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[2006] ZASCA 51
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Commissioner for South African Revenue Service v Hawker Air Services (Pty) Ltd; Commissioner for South African Revenue Service v Hawker Aviation Services Partnership and Others (379/05) [2006] ZASCA 51; 2006 (4) SA 292 (SCA); [2006] 2 All SA 565 (SCA); 68 SATC 141 (31 March 2006)

Links to summary

THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Case no: 379/2005
REPORTABLE
In the appeals between:
COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE SERVICE
Appellant
and
HAWKER AIR SERVICES (Pty) Ltd
Respondent
AND
:
COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE SERVICE
Appellant
and
HAWKER AVIATION
SERVICES PARTNERSHIP
First Respondent
HAWKER AIR SERVICES (Pty) Ltd
Second Respondent
HAWKER MANAGEMENT (Pty) Ltd
Third Respondent
Before: Howie P, Streicher JA, Cameron JA, Nugent JA and Conradie JA
Heard: Thursday 9 March
2006
Judgment: Friday 31 March 2006
Liquidation – urgency – not an independent ground for
dismissal of application – debt arising from VAT assessment – no
bona
fide and reasonable dispute – liquidation order to issue –
Sequestration –
Insolvency Act 24 of 1936
,
s 13
– one of partners
a company which cannot be sequestrated – no impediment to
sequestration of partnership – benefit to creditors
–
disappearance of substantial partnership asset – investigation
justified
Neutral citation: Commissioner for the South African Revenue
Service v Hawker Air Services (Pty) Ltd [2006] SCA 55 (RSA)
JUDGMENT
_______________________________________________________
CAMERON JA:
In the Pretoria high court the appellant (the Commissioner; SARS)
sought the liquidation and sequestration respectively of Hawker
Air
Services (Pty) Ltd (HAS) and a now-defunct partnership to which it
belonged, Hawker Aviation Services (the partnership). Patel
J
dismissed both applications with punitive costs orders, and later
refused leave to appeal. His judgment has been reported.
1
These are appeals against his orders with leave granted by this
court. HAS is the respondent in the liquidation appeal and the
second respondent in the sequestration appeal, where the partnership
is the first respondent and Hawker Management Co (Pty) Ltd
(ManCo)
the third respondent.
Patel J dismissed the applications on the grounds that they had not
been urgent; that the Commissioner had acted with an improper
ulterior purpose in bringing them; that the applications constituted
an impermissible collateral challenge to an earlier court
finding;
that the statutory tax judgment on which the Commissioner relied as
constituting the debt rendering him an unpaid creditor
of the
company and the partnership was invalid and therefore that the
Commissioner could not apply for either liquidation or
sequestration;
that the sequestration application was fatally
defective because it failed to embrace a liquidation application
directed at the
other corporate partner, ManCo; and that the
applications should be refused in any event in the exercise of the
court’s residual
discretion. The learned judge passed strong
criticism on the conduct of SARS’s officials. In addition he
determined that certain
statutory provisions were unconstitutional.
He granted the respondents the costs of four counsel, and ordered
the Commissioner
to pay them, not on the party and party scale, nor
even on the attorney and client scale, but on the ‘attorney and
own client
scale’.
Though it is unnecessary to traverse all its findings, the judgment
is incorrect and the criticism of the Commissioner and his
staff
unjustified. Some background is necessary. At the centre are very
substantial tax debts the Commissioner claims Mr David
King, the
sole director of HAS, and a number of parties connected to him owe;
and the Commissioner’s attempts over the last four
years to ensure
that HAS’s principal asset, its interest in a Falcon 900B jet
aircraft, remains available for the satisfaction
of that and other
tax debts. The partnership was formed in August 1999 to conduct a
charter business with a Hawker Executive Jet.
The partnership
registered as a vendor in terms of the Value-Added Tax Act 89 of
1991 and claimed 100% of the customs VAT on the
Hawker’s
acquisition as an input tax. On the premise that the Hawker was used
solely to convey passengers and goods for reward,
the Commissioner
paid this claim. Just more than a year later, in September 2000,
the partnership purchased the Falcon. A similar
VAT input claim was
made and paid.
