Farocean Marine (Pty) Ltd v Minister of Trade and Industry (614/05) [2006] ZASCA 137; 2007 (2) SA 334 (SCA) (30 November 2006)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2006
>>
[2006] ZASCA 137
|

|

Farocean Marine (Pty) Ltd v Minister of Trade and Industry (614/05) [2006] ZASCA 137; 2007 (2) SA 334 (SCA) (30 November 2006)

Links to summary

THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
Case no:
614/2005
In the
matter between:
FAROCEAN
MARINE (PTY) LTD APPELLANT
and
THE
MINISTER OF TRADE AND INDUSTRY
OF THE
REPUBLIC OF SOUTH AFRICA RESPONDENT
________________________________________________________________
Coram:
FARLAM,
MLAMBO, MAYA JJA, COMBRINCK
et
MALAN
AJJA
Date of
hearing: 9 November 2006
Date of
delivery: 30 November 2006
Summary: General
Export Incentive Scheme – Recovery of benefits unduly paid –
Power of Minister to institute action – Prescription
– When claim
is due – ‘advance … by the State’ (s 11(b)
Prescription Act
68 of 1969
) - Knowledge of debt and exercise of reasonable care –
Section 12(3)
Prescription Act 68 of 1969
Neutral Citation: This judgment may be referred to
as Farocean Marine v Minister of Trade and Industry 2006 SCA 165
(RSA)
JUDGMENT
________________________________________________________________
MALAN AJA:
[1] This
is an appeal with the leave of the court a quo against a judgment and
an order of Wagley J
1
dismissing two special pleas against the respondent’s particulars
of claim with costs.
[2] On 12
April 1996 the appellant lodged a claim with the Director-General of
the Department of Trade and Industry for benefits payable
to
exporters under the
General Export Incentive Scheme
(
GEIS)
in respect of a yacht it had constructed and exported to a
foreign purchaser on 28 February 1996. Benefits amounting to R 1 723
861
were paid to the appellant on 5 July 1996. In this action the
respondent seeks to recover the amount so paid from the appellant and
other relief.
[3] The
GEIS
was originally introduced as a State prerogative on 1
April 1990 for an initial period that ended on 31 March 1995 and was
intended
to encourage higher levels of beneficiation of products
before their export by providing for the payment to exporters of
certain
defined financial benefits so as to generate foreign currency
income for the country. The
Guidelines
introducing and
governing the operation of the scheme have the force of legislation.
2
Revision No 4 of the
Guidelines
has been in force since 1
April 1995
3
and governs the claim lodged by the appellant.
[4] During
November 1996 to 31 January 1998 the Director-General, acting in
terms of paragraph 3.11 of the
Guidelines
, caused an
investigation to be conducted to verify the information furnished by
the appellant in respect of its claim. As a result
of the
investigation the Director-General was satisfied that the export of
the yacht was not eligible for financial benefits under
GEIS
and/or that the appellant’s claim was based on false information
and/or that misleading information was furnished in respect of
it. It
is alleged that the investigation revealed that the purchase of the
yacht by the overseas purchaser had been financed through
a local
bank by means of a loan repayable over 10 years in South Africa; that
the export of the yacht did not constitute ‘export
sales’ as
defined in the
Guidelines
since it did not ‘produce the
inflow of the total sales value in foreign exchange into the Republic
of South Africa within 12 months
after the date of actual export’;
and that the appellant had represented that the export of the yacht
constituted ‘export sales’
when it did not.
4
As a consequence the Director-General acting under paragraph 3.11
disallowed the appellant’s claim and seeks to recover the amount
paid to the appellant. This decision, it is common cause, was taken
after 2 September 1996 being more than three years after the
date the
summons was served, viz 2 September 1999.
[5] The
respondent’s claim for recovery of the benefits paid to the
appellant is based on paragraph 3.11 of the
Guidelines
:
‘
The Director-General’s decision on the eligibility
of any product for benefits under the General Export Incentive
Scheme, as well
as the determination of the amounts of the incentives
will be final and conclusive. Nothing in this document shall be
construed as
an offer open to acceptance constituting a contractual
or other obligation or enforceable right against the Department. The
Director-General
may at any time conduct a full-scale investigation
to verify any information furnished by a claimant. If the
Director-General is
satisfied the claim was based on false
information, or the claimant furnished misleading information, or the
claimant is unable to
back his claim by documentary proof, he may
disallow the claim and recover the full amount paid to the claimant.
