About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2017
>>
[2017] ZAGPPHC 396
|
|
South African Revenue Services v Malema (76306/2015) [2017] ZAGPPHC 396 (6 February 2017)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 76306/2015
Date:
2017-02-06
Not
reportable
Not
of interest to other Judges
In
the matter between:
SOUTH
AFRICAN REVENUE
SERVICES
Applicant
and
SELLO
JULIUS
MALEMA
Respondent
Heard:
29 May 2017
Judgment:
2 June 2017
Coram
:
Makgoka
,
J
Summary:
Practice
and procedure -
Orde
r
referring
application
to
trial
-
Rule 6(5)(g) of
the Unifo
rm
Rules
of
Court
-
exercise
of discretion -
Appealability of
such order
-
sections 16 and 17 of
the
Superior Court Act of 2013 - interests of
justice
.
JUDGMENT
MAKGOKA,
J
[1]
This is an application for leave to appeal. The applicant, the
Commissioner for the South African Revenue Service (SARS}, who
was
the respondent in the main application, seeks leave to appeal against
an order of this court referring an application for
trial. The
application for leave to appeal is opposed by the
respondent, Mr Julius Sello Malema (Mr
Malema), the applicant
in the main application
[2]
The application comes under peculiar and extra-ordinary
circumstances. The judge who heard the main application, and whose
order is sought to be appealed against, Justice Jansen, has since
resigned as a judge and was therefore unavailable to hear the
application for leave to appeal. For the purpose of this judgment, I
shall refer to her as if she is still a judge.
[3]
The background facts can briefly be stated as follows. On 26 May 2014
Mr Malema entered into a compromise agreement with SARS
as envisaged
in terms of s 200 of the Tax Administration Act 28 of 2011 (the Act).
He performed in terms of the compromise. Subsequently,
on 5 February
2015 SARS informed Mr Malema that it is not bound to the compromise
agreement because he had allegedly failed to
make a full and frank
disclosure to it.
[1]
[4]
As a result of the stance adopted by SARS, Mr Malema launched an
application for an order declaring the compromise agreement
binding
on SARS. The application was heard by Ms Justice Jansen on 2 February
2016. Judgment was delivered on 29 April 2016 in
terms of which the
following order was made:
1.
The matter is referred to trial.
2.
The Applicants notice of motion stands as the simple
summons and the Respondent's notice of intention to oppose stands as
a notice
of intention to defend.
3
The Applicant is directed to file his declaration within 30 days of
this court order.
4
Thereafter the Uniform Rules of Court regarding the
filing of pleadings and all processes and procedures shall apply.
5
The costs incurred to date are costs in the action,
which costs include the costs consequent upon the employment of two
counsel.
[5]
SARS, aggrieved with this order, delivered its notice of application
for leave to appeal on 23 May 2016. It seeks leave to appeal
to the
Supreme Court of Appeal, alternatively to the full court of this
Division. Several grounds of appeal are stated in the notice
of
application for leave to appeal. Most of the grounds relate to what
SARS considers to be 'findings' by the court on some disputed
facts.
There is also a complaint that the court had misconstrued the dispute
between the parties.
[6]
These grounds clearly seek to challenge the court's statements in the
course of the judgment. But that it is impermissible,
as the
statements were made obiter. Therefore, the complaint in respect of
them can be disposed of summarily with a short and trite
answer. An
appeal does not lie against the reasons for judgment, but against the
substantive order made by a court. See
Western Johannesburg Rent
Board and Another v Ursula Mansions (Pty) Ltd
1948 (3) SA 353
(A)
at 355;
True Motives 84 (Pty) Ltd v Mahdi and Another
2009 (4)
SA 153
(SCA) para 35;
Jacobs
&
another v Baumann NO
(2009] ZASCA 43;
2009 (5) SA 432
para 9.
[7]
The upshot of SARS' application for leave to appeal, however, is that
on the papers before it, the court should have found that
SARS was
not bound to the compromise agreement and dismissed the application.
