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[2019] ZAGPPHC 55
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Commissioner For The South African Revenue Service and Another v Naude (51712/2017) [2019] ZAGPPHC 55 (6 March 2019)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
(1)
NOT
REPORTABLE
(2)
NOT OF
INTEREST TO OTHER JUDGES
(3)
REVISED
Case Number: 51712/2017
COMMISSIONER
FOR THE SOUTH AFRICAN
First Applicant
REVENUE
SERVICES
SOUTH
AFRICAN REVENUE
SERVICES
Second Applicant
And
JACOB
PETRUS JACOBUS NAUDE
Respondent
In
re:
JACOB
PETRUS JACOBUS
NAUDE
Applicant
and
COMMISSIONER
FOR THE SOUTH AFRICAN
First Respondent
REVENUE
SERVICE
SOUTH
AFRICAN REVENUE
SERVICES
Second Respondent
JUDGMENT
MOLEFE
J
[1]
This is an application in terms of rule
27
[1]
,
for an order condoning the late filing of an answering affidavit by
the Commissioner of the South African Revenue Service ("SARS",)
the respondent in the main application, and extending the date of its
filing to include the date on which it was filed, being 30
January
2018.
Background
[2]
The main application was launched by the
applicant (the respondent in this application), against SARS on 26
July 2017, wherein the
applicant seeks the following orders
[2]
:
2.1
setting aside SARS's decision to
disallow certain refunds claimed by the applicant in respect of fuel
levy (which includes diesel)
in terms of section 75(1A) of the
Customs and Excise Act, 91 of 1994;
2.2
declaring that the applicant would be
entitled to the diesel refunds;
2.3
declaring further:
2.3.1
that SARS failed to issue a notice of
assessment in respect of the disallowed diesel refunds for the
contended period of assessment;
2.3.2
that in those circumstances the
purported tax debt relied on by SARS is not due and payable; and
2.3.3
that all collection steps taken by SARS
against the applicant are null and void, alternatively irregular and
should be set aside;
2.4
that SARS be ordered to pay the amount
of R664 637.46 in respect of funds collected by it through a third
party agency procedure;
and
2.5
that pending the outcome of the above,
SARS is interdicted and restrained from proceeding with any further
collection steps and/or
appointments of third parties as contemplated
in
section 179
of the
Tax
Administration Act 28 of 2011
.
[3]
The main application was served on SARS
on 2 August 2017. On 24 August 2017, the State Attorney filed a
notice of intention to oppose
on behalf of SARS and thus the
answering affidavit was to be delivered on 14 September 2017.
[4]
SARS did not file its answering
affidavit when it became due. As a result, the applicant set the main
application down on the unopposed
roll on 19 December 2017. On the
date of the hearing, the parties agreed, which agreement was made an
order of court by Baqwa J
that SARS would file its answering
affidavit on 22 January 2018, together with an application for
condonation if any, failing which
the applicant would be entitled to
set the matter down on the unopposed roll.
[5]
Although SARS's answering affidavit was
signed and commissioned on 22 January 2018, it was filed on 30
January 2018, six days later
than it was due in terms of the agreed
court order. The answering affidavit was filed without an application
for condonation.
[6]
On 19 March 2018, the applicant's
attorneys of record, Messrs Malan & Nortje attorneys, addressed a
letter to the State Attorney
in which it was indicated
inter
alia
that unless they received
SARS's application for condonation for the late filing of its
answering affidavit within 14 (fourteen)
days thereof, they will
proceed to set the matter down for hearing on the unopposed roll.
[7]
The applicant is opposing this
application on these grounds, namely that:
7.1
the answering affidavit in the main
application was filed extremely late;
7.2
SARS's conduct and that of its attorneys
of record in this regard was grossly negligent, inexcusable and is in
contempt of the court
order dated 19 December 2017;
7.3
as a result, the applicant has suffered
immense prejudice.