Interest on payments
not due to a claimant shall be levied at the
rate prescribed in terms of
section 1(2)
of Act No 55 of 1975 as from
the issue dates of warrant vouchers or promissory notes.
If
the Director-General regards more drastic action necessary, he may
decide on the deregistration of a claimant under this Scheme
and/or
the institution of criminal proceedings against the claimant. The
Director-General will not consider the registration of the
claimant
unless good cause is shown by the claimant and at least one year has
passed from the date on which the claimant was deregistered.’
Paragraph
3.9 is also relevant and provides that
‘
[t]he Department will check all claims and determine
the amount of the claim, but all payments are subject to final
verification’.
[6] In its
first special plea the appellant alleges that the respondent, the
Minister, has no right or
locus standi
under paragraph 3.11 of
the
Guidelines
to sue for or recover payments made and that
only the Director-General may do so. The appellant pleaded that ‘[i]n
terms of clause
3.11 of the GEIS Guidelines . . . it is the
Director-General, and not the [respondent], who must exercise the
powers set out therein,
including the recovery of amounts paid to
claimants’. The respondent has alleged in its particulars of claim
and in its replication
that it was the Director-General, and not the
Minister, who took the three steps referred to in paragraph 3.11, viz
causing an investigation
to be conducted; satisfying himself in
respect of certain aspects of the appellant’s claim; and deciding
to disallow the claim
and recover the amount paid.
[7] The
appellant’s argument is based entirely on the wording of paragraph
3.11 that describes the powers of the Director-General.
Paragraph
3.11, however, must be read in the context of the
Guidelines
.
The scheme was introduced by the State through the Department.
Benefits under the Scheme were intended to be paid by the Department
to claimants who qualified. The Scheme was administered by the
Department and the Director-General was empowered ‘within his
absolute
discretion’ to ‘devise and implement rules and
guidelines pertaining to the practical implementation and operation’
of the
scheme.
5
The ‘terminology’ of the
Guidelines
emphasises the role of
the Department in the administration of the scheme: ‘claimants’
and ‘exporters’ had to be registered
by and claims lodged with
the Department. Certain forms had to be used.
6
The Department could call for additional information from claimants,
7
and, should the information not be forthcoming, ‘the Department
shall treat these exports as not qualifying for GEIS purposes and
shall reclaim all payments relating to such exports plus interest
from the claimant.’ All payments were ‘subject to final
verification’
and the Department was to ‘check all claims and
determine the amount of the claim’.
8
Exporters who traded under a trade name or in the name of a division
were allowed to register and claim under that name or the name
of a
division provided ‘the exporter shall at all times remain liable
for all monies, damages and liabilities due to the Department
by such
division or under such trade names’. Certain documents had to
accompany claims and copies of them ‘kept available, sorted
and be
easily accessible for Departmental inspection’ for at least five
years.
9
The Department had the right to verify information furnished by a
‘manufacturer’.
10
The declaration by the chief executive of a claimant requires him or
her to accept liability ‘jointly and severally … with the
claimant for all monies which may become due by the claimant to the
Department.’
11
The audit reports were furnished ‘solely for the information of the
Department’ and required the auditor to state that the claim
was
the responsibility of the claimant.
12
The
Guidelines
give certain powers to the Director-General,
13
but these powers are exercised on behalf of the Department the claim
of which is the subject matter of this action.
[8] The
first special plea
has a narrow ambit: may the Minister
commence these proceedings where the power to recover the amount paid
to a claimant on the wording
of paragraph 3.11 resides in the
Director-General. Proceedings on behalf of the State may be commenced
both in the name of the State
or the Government and in the name of a
nominal plaintiff or applicant, usually the Minister as the
embodiment of the Department.
14
Proceedings may also be commenced by the administrative head of a
department.