In particular, it was stated that the court erred
in failing to make
a determination on the interpretation of s 205 of the Act. It is
argued that had it done so, it would have found
that on the objective
interpretation of the section, Mr Malema's alleged non-disclosure,
misstatements and failure to keep his
tax affairs up to date,
constituted a breach of the compromise agreement and consequently,
SARS was not bound to it.
[8]
The common law test in an application for leave to appeal has always
been whether there are reasonable prospects that another
court, given
the same set of facts, might arrive to a different
conclusion. That test has been codified by s
17(1)(a)(i)
and (ii) of the Superior Court Act 10 of 2013, in terms of which
leave to appeal may only be given where a judge is
of the opinion
that the appeal would have reasonable prospect of success, or that
there is some compelling reason why the appeal
should be heard.
[9]
In the present application, the main, and dispositive, issue is
whether the order by Justice Jansen referring the application
to
trial is appealable. I shall revert to this aspect later. I must
first consider the framework under which orders such as the
one in
the present case, are governed. Referral of an application to trial
is governed by Rule 6(5)(g) of the Uniform Rules of
Court, which
provides:
'
Where
an application cannot properl
y
be
decided on affidavit the court may dismiss the application or make
such order as to
i
t seems
meet with a v
i
ew to ensuring
a just and expedi
t
ious
decision. In particular but without affecting the genera
l
ity
of the afor
e
going
,
i
t may direct that oral
ev
i
dence be heard on specific
issues with a view to reso
l
ving
any dispute of fact and to that end may order any deponent to appear
personally or grant leave for him or any other person
to be
subpoenaed to appear and be exam
in
ed
and
c
ross examined as a
witness or it may re
fe
r the
matte
r
to t
r
ia
l
with appropriate d
i
rections
as to pleading
s
or definition
o
f i
ssues
,
or otherwise
.'
[10]
From the text of the rule, it is plain that the court enjoys a
discretion, which must of course, be exercised judiciously.
Whether
in a particular case the discretion has been properly exercised,
regard must be had to the facts of each case and the reasoning
underpinning the decision. Rule 6(5)(g) should be considered also in
light of s 173 of the Constitution of the Republic of South
Africa,
1996, in terms of which this court, among others, has an inherent
right to regulate its own procedures.
[11]
In the present case, in her judgment, Justice Jansen gave a lengthy
and detailed exposition of the bases on which SARS alleged
Mr Malema
had made misstatements and non-disclosures to it, and Mr Malema's
reply to the allegations. Under the heading 'Referral
to trial' the
learned judge stated:
'[71]
At the hearing, the applicant’s advocate requested that
not only the issue of the Bendor Property, but the entire
application
be referred to trial because of the factual disputes in the
application.
[72]
In addition to the issue of the Bender Property, which this court is
not in a position to decide on affidavit
,
the
other
issues,
which gave
rise
to SARS declaring that
it is
no longer
bound by the compromise agreement, are
equally difficult to decide
on
the
conflicting versions set out in
the
affidavits
.
Even though SARS seeks to argue
that
it is
merely a matter
of
interpretation it
cannot
be
discounted that
the
information
available
to
the
parties
and the
reasons
and
facts upon
which they entered
into
the compromise agreement may
be
relevant.
.
..
[74]
The less said about the correct legal interpretation of section 205,
at this stage, the better. Whether the respondent's or
the
applicant's interpretation of the compromise agreement is correct
cross-examination in respect of the parties' knowledge of
the facts
and the circumstances attendant upon the compromise being entered
into will bring clarity to matters of great importance
to all the
parties. Cross-examination may even demonstrate that SARS would in
any event have entered into the compromise agreement
had it been
aware of all the facts which SARS contends the applicant did not
disclose or disclosed inaccurately or incompletely
- or prove the
exact opposite'.
[12]
I turn now to the appealability of the order. The lodestar as to
whether a particular decision is appealable remains
Zweni v
Minister of Law and Order of the Republic of South Africa
1993
(1) SA 523
(A). After a scholarly exposition of earlier authorities
and distilling their effect, Harms AJA formulated the test as follows
at 536A-C:
'
In
the light
of
these
tests
and
in
view
of the fact that
a
ruling
is the
antithesis
of
a
judgment or order,
it
appears
to
me that, generally speaking,
a
non-appealable
decision
(ruling)
is a
decision
which
is not
final (because
the court
of
first
in
stance
i
s
entitled
to
a
lte
r
it),
nor definitive of
the
rights of the
parties nor
has
the effect of d
i
sposing
of
at
least
a
substantial portion of the relief claimed in
the
main proceedings
'.