The
applicable law
[8]
Rule 27 of the Uniform Rules of Court
provides that:
"(1) In
the absence of agreement between the parties, the court may upon
application on notice
and on good cause shown, make an order
extending or abridging any time prescribed by these rules or by an
order of Court or fixed
by an
order
extending or abridging any time for
doing any act or taking any step in connection with any proceedings
of any nature whatsoever
upon such terms as to it seems
meet.
(2)
Any such extension may be ordered
although the application therefore is not made until after expiry of
the time prescribed or fixed,
and the court ordering any such
extension may make such order as to it
seems
meet as to the recalling, varying or
cancelling of the results of the expiry of any time so prescribed or
fixed, whether such results
flow from the terms of any order or from
these rules.
(3)
The court may, on good cause
shown, condone any non-compliance with
these
rules”.
[9]
In
Gumede
v Road Accident Fund
[3]
,
the court stated the following:
"[1] Condonation of the non-observance
of Court orders and rules is not
a
mere formality. A party seeking
condonation must satisfy the court that there is sufficient cause for
excusing the non-compliance.
Whether condonation should be granted or
not is
a
matter
of discretion that has to be exercised having regard to all the
circumstances of the particular
case".
[10] In general,
applications for condonation/extension of time have been dealt with
in terms of the
requirements in
United
Plant Hire (pty) Ltd v Hills and Others
[4]
,
where the Appellate Division, as it
then was, identified the necessary jurisdictional factors to be taken
into account where a Court
exercises its discretion in relation to an
application for condonation, namely:
10.1
the degree of non-compliance;
10.2
the adequacy of the explanation for such
failure;
10.3
the prospect of success;
10.4
the importance of the case;
10.5
the respondent’s interest in the
finality of the judgment;
10.6
the
convenience of the Court and avoidance of delays in the
administration of justice.
It
was stated in this case that the list is not exhaustive and that
these factors are not individually decisive, but are interrelated
and
the one is weighed against the other, so that the strength of one or
more may compensate for the weakness of one or more of
the other.
[11]
The applicant's counsel
[5]
raised a point
in limine
in
the heads of argument, a point not taken in the papers and he
submitted that I should consider and make a finding on same before
the merits of the application are considered.
[12]
The order of 19 December 2017 by Baqwa J
read that:
"The respondents (SARS) shall file
their answering affidavit(s) if any, on or before 22 January 2018,
together with their condonation
application(s), if any".
Counsel
for the applicant submits that the wording and the meaning of the
order is that if SARS wanted to deliver an answering affidavit
in the
main application, it had to do so on or before 22 January 2018, and
same had to be accompanied by a condonation application,
seeking
condonation for being late in the first place. Counsel contends that
SARS needs condonation for the late delivery of their
condonation
application but no relief is sought to that effect in the Notice of
Motion. Accordingly, the application is fatally
flawed and stands to
be dismissed with costs.
[13]
The applicant's counsel seeks to suggest
that for purposes of this application, SARS ought to have sought
condonation not only for
the six days, but also for the period prior
to the court order of 19 December 2017. I agree with the submission m
de by SARS counsel
[6]
that the provisions of rule 27(1), only requires condonation
application in the circumstances where there is no agreement as to
the late filing of the court documents. In this application, the
parties had on 19 December 2017, agreed that the answering affidavit
may be filed later than 14 September 2017, the date on which it
became due in terms of the Uniform Rules of Court.
[14]
What makes the applicant's argument more
untenable is that on 1 March 2018, the applicant's attorneys of
record addressed a letter
to the State Attorney in which it stated
that
[7]
:
"We refer to the above matter and your
answering affidavit that
was
served
on 30 January 2018. We refer to the court order dated 19 December
2017, in terms of which you were obliged to file your answering
affidavit on or before 22 January 2018.
We therefore confirm that we are not going
to reply to your affidavit, unless we receive your application for
condonation for the
late filing of your answering affidavit within 14
(fourteen) days of receipt of this letter".
[15]
It is clear from the wording of the
above-mentioned letter that the applicant's complaint, which
necessitated this application,
was due to the failure by SARS to
serve its answering affidavit on 22 January 2018, as directed by the
Court Order. In light of
the above, the applicant's point in
limine
cannot succeed and is therefore
dismissed.