15
Where proceedings are initiated, as in this case, by the Minister ‘in
his official capacity as the member of the Cabinet … who
has
overall control, authority and responsibility for the Department of
Trade and Industry’, the question is not whether the plaintiff
is
authorised to do so,
16
but whether the Minister has set out the necessary requirements for
liability. It is not a question whether the Minister has
locus
standi
: as Conradie JA said in
Distcor
Export Partners; Distcor Yacht Exporters v The Director-General of
the Department of Trade and Industry
:
17
‘
A
nominal plaintiff does not sue for his or her own account and the
question of whether such a plaintiff has a sufficient interest
in the
proceedings (the essential
locus standi
enquiry) obviously
does not arise. Such a plaintiff is there (only) to put someone
else’s case before the court: the question is
whether or not he has
authority to do so.’
The
respondent has expressly alleged that the Director-General, and not
the Minister, decided to disallow the respondent’s claim
and to
recover the full amount of the benefits paid. While it is correct
that ‘[p]ower is not conferred upon “the administration”
generally, and any power which is conferred may be exercised by the
office holder or body upon which it is conferred alone’,
18
the facts founding the cause of action based on paragraph 3.11 have
been expressly alleged. It is thus not a question of the Minister
exercising the powers of the Director-General but of the Minister
instituting action to put the case of the Department on whose behalf
it was decided to recover the benefits paid before court.
19
This is permissible and it follows that the first special plea was
correctly dismissed.
[9] In its
second special plea the appellant alleges that the respondent’s
claim has in terms
s 11(d)
of the
Prescription Act 68 of 1969
become
prescribed in that the respondent’s claim is for the recovery of a
payment made on [5] July 1996; that the respondent had
knowledge of
the identity of the appellant and the facts from which the debt
arises (or could have had such knowledge by exercising
reasonable
care) before 1 September 1996. Summons was served on 2 September
1999, a date more than three years after the date on
which the
alleged debt became due.
[10] To
the plea of prescription it was argued on behalf of the respondent
that the applicable period of prescription is not three
years but, in
terms of
s 11(b)
, fifteen years the debt in question being ‘a debt
owed to the State and arising out of an advance or loan of money or a
sale or
lease of land by the State to the debtor’. The argument was
that the debt is an ‘advance . . . of money’
falling under
the provisions of
s 11(b).
I do not agree. The verb ‘advance’
means to ‘pay (money) before it is due’ or to ‘lend (money)’.
20
When the word is considered in the context of
s 11(b)
it must be
noted that it is used together with the word ‘loan’ and followed
by the words ‘sale’ or ‘lease’ which, like
loans, are
commercial contracts. Payment of a benefit in terms of
GEIS
is
not made pursuant to a contract,
21
nor can it be described as a ‘loan’ of any kind.
[11] Nor
can the payment of
GEIS
benefits be a payment before it is
due. The respondent has argued that a claimant for
GEIS
benefits becomes entitled to them once he
prima facie
satisfies the criteria of Revision 4. Payment is made on this basis
but always ‘subject to final verification.’ The appellant
relies
on the words ‘but all payments are subject to final verification’
inserted in paragraph 3.9 of Revision 4 of the
Guidelines
which did not appear in the corresponding paragraph 3.10 of Revision
2. To my mind, these words mean no more than that the claims
submitted were subject to final verification by the Director-General
acting in terms of paragraph 3.9. They do not make payment of
benefits before such verification conditional or ‘in advance’.
22
The fact that the respondent may have certain rights against the
exporter’s auditors or chief executive officer does not detract
from this conclusion.
23
[12] Prescription
commences to run ‘as soon as the debt is due’
(s 12(1)).
Although the ‘date on which a debt arises usually coincides with
the date on which it becomes due’ this need not always be the
case.
24
The question is thus when the debt the respondent seeks to recover
arose and when it became due. A money debt is ‘due’ when there
is
a ‘liquidated monetary obligation presently claimable by the
creditor for which an action could presently be brought against
the
debtor. Stated differently, the debt must be one in respect of which
the debtor is under an obligation to pay ‘immediately’.