[13]
However, the
Zweni
attributes are not cast in stone, as
observed in
Moch v Nedtravel (Pty) Ltd tla American Express Travel
Service
1996 (3) SA 1
(A) at 1OF- 11C. Even where a decision does
not bear all these attributes it may nevertheless be appealable if
some other considerations
are evident, including that the appeal
would lead to a just and reasonable prompt resolution of the real
issue between the parties.
[14]
Almost two decades after
Zweni,
the Supreme Court of Appeal in
Philani-Ma Afrika v Mailula
2010 (2) SA 573
(SCA) adapted
the general principles on the appealability of interim orders, and
concluded that what is of paramount importance
in deciding whether a
judgment is appealable is the interests of justice. That approach
received the imprimatur of the Constitutional
Court in
Intl Trade
Administration Commission v SCAW SA (Pty) Ltd
2012 (4) SA 618
(CC). The Constitutional Court at para 52, observed that the Supreme
Court of Appeal had, in
Philani-Ma-Afrika,
adapted the general
principles to accord with the equitable and the more
context-sensitive standard of the interests of justice
favoured by
the Constitution.
[15]
In
Absa Bank Limited v Mkhize and two similar matters
[2013]
ZASCA 139
;
2014 (5) SA 16
(SCA) the high court, not being satisfied
with the service effected by
Absa
in a foreclosure matter, had
postponed the application and directed that certain further steps be
taken. The majority held that
the order amounted to no more than a
direction before the main action could be entered into, as to the
manner in which the matter
should proceed.
[16]
Recently in
Nova Property Group Holdings Limited v Cobbett
&
others
[2016] ZASCA 63
;
2016 (4) SA 317
(SCA), the Supreme
Court of Appeal explained how the notion of the interests of justice
could influence the appealability of a
decision:
'
[9]
It is
well established that
in
deciding what is
in
the
interests
of
justice,
each case has to be
considered in
ligh
t
of
its own
facts. The
considerations
that
serve
the
interests
of justice,
such
as that the
appeal will traverse
matters
of
significant importance which pit the rights of privacy and dignity on
the one
hand, again
st
those
of access
to
informat
ion
and
freedom
of
expression on
the
other hand
,
certainly
loom large before
us. However, the most compelling, in my view
,
is
that a conside
r
ation
of the merits of the appeal will necessarily involve a
res
olution
of the seemingly conflicting decis
i
ons
in
La
Lucia Sands
Share Block Ltd
&
others
v Barkhan
&
others
201O (6) SA
4
21
(SCA) and
Bayoglu v
Manngwe Mining
(P
ty)
2012 JDR
1902 (GNP)
on
the one
hand
,
and
Basson v On-Point
Engineers
(Pty)
Ltd
2012
JDR
2126 (GNP) and
M
&
G
Centre fo
r
Investigative Journalism NPC v CSR-E Loco
Supply
case number 23477/2013 (8 November
2013
)
on the other
.
'
[17]
In the present case, Mr
Gauntlett
SC,
lead counsel for SARS, quite correctly, disavowed any direct reliance
on the
Zweni
attributes,
it being common cause that the impugned order:
(a)
is not final;
(b)
is not definitive of the rights of the parties;
(c)
does not dispose of at least a substantial portion of
the relief claimed.
[18]
Counsel
,
instead
,
r
elied on the rubr
i
c
o
f
th
e
'
i
nterests
o
f
justice
'
developed in
Phi/ani-M
a
-Afrik
a
and explained in
Nov
a
Property
,
for
the argument that the order is appealable
.