HAS was the manager of the partnership’s charter business and both
aircraft were registered in its name, though beneficial ownership
vested in the partnership. HAS remains the registered owner in
respect of the Falcon. The partnership sold the Hawker in May
2001
to a foreign-registered company King represented in South Africa,
Ben Nevis Ltd (Ben Nevis) (from which the partnership had
originally
bought the Hawker). In February 2002, the Commissioner issued
income tax assessments for the tax years 1998, 1999 and
2000 against
King (for R912 million) and against Ben Nevis (for nearly R1.5
billion). In the same month, the high court granted
the
Commissioner certain orders designed to preserve the Falcon –
which the Commissioner claims is valued at some R175 million
– as
an asset from which these tax debts might be satisfied. But the
orders were not effective to prevent the Falcon’s being
flown
abroad without being returned: and it has been hangared in Europe,
idle, since May 2002.
In September 2002 a new partnership was formed when Rand Merchant
Bank Ltd, an en commandite partner (RMB), and ManCo, the other
public partner, sold their interests. HAS continued as a partner in
the new partnership, with an undiminished interest in the
Falcon.
It is from its standing as a partner in the old partnership that the
Commissioner claims HAS continues to be liable for
that entity’s
tax debts; and from its continuing interest in the same asset –
the Falcon – that the Commissioner claims its
winding-up may
render reward. The tax debts arise, the Commissioner asserts, from
VAT assessments issued against the partnership
on 13 March 2003
after SARS determined that the Hawker and Falcon aircraft were used
predominantly for unrecompensed private purposes
(mainly the
conveyance of Mr King) and not for commercial chartering. The
Commissioner has fixed the partnership’s VAT liability
at
approximately R73 million in tax, additional tax, penalties and
interest.
Between March and early December 2003, correspondence passed between
SARS and the legal representatives of HAS and the partnership
in
regard to the VAT assessment. An objection was partly successful,
but within a few days in early December, the Commissioner
made a
final ruling, took statutory judgments in terms of s 40 of the VAT
Act against HAS and the partnership, obtained nulla bona
returns in
respect of the judgments, and moved urgently for the liquidation of
HAS and the sequestration of the partnership.
The urgency, the Commissioner said, lay in the fact not only that
the Falcon while stationary was unproductive and deteriorating,
but
that attempts had been made to de-register it in South Africa, and
to transfer its registration abroad in defiance of court
rulings.
For in February 2003 Hartzenberg J had granted the Commissioner an
order requiring the new partnership to take all necessary
steps to
procure the Falcon’s return to South Africa. In September 2003
Hartzenberg J had granted the new partnership and associated
entities leave to appeal against this order, and had refused the
Commissioner’s application for interim enforcement of the order
under Rule 49(11).
On Friday afternoon 5 December and Saturday 6 December 2003, the
Commissioner launched the liquidation and sequestration applications
on an urgent basis. Patel J was the judge on urgent duty in the
Pretoria high court that week. On Tuesday 9 December he directed
the parties to submit written argument. The matters were argued on
Wednesday 10 and Thursday 11 December, when they were postponed
sine
die. The hearing resumed on 14 and 15 June 2004. After the
prolonged hearing before Patel J, and before he delivered judgment,
this court upheld Hartzenberg J’s order requiring the new
partnership to procure the return of the Falcon to South Africa.
2
Patel J dismissed the applications on 26 November 2004 and handed
down his written judgment on 5 January 2005.
Urgency
One of the grounds on which Patel J dismissed the applications was
that at their inception they had lacked urgency. This was

erroneous. Urgency is a reason that may justify deviation from the
times and forms the rules prescribe. It relates to form, not
substance, and is not a prerequisite to a claim for substantive
relief. Where an application is brought on the basis of urgency,
the rules of court permit a court (or a judge in chambers) to
dispense with the forms and service usually required, and to dispose
of it ‘as to it seems meet’ (Rule 6(12)(a)). This in effect
permits an urgent applicant, subject to the court’s control,
to
forge its own rules
3
(which must ‘as far as practicable be in accordance with’ the
rules). Where the application lacks the requisite element or
degree
of urgency, the court can for that reason decline to exercise its
powers under Rule 6(12)(a). The matter is then not properly
on the
court’s roll, and it declines to hear it. The appropriate order
is generally to strike the application from the roll.