25
[13] On
behalf of the appellant it has been argued that the debt in this
matter, ie the obligation to refund the benefits paid, arose
when
they were paid to the appellant, ie on 5 July 1996, and that once the
respondent had knowledge of the financing arrangement
for the
purchase of the yacht it knew that the appellant did not qualify for
GEIS
benefits and was not entitled to them. It has further
been submitted that the fact that the Director-General conducted an
investigation
later and decided to reclaim the money subsequently
were irrelevant since a creditor cannot by its own conduct or
inaction postpone
the commencement of prescription. At best, it was
submitted, the investigation and decision by the Director-General in
terms of paragraph
3.11 were ‘procedural conditions’ which could
not affect the fact that the benefits could be reclaimed as soon as
they were paid.
26
I do not agree that the requirements set out in paragraph 3.9
can
be termed ‘simple procedural steps’.
27
This is not a case of a person who is entitled to enforce his claim
but through inaction delays to do so.
28
Accepting for the purposes of the second special plea that the debt
existed at the time of payment because payment of the benefits
to the
appellant was not due, the respondent may have several causes of
action available for its recovery including paragraph 3.11.
The power
of disallowance is made subject to the presence of certain
jurisdictional facts and even if those facts were present the
Director-General still had a discretion whether or not to disallow a
claim.
29
The debt became due only after an investigation had been conducted to
verify the information furnished by the claimant; the
Director-General
being satisfied that the claim was based on false
information or that the claimant had furnished misleading information
or that the
claimant was unable to support his claim with documentary
proof; and the Director-General, in addition, upon being so satisfied
deciding
to exercise his discretion to disallow the claim and cause
recovery of the benefits paid.
[14] The
relationship between a claimant under
GEIS
and the
Director-General or Department is not contractual but arises from
administrative law. In
Dilokong
Botha JA explained the
relationship:
30
‘
Wat
hier gebeur het, is dat die Minister, verteenwoordigend van die
uitvoerende gesag van die Staat, bekend gemaak het dat sekere
geldelike voordele beskikbaar gemaak is vir sekere uitvoerders wat
aan bepaalde vereistes voldoen en wat eise indien volgens die
“riglyne” wat daarvoor voorgeskryf is. Hierdie oorwegings dui op
wat na my oordeel van fundamentele belang is in die huidige
ondersoek: die aard van die onderliggende verhouding tussen die
partye. Daardie verhouding is dié van owerheid teenoor
onderdaan.
Dit lê op die gebied van die administratiefreg. Dit
kan natuurlik gebeur dat ‘n kontraktuele verhouding geskep word
tussen
die uitvoerende gesag en ‘n onderdaan, soos wanneer ‘n
kommersiële ooreenkoms beklink word, maar in die huidige geval
is
die beskikbaarstelling aan onderdane van geldelike bystand uit die
Staatskas deur middel van ‘n suiwer begunstigende beskikking,
iets
wat so eie is aan ‘n administratiefregtelike verhouding dat ek geen
ruimte daarin kan sien vir ‘n bevinding van kontraktuele
aanspreeklikheid van Staatskant nie. Ek wil dit so stel: objektief
beoordeel, toe die Minister die skema uitgevaardig het, en toe
die
appellant hom ingevolge die skema geregistreer het en ‘n eis
ingedien het, was daar nóg by die een nóg by die
ander
die bedoeling om ‘n kontraktuele verhouding tot stand te bring: die
animus contrahendi
het wedersyds ontbreek.’
In acting
as aforesaid the Director-General was acting in an administrative
capacity and conducting an investigation in which the
claimant was
entitled to be heard and actively participate in.
31
The debt was ‘due’ only when the Director-General decided to
disallow the benefits.
32
[15] On
behalf of the appellant, however, reliance was placed on
s 12(3)
of
the
Prescription Act 68 of 1969
:
‘
A debt shall not be deemed to be due until the
creditor has knowledge of the identity of the debtor and of the facts
from which the
debt arises: Provided that a creditor shall be deemed
to have such knowledge if he could have acquired it by exercising
reasonable
care.’
Counsel’s
argument was directed at paragraph 9 of the particulars of claim
where it is alleged that the investigation undertaken
by the
Director-General established:
‘
9.1 That
the purchase of the motor yacht by the overseas purchaser thereof had
been financed locally through the Standard Merchant
Bank, such
finance constituting a loan repayable over 10 years in monthly
instalments in arrears in South Africa;
That the export of the motor yacht by Defendant did
not constitute “export sales” (as defined in paragraph 5.1.3
above) as
it did not “produce the inflow of the total export
sales value (as defined in paragraph 5.1.4 above) in foreign
exchange into
the Republic of South Africa within 12 months after
the date of actual export”.