The
reasons for the delay
[16]
The reasons proffered by SARS for the
delay in filing the answering affidavit on 14 September 2017 are
that, due to internal bureaucratic
processes required for the
appointment of counsel, the State Attorney only received instructions
from SARS to appoint counsel on
11 October 2017 and 18 October 2017.
The decisions sought to be reviewed and set aside in the main
application were taken by Mr
Sangweni, an auditor stationed at SARS
offices in Standerton, which is the office which has jurisdiction
over the applicant’s
business activities
[8]
.
Part of the input required for purposes of putting together the
answering affidavit, came from the officials responsible for the
implementation of the diesel rebates policy at SARS head office.
[17]
The first consultation with counsel was
held with Mr Sangweni on 29 November 2017 and on 14 December 2017,
counsel circulated the
first draft affidavit. At that time, the
applicant had already placed the matter on the roll of 19 December
2017 and on that day,
the parties' agreement that SARS will file its
answering affidavit on 22 January 2018, was made an order of court.
[18]
Due to the holiday period, the officials
of SARS who were relevant to review the affidavit, were already on
leave and this occasioned
further delays, with counsel only being
able to consult again with the relevant officials on 12 January 2018.
The additional work
on the first draft took a considerably longer
time than it was anticipated, which was exacerbated by the fact that
some of the
documentation had to be physically sourced from the SARS
offices in Standerton.
[19]
The answering affidavit spanning some
147 pages including annexures, was signed and duly commissioned on 22
January 2018 and was
delivered to the State Attorney at
12h00
[9]
.
On 23 January 2018, the secretary delivered the copies of the
answering affidavit to the Registry Office for urgent service and
filing. Mr Mashabela expected and understood that the answering
affidavit was delivered on 22 January 2018. It was only when he
received the letter dated 19 March 2018 that he realized that the
answering affidavit was not delivered on 22 January 2018.
[20]
An inquiry into the reasons why the
answering affidavit was not filed on 22 January 2018, found that the
State Attorney Registry
Service is understaffed and under capacitated
with only three messengers servicing 80 attorneys. Mr Mashabela is
also responsible
for approximately 1448 files, 850 of which require
his personal attention almost on a daily basis.
[21]
Counsel for the applicant submitted that
SARS and the State Attorney were both culpably remiss and indifferent
to the consequences
of their failure to attend to this case
diligently and timeously. In light of the judgment in
Grootboom
v The National Prosecuting Authority and Another
[10]
,
counsel submits that such conduct
can simply not be condoned. It was further argued that by the time
the matter was in court on
19 December 2017, (almost five (5) months
after the application was served) a final draft of the answering
affidavit was not even
ready. Even though SARS knew that its
answering affidavit was late, they ignored even the basic principles
of collegiality of a
request for an extension of time. It is
submitted that on this basis alone the application for condonation
should fail.
The
degree of non-compliance
[22]
The parties agreed to extend the filing
of SARS answering affidavit on or before 22 January 2018, and this
agreement was made an
order of court on 19 December 2017. SARS only
filed the affidavit on 30 January 2018, six (6) days late. Applicant
contends that
SARS's answering affidavit was filed extremely late.
[23]
It is submitted on behalf of the SARS
that the delay of six days is not an extreme delay, in particular
when one considers that
the answering affidavit was signed on 22
January 2018, the date on which it became due.
Prospects of success and the importance of
the case
[23]
As stated above, the applicant in the
main application seeks an order setting aside SARS's decision to
disallow certain fuel levy
refunds previously claimed by the
applicant in respect of diesel allegedly used by him in terms of
section 75(1
)(A)
of
the
Customs and Excise Act.
The
main issue in dispute between the parties in the main application is
whether the applicant was entitled to the diesel claims
he made
during the period under review
[11]
.
[24]
In order to qualify for the diesel
refund claims, the applicant ought to satisfy the commissioner that:
(i) he himself purchased
the diesel; (ii) he used the diesel for
qualifying activities; and (iii) he kept sufficient records showing
that the diesel dispensed
and claimed for, was in fact used for
qualifying activities
[12]
.