4
This enables the applicant to set the matter down again, on proper
notice and compliance.
5
Far from striking the applications from his roll, Patel J heard
lengthy argument over two days in December, and then permitted
the
parties to postpone the matters, in the event to a date more than
six months later. In the meanwhile, on Monday 8 December
King on
behalf of both HAS and the partnership lodged affidavits (which he
described as ‘preliminary answering affidavits’),
which engaged
with the merits of the applications. There was no suggestion that
deponents other than King wished to testify or
could testify, and
King, having the assistance of his legal team, took a deliberate
decision not to ask for extra time to deal
with any other points he
may have wished to raise. In addition, from December 2003 to June
2004, King and his advisors chose deliberately
not to file
additional affidavits, though it was open to them to do so.
Instead, HAS and the partnership made it clear that if
they lost on
the points they did raise, they would, in defiance of the rule of
practice that a matter may not be dealt with in
this piecemeal
fashion, ask for a postponement in order to deal with other points
they had not raised.
In this court the respondents persisted in submitting that the
application was not urgent when it was brought in December 2003,
but
even if that were so, there is nothing now to be made of that. I
have already pointed out that lack of urgency will entitle
a high
court in the exercise of its discretion to refuse to enrol a matter
where the ordinary forms and procedures have not been
followed. But
that is not what occurred. Patel J traversed the full ambit of the
merits of the relief that was sought, and far
from striking the
matter from the roll for want of such compliance, dismissed it.
Whether or not it was urgent in December 2003
is immaterial to the
question now before us, which is whether the application ought to
have been dismissed.
The liquidation
application
The Commissioner applied for the winding-up of HAS as a creditor of
the company.
6
He claimed in the founding papers that HAS owed SARS a VAT debt of
‘approximately R73 million’, the computation of which he
set out
in detail. The founding affidavit referred to the assessments on
which the tax claim was based, and recorded that SARS
had obtained
judgment against both HAS and the partnership in terms of s 40(2)(a)
of the VAT Act.
7
Both in the high court and in this court, HAS contested the
validity of the statutory judgments on extensive grounds both formal
(invoking the decision of this court in
Singh v Commissioner,
South African Revenue Service
)
8
and constitutional (invoking inter alia the separation of powers and
the penal nature of some of the tax claimed). Patel J upheld
these
defences.
It is not necessary to consider the objections to the judgments,
because the founding affidavit relies also on the assessments
that
underlie them. The founding deponent states that SARS ‘applies
for the liquidation of [HAS] based on a VAT debt of approximately
R73 million for which the [partnership] was assessed and for which
[HAS] is liable in terms of s 51(3) of the VAT Act’.
9
The assessments constituted SARS a creditor of the partnership and
of HAS. And at no stage did deponents on behalf of the partnership
or HAS dispute the existence of the debts on bona fide and
reasonable grounds.
10
The defences raised by HAS against the assessments may be shortly
disposed of. The first was that it is constitutionally not
permissible
for the Commissioner to usurp the function of a court of
law by imposing on a taxpayer any additional burden that has a penal
element.
However, the imposition of additional tax or a penalty is
no more than provisional; its imposition is appealable so that the
ultimate
arbiter of the fairness of an additional tax or a penalty
is the court.
On a formal level the assessments were challenged on the footing
that having upheld an objection by HAS the Commissioner had, despite
an undertaking to issue a revised assessment, by the time the
application for liquidation was made, not yet done so.
There are two answers to this point. First, the objection applies to
only one of the assessments. The assessment for the period
ending
December 2000 was not revised. Secondly, according to the plain
meaning of s 31(1) of the VAT Act any assessment issued
by the
Commissioner creates a debt which is payable whether or not the
taxpayer disputes his liability. If the Commissioner decides
to
revise the assessment downwards that has the effect of reducing the
debt. It does not mean that there is no debt until all a
taxpayer's
objections have been dealt with and a 'final' assessment has been
issued (see
Singh
's case para 11)
The argument that the 'pay now argue later' rule, the
constitutionality of which was established by
Metcash Trading Ltd
v Commissioner, South African Revenue Service
,
11
applies only where the Commissioner takes a statutory ‘judgment’,
and not to an application for liquidation, is unsustainable.