In
this regard
,
Mr
Gauntl
e
tt
submitted that the court had made a
prelim
i
nary interpre
t
ation
of s 205
,
by for example,
suggesting a sub
j
ective
element to it
,
and had
therefore 'half-cooked
'
the
issue for the trial court
,
thereby
hamstringing it. For that reason
,
and
given that there has not been a prior interpretation of this
important section
,
it was in
the interests of justice that leave should be granted for either the
Supreme Court of Appeal or a full court to give an
authoritative view
on it.
[19]
I disagree with this submission, for two reasons. First, the factual
premise of this proposition is not correct. The learned
judge did not
express any firm views on the construction of s 205. She pointed to
divergent and possible interpretations of the
section. She then
expressed doubt on the correctness of one adopted by SARS, in
particular, whether the non-disclosures and inaccuracies
had to be
intentional for purpose of avoiding a compromise agreement.
[20]
Second, this argument goes against the very basis of SARS' main
ground of appeal. As stated earlier, the overriding complaint
by SARS
in its notice of application for leave to appeal is that the court
erred in failing to make a determination on the interpretation
of s
205. Indeed the learned judge did not do, consciously so, it appears.
She was particularly careful to steer from that exercise,
as
pointed out in para [11] above. This is borne out by the penultimate
paragraph of the judgment:
'[90]
This
court does not wish to bind
the
court
hearing the trial and does not express an
opinion on
which
interpretation
of
section 205
of
the
TTA
is
accurate.
These issues will be clarified when
evidence
is
led
regarding
the
rationale for SARS entering
into
a compromise agreement and
later
adopting the stance that
it
is
not bound by it.'
[21]
In my view, there is nothing in the present case which warrants the
attention of an appellate court at this stage. Unlike what
the court
considered in
Nova Property
-the
desirability of harmonising conflicting decisions - nothing has been
determined yet, either through factual finding or an interpretation
of s 205 of the Act. The court exercised a discretion accorded to it
by rule 6(5)(g) of the Uniform Rules of Court by referring
the matter
to trial. There is no suggestion that such discretion was exercised
capriciously or upon a wrong principle. The order
is not definitive
of any issue between the parties, and is merely a preparatory one for
the determination of the real dispute between
the parties, namely,
whether in the context of s 205 of the Act, SARS was bound to the
compromise agreement it concluded with Mr
Malema.
[22]
What is more, I am not persuaded that an appeal would lead to a just
and prompt resolution of that dispute. It might well be
that SARS is
inconvenienced due to the fact that some of the people who were
involved in the conclusion of the compromise agreement
are no longer
in its employ. But, as held in
South Cape Corporation (Pty) Ltd v
Engineering Management Services (Pty) Ltd
1977 (3) SA 534
(A) at
5500-H) the fact that a decision (such as the impugned order) may
cause a party an inconvenience or place him at a disadvantage
in the
litigation which nothing but an appeal can correct is not taken into
account in determining its appealability.
[23]
In all circumstances, I conclude that there are no compelling reasons
why the appeal should be heard. It is not in the interests
of justice
to do so. In the result the application for leave to appeal falls to
fail. With regard to costs, both parties have employed
two counsel
throughout, including in this application. Costs of two counsel are
therefore warranted.
[24]
In the result the following order is made:
1.
The
application by the applicant (Commissioner for the South African
Revenue Services) for leave to appeal against the order of
29 April
2016, is dismissed with costs, such costs to include costs consequent
upon employment of two counsel.
TM
Mkgoka
Judge
of the High
Court
APPEARANCES
:
For
the Applicant:
JJ
Gauntlett
SC (with HGA Snyman SC)
Instructed
by:
MacRobert
Inc., Pretoria
For
the Respondent: PF Louw SC (with L. Sigogo)
Instructed
by:
Tumi
Mokoena Inc., Polokwane
Bernhard
Van der Hoven, Pretoria
[1]
1
Section 205 of the Act tabulates circumstances in which SARS may set
aside or
avoid
compromise.
It
sets certain jurisdictional requirements. Of importance, if the
taxpayer made a material misrepresentation leading to the compromise
or committed any breach of a material nature regarding the
compromise,
as
envisaged
in the Act, SAR$ is not bound to the compromise