[25]
The applicant is a sole proprietor and a
registered user for farming and forestry activities in terms of the
Customs and Excise Act.
The
dispute in the main application follows an audit undertaken by SARS
on the applicant's activities. Counsel for SARS submits
that SARS has
demonstrated in its answering affidavit,
inter
alia,
that (i) the applicant did not
purchase the diesel in respect of which refunds were claimed; (ii)
the diesel was purchased by Bonnie
Brooks, who is not the User and
VAT vendor for the purpose of the
Customs
and Excise Act;
(iii) the applicant
kept one logbook to register diesel usage in respect of the
activities of both the applicant and Bonnie Brooks;
(iv) the
documents attached to the founding affidavit as proof of keeping a
proper logbook are not the same as those made available
to SARS for
the audit.
[26]
It is therefore submitted that in light
of the above, the applicant will not on the basis of his founding
affidavit alone, be able
to prove that SARS's decision to disallow
the diesel rebate claims falls to be reviewed and set aside and
SARS's prospects of success
are high.
[27]
Counsel for SARS further submits that
the case is important to SARS in that policy issue raised in the
answering affidavit need
to be fully adjudicated in order to ensure
that the current regime of diesel refunds introduced in 2000 is
effective. The current
diesel refund regime was introduced
specifically to curb the abuses that were prevalent in the previous
scheme. This included the
linking of the claims for diesel refund to
the administration of the VAT system and to limit the entitlement to
claim the refund
to the primary producer (user), in order to make
such a producer more internationally competitive by reducing its
input costs through
the grant of the refund. It is contended
therefore that the main application is an important case for the
court to determine whether
diesel refunds in respect of diesel
purchases made by another entity and used by the user may be allowed.
Applicant's
interest in the finality of the case; the convenience of the Court
and the delays in the administration of justice
[28]
In the main application the applicant
also seeks an interdict in terms of which SARS is restrained from
proceeding with any further
collection steps and/or appointments of
third parties as contemplated in
section 179
of the
Tax
Administration Act,
pending
the
finalization of the main application. This interdict was granted in
terms of the court order of 19 December 2017. The amount
of money
already collected from the applicant through this procedure is R664
637.46, and the collection of this money precedes
the main
application. No monies were collected from third parties subsequent
to the launching of the main application, and significantly,
after
the interdict. The third party notice authorizing SARS to undertake
further collection steps was also withdrawn on 4 May
2018
[13]
.
[29]
Counsel for SARS submits that the
applicant has not suffered any prejudice at all as a result of the
late filing of the answering
affidavit on 30 January 2018. It is
further submitted that the applicant will not suffer any prejudice if
condonation is granted
and the answering affidavit is allowed. This
would allow the main application to be adjudicated upon properly and
there will be
finality on the disputes between the parties.
[30]
It is further submitted that in the
avoidance of further delays and in the interest of the administration
of justice, the applicant
should have allowed this application for
condonation to be adjudicated simultaneously with the main
application.
[31]
Counsel for the applicant argues that Mr
Mashabela's version is that on 22 January 2018, he was in possession
of a signed answering
affidavit, together with all the necessary
annexures but gives no explanation as to why he did not arrange with
the applicant's
attorneys to serve the affidavit by email. Counsel
submits that this application for condonation should be adjudicated
on the backdrop
of
Grootboom
supra
[14]
wherein Bosielo AJ stated as
follows:
"[23] It is now trite that condonation
cannot
be
had
for the
mere
asking.
A party seeking condonation must make out
a
case entitling it to the court’s
indulgence. It must show sufficient cause. This requires
a
party to give
a
full explanation for the
non-compliance with the rules or court's directions. Of great
significance, the explanation must be reasonable
enough to
excuse
the default.
[30] There is another important dimension to
be considered. The respondents are not ordinary litigants. They
constitute an essential
part of government. In fact, together with
the office of the state attorney, the respondents sit at the heart of
the administration
of justice. As organs of state, the Constitution
obliges them to 'assist and protect the Courts to ensure the
independence, impartiality,
dignity, accessibility and effectiveness
of the Courts"'.