Once
the Commissioner is a creditor, he is entitled to whatever remedy a
creditor may have for the enforcement or collection of
the debt.
Finally, it was argued in this regard that since the existence of
the debts is disputed on 'reasonable and bona fide grounds' a
court
should in the exercise of its discretion not wind up HAS. As I have
indicated, there is no evidence on the papers of a bona
fide
dispute. The assessments derived from SARS’s conclusion that, in
contradiction of the intentions expressed in procuring
the VAT input
credits, the aircraft had been used preponderantly for the private
conveyance of King without recompense to the partnership.
King’s
‘preliminary answering affidavit’ scrupulously avoids dealing
with SARS’s detailed audit that provided the basis
for the
assessments. He refers only to objections made in letters on behalf
of the partnership by the tax attorneys representing
it.
These
objections were of a factual and legal nature. It was contended that
the reporting partner, ManCo, entirely under the control
of RMB, at
the outset formed the intention that both aircraft would be used
only for making ‘VATable’ supplies. Since ManCo
did not know
that the aircraft were not being used as alleged by SARS, it had no
reason to change its original intention which
accordingly persisted
with the result that, whatever the actual use, the original VAT
input tax could not be reclaimed by the Commissioner.
But these objections were never – despite express invitation –
affirmed on oath. Between March 2003, when the assessments
were
first raised, and June 2004, when argument on the applications was
concluded, no attested affirmation was ever forthcoming
that
contradicted the detailed investigation and findings of SARS in
relation to the use of the aircraft. In addition, SARS’s
assertion that those responsible for the management of the
partnership, effectively employees of the financing partner, RMB,
were
turning a blind eye to the actual use of the aircraft, was
never controverted. On the contrary, the RMB employees were notably
silent.
If I find, as I do, that the evidence as
to the intention (whether of HAS or of ManCo) on acquisition of the
aircraft, to use them
only for the making of ‘VATable’ supplies
is not bona fide, there is no longer any basis for counsel's
contention that, as
a matter of law, such intention as to the use of
the aircraft on their acquisition must be taken to have persisted
throughout the
period of their use.
Though the Commissioner relied also on the statutory judgments
obtained against HAS, those judgments neither extinguished nor

superseded the assessments: they were designed merely to strengthen
the revenue’s right to enforce the assessments.
12
Under the VAT Act the issue of the assessments against the
partnership created a deemed debt.
13
There can thus be no doubt that SARS enjoys standing as a creditor
of the partnership, for whose debts HAS is liable. And it is
common
cause, on information supplied by King himself, that HAS is quite
incapable of paying any its debts. In these circumstances
the court
had a discretion whether to order the winding-up of the company
14
and it is clear that that discretion should have been exercised in
favour of doing so.
The partnership remained free to contest the deemed debt.
15
And no doubt a court, in the exercise of its discretion, may
withhold a w-up order even in respect of a deemed debt if it is

shown that the debt is disputed on bona fide and reasonable grounds.
That was never done here. There were no other proper grounds
to
withhold a winding-up order, for the reasons that follow, and it
ought to have been granted.
HAS and the partnership contended that SARS’s real motive in
bringing the applications was to procure the return of the Falcon,
thereby rendering it available for execution in respect of the tax
debts of King and Ben Nevis – an object thwarted when Hartzenberg
J declined to order interim enforcement of the order requiring the
new partnership to procure its return to South Africa. They
thus
contended that SARS thus acted with improper ulterior purpose, and
that the applications constituted an impermissible collateral
challenge to the prior rulings. There is no merit in these
imputations. The real motive of SARS was plainly to collect VAT.

No acceptable basis was advanced for impugning this. The
liquidation and sequestration applications, and the attendant focus
on the Falcon’s recovery, flowed from this. It does not
constitute an ulterior purpose.