That Defendant had represented to the Department that
the export of the motor yacht constituted “export sales” as
defined
in paragraph 5.1.3 above, when it did not.’
Paragraph
9.2, counsel has submitted, contains a conclusion of law, not a
statement of the facts relied upon. In this regard reference
is also
made to the respondent’s letter of 6 March 1998 in which a refund
of the benefits was claimed:
‘
A
verification carried out by officials of this department . . .
revealed that the steel motor vessel exported . . . was financed
locally through the Standard Merchant Bank and the loan is repayable
over 10 years in 6 monthly instalments in arrears. Therefore,
this
export does not qualify for GEIS benefits as total export sales value
in Foreign Exchange did not flow into the Republic of
South Africa
within twelve months after the date of actual export as is stipulated
in Paragraph 2.9 of the GEIS guidelines.’
[16] On
behalf of the appellant it was contended that the respondent acquired
knowledge of the claim and facts on which it was based
as early as 29
March 1995, ie more than a year before the appellant submitted its
GEIS
claim on 12 April 1996, when it received the appellant’s
letter of 23 March 1995 together with a schedule attached to one of
the
annexures. The schedule was prepared by the Credit Guarantee
Insurance Corporation (CGIC) dated 3 April 1990 and contains details
of the loan by Standard Merchant Bank (SMB) to the foreign purchaser
repayable in 20 consecutive six monthly instalments in Rand
in South
Africa over 10 years the first instalment to fall due six months
after completion of the project, ie the construction of
the yacht.
Counsel for the appellant argued, with reference to the allegations
in paragraphs 1.1 to 9.3 of the particulars of claim,
that the
respondent knew or should have been aware on 29 March 1995, when it
received the letter, that the purchase of the yacht
was financed
locally through SMB; and that the export of the yacht did not
constitute ’export sales’ as defined since it did
not produce the
inflow of the total export sales value in foreign exchange into the
Republic within twelve months after the date
of actual export.
[17] To my
mind paragraph 9.2 does not contain a conclusion of law: it refers to
the entire definition of ‘export sales’ and the
particulars of
claim cite this definition in its entirety in paragraph 5.1.3. It is
clear that the whole of the definition is relied
upon as a factual
averment including that part of it underlined below. ‘Export sales’
is defined in paragraph 2.8 of the
Guidelines
as:
‘
sales
of qualifying products produced in the Republic of South Africa, to
bona fide
importers in eligible countries. It is essential
that these sales produce the inflow of the total sales value in
foreign exchange
into the Republic of South Africa within twelve
months after the date of actual export, notwithstanding any
authorization of payment
for such export sales over a longer period
than twelve months by the Exchange Control Authorities. Only goods
which physically left
South Africa qualify under the GEIS.
If the
price for any such export sale is paid in South African currency,
such sale may qualify for assistance under the GEIS if proof
to the
satisfaction of the Director-General, is furnished that the payment
of such price in South African currency emanated from
a direct inflow
of foreign exchange to the same value
’ (my emphasis).
33
[18] It
follows from this definition that the fact that the relevant
officials in the Department may have had knowledge that the purchase
price of the yacht was payable in Rand and was financed through a
loan by SMB is not sufficient to lead to the conclusion that the
respondent had knowledge of the facts from which the debt arose
(s
12(3)
of the
Prescription Act). The
question is not whether the
respondent knew that the purchase was financed through a local bank
but whether, because the price was
payable in Rand, the Department
knew that payment nevertheless ‘emanated from a direct inflow of
foreign exchange to the same value’.
This was the purpose of the
investigation undertaken by Mr Strydom, one of the officials employed
by the Department. The officials
of the Department could obviously
not have known of any ‘direct inflow of foreign exchange’ at the
time of payment of the benefits
or at the time of receiving
the
appellant’s letter of 23 March 1995.