[32]
I totally agree with the sentiments
expressed by Bosielo J and agree that SARS and the State Attorney
were indifferent to the consequences
of their failure to attend to
this case diligently and timeously.
[33]
The principles of seeking condonation
are analogous to those of seeking a postponement. A party who applies
for a postponement seeks
an indulgence from the court and must
therefore show good cause for the interference with the other party's
procedural right to
proceed and the general interest of justice in
having matters finalised
[15]
.
[34]
In
Feldman
v Feldman
[16]
the Court stated that:
[". . .
the Court Rules are not there
to hamper
a
Court in dispensing justice, but to assist
a
Court in doing
so.
Where it becomes necessary to deviate
from those Rules in order to dispense justice and to
see
that
justice is done, it is absolutely necessary for
a
Court, if
good cause is shown, to grant the indulgence. That is the very action
which the appellant in this case resorted to and
he is at present
criticised for his honest approach'].
[35]
In my opinion, SARS has fully explained
the reasons for its delay in filing the answering affidavit, showing
that it was not due
to delaying tactics. Given the merits of the case
as summarized above, and in the interest of justice, SARS should be
given the
opportunity to present its case. This will allow the
applicant to file a replying affidavit and to explain the pertinent
issues
raised by SARS in its answering affidavit. I am therefore
satisfied that SARS had demonstrated that
prima
facie
there are sufficient reasons
to entitle it to the Court's indulgence.
Costs
[36] Counsel for
SARS argues that there is no plausible reason why the applicant is
opposing the condonation
application, safe for the grounds that the
answering affidavit was filed late. It is therefore submitted that in
light of the opposition
of this application, the costs of this
application should follow the cause on a party and party scale. I do
not agree with this
argument.
[37]
Rules of court are meant to be observed
by the parties at all material times. No one party should be allowed
by his own indolence,
to treat the rules of court with disdain. In
casu,
SARS
disregarded and ignored the compliance with the court order. There is
no justifiable reason why SARS should be allowed to disregard
the
rules and order of this court with no consequences. The usual rule is
that the party seeking indulgence must pay the wasted
costs. I have
taken into consideration the circumstances of this case, weighed the
various issues and the conduct of the parties
and I am of the view
that it is just and fair that SARS should pay the costs for the
application.
[38]
I accordingly make the following order:
1.
The applicants (SARS) is granted
condonation in terms of Rule 27(2) for the late filing of its
answering affidavit in the main application;
2.
The date for the filing of the
answering affidavit is hereby extended to include the date on which
the answering affidavit was filed
30 January 2018.
3.
The applicant to pay costs of
this application.
D
S MOLEFE
JUDGE
OF THE HIGH COURT
APPEARANCES:
Counsel
on behalf of Applicant
:
Adv. M
Chabedi and Adv. R
Tsele
Instructed
by
:
Prinsloo, Wolmarans, Greyling
Attorneys
Counsel
on behalf of Respondent
:
Adv. R
Ellis
Instructed
by
: The
State Attorney, Pretoria
Date
of Hearing
: 28
January 2019
Date
of Judgment
: 6 March
2019
[1]
Uniform Rules of Court
[2]
Supporting Affidavit pages 7-9, para 5
[3]
2007 (6) SA 304
{C) at page 307 D
[4]
1976 (1)SA 717 (A)
[5]
Advocate P Ellis
[6]
Advocate MPD Chabedi
[7]
Supporting affidavit page 10, para 12, annexure "NM1" at
page 5
[8]
Bundle pages 11-12, par 16, 17 and 18
[9]
Bundle page 17
[10]
2014 (2) SA 68
CC at page 69
[11]
Bundle
page
20 para 44
[12]
Section 75 read with item 670.04 of Schedule No 6 of the Customs Act
[13]
Bundle
page
55,
annexure "N3"
[14]
2014 (2) SA 68
(CC) at
paras [23] and
{30]
[15]
Persadh and another v General Motors SA (Pty) Ltd
2006 (1) SA 455
(SE) at para [13]
[16]
1986 (1) SA 449
(T) at page 455 A-B