King and a number of persons are alleged to have interests in the
aircraft, including HAS. Previous efforts to recover the Falcon
related to the interests of King and other parties associated with
him. In the present case, the Commissioner seeks the appointment
of
a liquidator to pursue whatever interests HAS enjoys in the
aircraft. That is not an ulterior purpose. The extent to which
these interests may coincide with interests pursued in related
applications is irrelevant and does not constitute an ulterior

purpose. King claims that HAS’s interest in the aircraft is
limited to the extent of its share in the partnership, which is no
more than 0.1%. The Commissioner contests this construction. A
liquidator will be able to investigate the truth of these claims,
and follow up any interest he may discover.
The proceedings before Hartzenberg J, though also directed to the
preservation and recovery of the Falcon, involved differing parties
and different considerations. An application under Rule 49(11) for
interim enforcement of a court order pending appeal is considered
and granted on quite different grounds from those at issue when a
liquidation is sought. The applications for the liquidation
of HAS
and the sequestration of the partnership were thus not collateral
challenges to the refusal by Hartzenberg J to grant the
Commissioner
interim enforcement of the order to return the Falcon, but a
legitimate claim that entailed an alternative means to
the same end.
There was thus no impropriety, ulteriority or impermissibility in
SARS seeking to pursue its purposes through liquidation
and
sequestration proceedings.
The sequestration application
The partnership sought to be sequestrated consisted of HAS, ManCo
and RMB. The Commissioner has applied for the sequestration
of the
partnership, but not for the liquidation of ManCo. The question is
whether in these circumstances the sequestration of
the partnership
is competent.
Section 13(1)
of the
Insolvency Act 24 of 1936
provides:
‘
If
the court sequestrates the estate of a partnership (whether
provisionally or finally or on acceptance of surrender), it shall
simultaneously
sequestrate the estate of every member of that
partnership other than a partner en commandite or a special partner
as defined in
the Special Partnerships’ Limited Liability Act, 1861
(Act No 24 of 1861) of the Cape of Good Hope or in Law No 1 of 1865
of Natal,
who has not held himself out as an ordinary or general
partner of the partnership in question: Provided that if a partner
has undertaken
to pay the debts of the partnership within a period
determined by the court and has given security for such payment to
the satisfaction
of the registrar, the separate estate of that
partner shall not be sequestrated by reason only of the sequestration
of the estate
of the partnership.’
Does s 13, by requiring that the court ‘shall simultaneously
sequestrate’ the estates of all the partners, render impossible
a
partnership sequestration where not all the members can be
sequestrated? In
Partridge v Harrison and Harrison
,
16
Greenberg JP held No. There, the estate of one of the partners
could not be sequestrated because of a military service moratorium.

Greenberg JP held that the partnership could nevertheless be
sequestrated. He found that s 13, though imperatively expressed,
must be limited to cases where the estates of the partners can be
sequestrated, and that it does not apply where there is a lawful
bar
to sequestration. He said:
‘
Notwithstanding
that this is couched in imperative language, there are cases where it
could not be carried out. For instance if a
partner has been
sequestrated and has not acquired an estate as against his trustee so
as to allow a second sequestration, the Court
could do no more than
to sequestrate the partnership estate and the estates of the
remaining partners. The same would probably be
the case if one of
the partners was a limited company. It would appear therefore that
the section must at least be limited to cases
where the estates of
the partners can be sequestrated and does not apply where there is a
lawful bar to such sequestration.’
Greenberg JP also stated
that the proviso to s 13 ‘shows that it was contemplated that
sequestration of the private estates does
not follow automatically in
all cases upon a sequestration of the partnership estate’.
The reasoning of Greenberg JP was followed for nearly half a
century. The sequestration of partnerships was ordered where one
of
the partners was married in community of property,
17
where one was the beneficiary of an agricultural moratorium,
18
and where one was a company under judicial management,
19
in each case rendering sequestration impossible. But in
P de V
Reklame (Edms) Bpk v Gesamentlike Onderneming van SA Numismatiese
Buro (Edms) Bpk en Vitaware (Edms) Bpk
,
20
these decisions were criticised as conceptually flawed, since the
statutorily created concursus creditorum presupposes the
simultaneous
sequestration of all the members of the partnership and
cannot operate effectively without it.