The further
question is thus whether, by exercising reasonable care
(s 12(3))
,
they could have known that payment would nevertheless not have
emanated from a direct inflow of foreign exchange to the same value.
A review of the evidence shows that this is unlikely.
[19]
The
letter of 23 March 1995 and the SMB letter should be seen in
perspective. Mr Ocenasek, a founder of the appellant, testified that
the original contract to build the yacht was signed on 27 June 1990
but amended subsequently. The foreign purchaser agreed to borrow
the
purchase price from SMB and the appellant, according to the evidence
of Mr Burt, approached SMB to arrange for a loan under the
Export
Credit Scheme to the foreign purchaser. The application was submitted
to SMB who sent it to CGIC who forwarded it to the re-insurance
committee of the Export Credit Authority, an agency administered by
the Department. The re-insurance committee granted SMB approval
for
the loan subject to inter alia approval by the SA Reserve Bank. The
SMB document, ie the schedule of payments, was generated
by the CGIC
in relation to this approval and sets out the repayment terms to
which the CGIC was prepared to agree in order to provide
the
appellant with credit insurance cover in respect of the sale of the
yacht.
[20] The
appellant applied to the Director: Financial Assistance Schemes ‘for
GEIS benefits in respect of a project of a capital
nature’ on 9
November 1994. The application makes provision for the
Director-General to fix the ‘E factor’ and to stipulate
the ‘GEIS
category (M factor)’. The application was declined. The appellant
thereafter on 23 March 1995 made representations
to the Department to
reconsider the application. Attached to this letter was the schedule
of repayments referred to. The respondent
then requested the
appellant to complete a claim form according to the
Guidelines
which the appellant submitted on 12 April 1996. The claim form
embraced three claims including one for the yacht. With regard to
the
yacht the ‘export sales value’ was reflected as R 12 313 296 and
the
GEIS
benefit claimed as R 1 723 861. By letter dated 1
July 1996 the appellant was advised that the claim had been approved.
The amount
of the benefit was paid by cheque dated 5 July 1996. The
appellant’s application to fix the E factor, the Department’s
refusal
of the application and the appellant’s letter of 23 March
1995 (enclosing the schedule of repayments) were not included in the
appellant’s claim for
GEIS
benefits. Mr Ocenasek testified
that he thought that the Department would have had all the
correspondence relating to the claim in
its possession.
[21] The
investigation into the appellant’s claim was instigated by a note
dated 13 August 1996 received from the SA Reserve Bank
requesting SMB
to confirm that the export proceeds were received in South Africa as
well as its extent and other information. The
appellant in a letter
of 25 September 1996 explained to its banker, SMB, that the amount of
the original contract price had increased
from R 8 million to an
amount in excess of R 9 722 712 as a result of extra costs incurred
at the request of the purchaser. Its letter
added:
‘
The
amounts received in Foreign Currency, converted to Rands at the time
when received in South Africa over the duration of the contract,
amount to R 9 722 712.00
.
When
the export value is claimed for Geis purposes, the total foreign
value received is converted at the rate that is applicable on
the
date of the Geis Claim hence the discrepancy between the export value
and the value of R 9 722 712.00 in our application’ (my
emphasis).
[22] SMB’s
explanation of 8 October 1996 to the Reserve Bank confirmed the
appellant’s figures. However, it stated that
‘
a
total payment of R 9 723 012-50 has been received being
R 2 973
012-50 by direct transfer from abroad
and the balance of R 6 750
000-00 being financed by our Standard Corporate and Merchant Bank
secured by CGIC per H/O Ref 224/91 submitted
by Standard Merchant
Bank Limited’ (my emphasis).
[23] A
departmental investigation was thereupon requested on 29 October 1996
and the appellant was formally notified of it by letter
on 31 October
1996. An initial investigation by Mr Strydom took place at the
appellant’s premises on 11 and 12 November 1996 resulting
in the
Department’s letter of 15 November 1996 advising that the full
amount of the
GEIS
benefits had to be refunded. The appellant
was invited to make further representations. The appellant’s letter
of 6 January 1997
explained that the yacht building contract was
entered into on 27 June 1990 for R 8 million but that due to
modifications the price
was eventually increased to more than R 16
million but that no claim was submitted for the amount of the
increase ‘as this amount
was paid in local currency’, the
implication being that the original part of the price was received in
foreign currency. With regard
to the loan obtained by the foreign
purchaser from SMB the appellant said:
‘
The
Guidelines in respect of the General Export Incentive Scheme
(Revision No 4) states in paragraph 2.8 that should the price for
the
export sale be received in South African currency, such claim may
qualify for assistance
if it can be shown that the payment of such
price emanated from a direct inflow of foreign exchange to the same
value
’ (my emphasis).
