’s
office, without the Commissioner being aware and having agreed to the
institution
of these proceedings.
35.
I therefore hold that I am satisfied that Klagsbrun has been duly
authorised to represent
the Commissioner in the main action
instituted under this case number.
Costs
36.
I now turn to a consideration of the costs order to be made herein.
Initially, both
parties sought a punitive costs order against each
other. It is only the Commissioner, however, who persists in
seeking a
punitive costs order.
37.
The basis on which the Commissioner contends such a costs order is
appropriate, is the following:
37.1.
the Commissioner contends that this application is an abuse of
process and was brought with ulterior motives namely
to derail and
delay the main action, and
37.2.
it is contended that the applicants were well aware of Klagsbrun’s
authority to represent the Commissioner from
its principals’,
the de Robillards, involvement in previous but related proceedings
where, it is claimed, the De Robillards
and their associates engaged
in abusive and frivolous court processes.
38.
In argument before me, counsel for the Commissioner accepted that the
service of a notice
in terms of rule 7 was a procedural entitlement.
39.
Even if it can be said that, reasonably speaking, the applicants did
not have reason to
doubt Klagsbrun’s authority to represent the
Commissioner, it was within the Commissioner’s powers not to
let this
issue drag on for as long as it has.
40.
I have set out above the timeline according to which the Commissioner
acted since the applicants
served their notice in terms of rule 7.
It took the Commissioner two months to respond to the rule 7 notice
and, once this
application was served, some eight months to file its
answering affidavit.
41.
It was open to the Commissioner / Klagsbrun immediately upon the
applicants’ failure
to accept the special power of attorney
from Mr. Bavuma, themselves to institute an application seeking a
declaratory order that
the power of attorney was sufficient to
satisfy the court as to Klagbrun’s authority. At the very
least, the Commissioner
and/or Klagsbrun could have moved this matter
forward with far greater alacrity.
42.
The complaints that this application has caused a delay in
prosecution of the action can
therefore not solely be laid at the
feet of the applicants. I am therefore not inclined to make a
punitive costs order.
It is my finding that the costs should
nevertheless follow the result.
43.
I therefore make the following order:
43.1
the application is dismissed;
43.2
based on the documentation before me I am satisfied that Klagsbrun
Edelstein Bosman de Vries Inc is duly
authorised to represent the
Commissioner, South African Revenue Services in the action instituted
under case number 81483/2019,
and
43.3
the applicants are directed to pay the costs of this application,
jointly and severally, the one paying the
other to be absolved.
I
JOUBERT
ACTING
JUDGE OF THE HIGH COURT
Appearances
:
Counsel
for the Applicants:
CJ
Hartzenberg SC
Instructed
by:
Jasat
& Jasat Attorneys
Counsel
for the Respondent:
WH
Pocock
Instructed
by:
Klagsburn
Edelstein Bosman Du Plessis Inc
Date
heard:
4
May 2021
Date
of judgment:
17
June 2021
[1]
2010
(6) SA 565
(ECP) at paras [11] to [12] (at 568H – 569B).
[2]
Johannesburg
City Council v Elesander Investments (Pty) Ltd
1979 (3) SA 1273 (T).
[3]
See
in this regard
Administrator,
Transvaal v Mponyane
1990 (4) SA 407
(W) at 409;
Firstrand
Bank Limited v Fillis
(
supra
)
at 569A – B;
Mall (Cape) (Pty)
Ltd v Marino Ko-operasie Beperk
1957
(2) SA 347
(C) and
Johannesburg City
Council v Elesander Investments (Pty) Ltd
1979 (3) SA 1273
(T) at 1279C – D.
[4]
1992 (2) SA
703
(W) at 705D – H.
[5]
2005 (4) SA 199 (SCA).
[6]
2004 (3) SA 615
(SCA) at 624I - 625A.
[7]
At
206F – H.