21
That the concursus the statute envisages is incomplete, and that it
would operate incompletely where a partnership sequestration
excludes the estate of one of the partners is correct. Yet the
criticism is not persuasive. It proceeds on the premise that a
complete concursus is imperative, when the exceptions s 13 itself
creates show that this is not so. The interpretation favoured
by
Greenberg JP and the decisions that followed him achieve a
pragmatic, if partial, result, which is compatible with the language
of s 13 when interpreted, as Greenberg JP did, as requiring the
sequestration of only those partners whose estates are capable
of
sequestration.
22
Even though this means that in such situations the statutory
concursus will be incomplete, it seems to me to offer a more
practicable
and coherent approach to the difficulties that would
result if s 13 were interpreted to render sequestration of a
partnership impossible
where one of the partners cannot be
sequestrated.
I therefore conclude that the interpretation adopted in the
Partridge
case is preferable and that since ManCo is a
company, which is not capable of being sequestrated, s 13 did not
require its sequestration.
It follows that the application for the
partnership’s sequestration is not defective.
The question is whether the Commissioner has established that
sequestration would render any benefit to creditors, given that the
partnership is now defunct. The answer seems to lie in those
decisions that have held that a court need not be satisfied that
there will be advantage to creditors in the sense of immediate
financial benefit. The court need be satisfied only that there
is
reason to believe – not necessarily a likelihood, but a prospect
not too remote – that as a result of investigation and
inquiry
assets might be unearthed that will benefit creditors.
23
In the present case, the partnership was the beneficial owner of the
Falcon which, in circumstances set out in the judgment in
Metlika
Trading Ltd v Commissioner, South African Revenue Service
,
24
was transferred to a new partnership. It is true that HAS continued
as a partner in the new partnership; but in substance the
partnership lost an asset of very considerable value for no
discernible return to it. That, at least, is something in regard to
which investigation and inquiry may yield a benefit for the
creditors of the partnership, if it were found for instance that the
transfer to the new partnership involved a voidable disposition, or
a disposition without value or was, as SARS contends, a simulated
transaction in fraud of the revenue.
Reverting to the liquidation, given that only one creditor is
involved, and only one shareholder, both of whom have had the
opportunity
to be heard, it will serve no purpose to issue an
interim winding-up order. A final order will therefore issue. The
Commissioner,
though employing three, asked for the costs of only
two counsel.
Order:
The appeal
succeeds with costs, including the costs of two counsel.
The order of the
court below is set aside, and in its place is substituted the
following:
A: In the liquidation application, case number 34593/2003:
There is a
winding-up order in respect of the respondent company;
The costs of the
applicant, including the costs of two counsel, are costs in the
winding-up.
B: In the sequestration
application, case number 34724/2003:
The estate of the
Hawker Aviation Services Partnership is placed under provisional
sequestration in the hands of the Master of the
High Court;
The Partnership is
called upon to advance reasons, if any, on Tuesday 25 April 2006 why
the court should not order the final sequestration
of its estate.
E CAMERON
JUDGE OF APPEAL
CONCUR:
HOWIE P
STREICHER JA
NUGENT JA
CONRADIE JA
1
Commissioner,
South African Revenue Service v Hawker Aviation Services Partnership
2005 (5) SA 283
(T).
2
Metlika
Trading Ltd v Commissioner, South African Revenue Service
2005 (3) SA 1
(SCA). A subsequent application for leave to appeal
to the Constitutional Court was dismissed.
3
See
Republikeinses Publikasies (Edms) Bpk v Afrikaanse Pers
Publikasies (Edms) Bpk
1972(1) SA 773 (A) 782A-783H.
4
Luna Meubel
Vervaardigers (Edms) Bpk v Makin
1977 (4) SA 135
(W) 139F-140A.
5
Cf
Rule 6(6): ‘The court, after hearing an
application whether brought ex parte or otherwise, may make no order
thereon (save as
to costs if any) but grant leave to the applicant
to renew the application on the same papers supplemented by such
further affidavits
as the case may require.’