The letter
also stated that on 1 March 1996 an invoice in foreign exchange had
been raised for the full outstanding value of both
the original and
modified contract and that in determining the export sales value
‘
the
free carrier value of the original contract was used and the foreign
currency value reflected on the . . . invoice was converted
into
local currency at the spot buying rate on the date of the original
DA550.’
[24] This
led to the respondent’s response that the appellant had not replied
to the ‘most critical aspect’ of the enquiry,
viz that only R 2,9
million was received in foreign currency. Further information
regarding the amounts of R 9 722 712 allegedly
received from overseas
and R 6 571 340 received locally was requested. The appellant
responded by letter of 29 January 1997 enclosing
a reconciliation
between invoices and monies received for the yacht. This was the
first full accounting received by the respondent.
This led to a
provisional finding that the claim in respect of the yacht had to be
disallowed partially. The appellant was asked
to comment but no
agreement could be reached and the error committee decided that
Strydom should again verify the information which
he did on 29 and 30
September 1997.
[25] In
giving evidence on the appellant’s reconciliation Mr Strydom
pointed out that the invoices were dated from 19 February 1991
to 12
February 1996 and that they did not reflect foreign exchange but only
Rand payments. In the ‘received from column’ five
payments were
reflected as Rand payments amounting to R 2 972 152-50 which were
paid by the foreign purchaser in foreign currency.
Seven payments
were received from SMB totalling R 6,75 million. From the
reconciliation and vouchers it is apparent that the appellant
had
arrived at the foreign exchange values by converting the Rand
payments to dollars at the spot rate on the dates of the invoices.
The total of these dollar values were then again converted to Rand at
the spot rate on the date of the claim form. In this way the
appellant had calculated the alleged ‘export sales value’ of
approximately R 12,3 million reflected in column 8 of the claim
form.
In fact, only R 9,7 million was received mostly in Rand and payments
received from SMB was received in Rand. Mr Strydom then
recommended
to the error committee that the full amount of the benefit for the
yacht be disallowed. After he received legal opinion
the final error
report dated 31 January 1998 was produced. At its monthly meeting of
February 1998 the error committee disallowed
the appellant’s claim
in respect of the yacht and informed the appellant accordingly.
[26] From
the history of the investigation detailed above it is clear that the
officials of the Department could not reasonably have
known of the
facts from which the debt arose before completion of this
investigation in which the appellant was entitled to and did
participate. At the earliest they could reasonably have known of the
facts from which the debt arose (accepting that it arose at
the time
of payment of the benefits) was after receipt of the appellant’s
letter of 29 January 1997 enclosing a reconciliation
between invoices
and monies received for the yacht On all accounts the officials acted
with reasonable care. It follows that the
second special plea was
misconceived and was correctly dismissed.
The appeal
is dismissed with costs.
F R MALAN
Acting
Judge of Appeal
CONCUR:
FARLAM JA
MLAMBO JA
MAYA JA
COMBRINCK
AJA
1
Minister
of Trade and Industry v Farocean Marine (Pty) Ltd
2006
(6) SA 115
(C).
2
Director-General,
Department of Trade and Industry and another v Shurlock
International (Pty) Ltd
2005
(2) SA 1
(SCA) para 2 at 3G-H. See
South African Co-Operative
Citrus Exchange Ltd v Director-General: Trade and Industry and
another
[1997] ZASCA 6
;
1997 (3) SA 236
(SCA) 239B-F;
Dilokong Chrome Mines
(Edms) Bpk v Direkteur-Generaal, Departement van Handel en Nywerheid
1992 (4) SA 1
(SCA) 21G ff.
3
The
scheme terminated on 31 December 1997; see the introduction to the
Guidelines
.