6
Companies
Act 61 of 1973 s 346(1): ‘An application to the Court for the
winding-up of a company may, subject to the provisions
of this
section, be made – (a) by the company; (b) by one or more of its
creditors (including contingent or prospective creditors);
…’
7
VAT
Act s 40(2)(a): ‘If any person fails to pay any tax, additional
tax, penalty or interest payable in terms of this Act, when
it
becomes due or payable by him, the Commissioner may file with the
clerk or registrar of any competent court a statement certified
by
him as correct and setting forth the amount thereof so far due and
payable by that person, and such statement shall thereupon
have all
the effects of, and any proceedings may be taken thereon as if it
were, a civil judgment lawfully given in that court
in favour of the
Commissioner for a liquid debt of the amount specified in the
statement.’
8
2003
(4) SA 520
(SCA).
9
VAT
Act s 51(3): ‘Subject to the provisions of section 46 [dealing
with persons acting in a representative capacity], every member
of a
partnership shall be liable jointly and severally with other members
of the partnership for performing the duties of the partnership
in
terms of this Act and paying the tax imposed by this Act on the
partnership in respect of supplies made by the partnership while
such member was a member of the partnership’.
10
See
Kalil v Decotex (Pty) Ltd
1988 (1) SA 943 (A) 980-982.
11
2001
(1) SA 1109
(CC).
12
Swadif
(Pty) Ltd v Dyke NO
1978 (1) SA
928
(A) 940-944
.
13
VAT
Act 89 of 1991 s 31(1); 36(1): ‘The obligation to pay and the
right to receive and recover any tax, additional tax, penalty
or
interest chargeable under this Act shall not, unless the
Commissioner so directs, be suspended by any appeal or pending the
decision of a court of law …’
14
See
PM Meskin and others
Henochsberg on the Companies Act
(5 ed,
1994, with updates) vol 1 p 693f.
15
Metcash
Trading Ltd v
Commissioner,
South African Revenue Service
2001 (1) SA 1109
(CC) paras 34-48.
16
1940
WLD 265 266-7.
17
SA
Incorporated Merchants’ Protection Agency Ltd v Kruger
1947 (3) SA 304
(T).
18
Laymore
(Pty) Ltd v Five Streams Wattle Estate
1957 (3) SA 671
(N) (even though Holmes J only assumed, without
deciding, that the partnership could be sequestrated, the order was
indeed granted
on the return day).
19
SA Leather Co (Pty) Ltd v Main
Clothing Manufacturers (Pty) Ltd
1958 (2) SA 118
(O).
20
1985
(4) SA 852 (C).
21
Insolvency
Act 24 of 1936
,
s 49(1):
‘When the estate of a partnership and the
estates of the partners in that partnership are under sequestration
simultaneously,
the creditors of the partnership shall not be
entitled to prove claims against the estate of a partner and the
creditors of a partner
shall not be entitled to prove claims against
the estate of the partnership; but the trustee of the estate of the
partnership shall
be entitled to any balance of the partner’s
estate that may remain over after satisfying the claims of the
creditors of the partner’s
estate in so far as that balance is
required to pay the partnership’s debts and the trustee of the
estate of a partner shall
be entitled to any balance of the
partnership’s estate that may remain over after satisfying the
claims of the creditors of the
partnership estate, so far as that
partner would have been entitled thereto, if his estate had not been
sequestrated.’
22
Catherine
Smith,
The Law of Insolvency
(3ed, 1988) pp 70-71 favours the
approach of Greenberg JP; while PM Meskin
Insolvency Law and its
operation in winding-up
(1990, with updates) 2-29, who favours
the analysis in
P de V Reklame
concedes ‘that the resulting
situation clearly is unsatisfactory, given the policy of achieving a
sequestration of the partnership’s
estate as such’ and
recommends remedy by legislative amendment.
23
Meskin
& Co v Friedman
1948 (2) SA
555
(W) 559, per Roper J;
Hillhouse v Stott
1990 (4) SA 580
(W) 585 and
Dunlop Tyres (Pty) Ltd v Brewitt
1999 (2) SA 580
(W) 585 per Leveson J.
24
2005
(3) SA 1
(SCA).