4
See
para 17 hereunder for the definition of
‘export
sales’.
5
Para
3.10.
6
Paras
3.2; and 4.
7
Para
3.8.
8
Para
3.9.
9
Para
3.8.
10
Para
5.2.9.
11
Para
(r).
12
Annexures
6A and 6B to the
Guidelines
.
13
Eg
p
aras 2.8; 3.10; 3.11.
14
Distcor
Export Partners; Distcor Yacht Exporters v The Director-General of
the Department of Trade and Industry
Case
521/03 (SCA) 23 March 2005 paras 4 and 6. In litigation against the
State the Minister of the department concerned may be cited
as the
nominal defendant or respondent
(s 2
State Liability Act 20 of 1957
)
but the State or Government may also be cited.
15
Distcor
Export
paras 6,10.
16
Distcor
Export
para 6.
17
Case
521/03 (SCA) 23 March 2005 para 7.
18
Lawrence
Baxter
Administrative Law
(1984)
426.
19
Cf
Distcor Export
para 7.
20
The
Concise Oxford Dictionary
8ed
sv
‘advance’.
21
See
para 14 hereunder.
22
See
Shurlok
para 11: ‘It is true that claims were provisional
in the sense that they were subject to disallowance by the
appellant, but, on
the plain wording of para 3.11, the power of
disallowance was made expressly subject, as I have said, to the
presence of one or
other of the jurisdictional facts stated, neither
of which is present in this case.’ The amended wording of
paragraph 3.9 in
Revision 4 does not affect this conclusion.
23
See
Annexures 3A and 3B to the
Guidelines
.
24
List
v Jungers
1979 (3) SA 106
(A)
121C and see
MV Forum Victory: Den Norske Bank ASA v Hans K
Madsen CV and others (Fund Constituting the Proceeds of the Sale of
the MV Forum
Victory)
2001 (3) SA 529
(SCA) 535G-H.
25
The Master v
I L Back and Co Ltd and others
1983 (1) SA 986
(A) 1004F-G and see
Singh v Commissioner, South
African Revenue Service
2003 (4) 520 (SCA) 533D-E;
Deloitte
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) 532H-I and MM Loubser
Extinctive Prescription
(1996) p 51.
26
See
eg
Uitenhage Municipality v Molloy
[1997] ZASCA 112
;
1998 (2) SA 735
(SCA)
742A-H;
The Master v IL Back & Co Ltd and others
1983 (1)
SA 986
(AD) 1005G-H;
Stockdale and another v Stockdale
2004
(1) SA 68
(C) 73I-74G.
27
Santam Ltd v
Ethwar
[1998] ZASCA 102
;
1999 (2) SA 244
(SCA)
253C-D.
28
Cf
Van Vuuren v Boshoff
1964 (1) SA 395
(T) 401D-E.
29
Shurlock
above 6E-I.
30
Dilokong
above note 2 at 18B-F.
31
Dilokong
above 22C-E where it was said
that the Director-General in administering the scheme acts ‘as ‘n
funksionaris wat sy bevoegdheid
ontleen aan die bepalings van die
skema. As sodanig, en as ‘n amptenaar van die Staat, is hy gebonde
om op te tree binne die
raamwerk van die skema. Hy tree dan op op ‘n
administratiefregtelike vlak wat sy beslissings beregbaar maak deur
‘n Hof.’
See
South African Co-Operative Citrus Exchange Ltd v
Director-General: Trade and Industry and another
[1997] ZASCA 6
;
1997 (3) SA 236
(SCA) 239D-E.
32
Cf
Stockdale and another v Stockdale
2004 (1) SA 68
(C) 73D-74E.
33
In
the
General Notes on the Guidelines in respect of the GEIS
paragraph 2.8 is commented upon: ‘In the instance where
payments for exports are made in rand, the onus is on the claimant
to
prove that the rand payments received were converted from foreign
exchange and in fact resulted in the inflow of foreign currency
into
South Africa. It is vitally important that the exporter should
approach his bank to establish and confirm by way of Form E
(or a
certificate signed by the claimant’s bank manager personally that
the requirements of Form E have been met) before or after
the GEIS
claim has been processed and approved for payment.’