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[2012] ZAGPPHC 360
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Metlika Trading Ltd v Commissioner for the South African Revenue Services (24997/2011) [2012] ZAGPPHC 360; 74 SATC 289 (20 July 2012)
Metlika
Trading Ltd v Commissioner for The South African Revenue Service
2012
JDR 1278 (GNP)
2012
JDR 1278 p1
Citation
2012 JDR 1278 (GNP)
Court
North Gauteng High Court, Pretoria
Case
no: 24997/2011
DATE:
20 JULY 2012
Judge
Meyer J
Heard
Information not available
Judgment
July 20, 2012
[zSMz]
Summary
Interdict
— First applicant seeking to interdict first respondent
executing against its assets for tax debt of second applicant.
[zJDz]Judgment
Meyer,
J
[1]
This is an application for an interim interdict to prevent the
first respondent ('SARS') from executing against certain assets
of
the first applicant ('Metlika') for the tax debt of about R2,7
billion of the second applicant ('Ben Nevis') pending the 2012
JDR
1278 p2 resolution by trial and arbitration of the disputes between
the parties relating to a guarantee agreement entered into
on 30
April 2002.
[2]
Metlika and Ben Nevis are companies incorporated in the British
Virgin Islands and they are solely owned by a Guernsey based
discretionary trust, named the Glencoe Investment Trust ('the
trust'), the beneficiaries of which are the second respondent
('King')
and members of his immediate family. The trustee of the
trust permitted King free reign as far as the affairs and assets of
Ben
Nevis and Metlika in South Africa were concerned. King was at all
material times said to be the South African representative of
Metlika
and of Ben Nevis.
[3]
King used Ben Nevis to acquire assets in South Africa, particularly
shares in Specialised Outsourcing Limited ('SOL'). SOL
was listed on
the Johannesburg Stock Exchange in October 1997. At that time, Ben
Nevis was the registered shareholder of approximately
70% of the
shares in SOL. It sold virtually all these shares over a two year
period at a profit in excess of R1 billion. Ben Nevis
acquired
various assets in South Africa, amongst others those that form the
subject-matter of this application. King, however,
caused most of the
sales proceeds to be remitted to the trustee and to banks in the
United Kingdom. King refrained from registering
Ben Nevis as a
taxpayer in South Africa and its income as a result of the sale of
its shares in SOL were not declared to SARS.
During the year 2000,
SARS directed enquiries to King, inter alia in respect of the profits
which Ben Nevis had made in South Africa.
SARS also required the
submission of returns by Ben Nevis for the tax years 1998, 1999, and
2000. During January 2002, an enquiry
was held in terms of s 74C of
the Income Tax Act 58 of 1962. It then came to light that, as a
result of the 2012 JDR 1278 p3 earlier
enquiries made by an official
of SARS, all the South African assets owned by Ben Nevis had been
transferred to Metlika during January
2001.
[4]
On 15 February 2002, SARS raised income tax assessments against Ben
Nevis in respect of the 1998, 1999 and 2000 tax years
in a total
amount of R1 467 844 333.39. Incidentally, King personally was
assessed in an amount of about R913 million, of which
amount he only
paid the sum of about R4,4 million to SARS. After unsuccessfully
objecting to the assessments, Ben Nevis noted an
appeal to the Tax
Court of this Court.
[5]
As a result of the transfer of all the assets of Ben Nevis to
Metlika. SARS, during July 2002, instituted what has been referred
to
as the piercing action' against Metlika, Ben Nevis and King in this
Court under case number 20827/02 for an order declaring
that various
assets previously held in the name of Ben Nevis were in fact owned by
Ben Nevis or King and for alternative relief.
I return to the
piercing action later on in this judgment. Prior to its institution,
this Court granted urgent relief to SARS on
18 February 2002, which
relief included interim orders authorising the attachment of certain
assets to confirm jurisdiction in
the case of Ben Nevis and to found
jurisdiction in the case of Metlika. Interdicts aimed at preserving
their South African assets
were also granted against Ben Nevis and
Metlika preventing them from disposing of any of their South African
assets consisting
of shares and loan accounts in various local
companies as well as interdicts against such companies from disposing
of their own
assets pending the finalisation of the piercing action
that was, at that stage, to be instituted by SARS. The interim orders
were
subsequently confirmed subject to certain amendments and are
referred to as the 'preservation order'. 2012 JDR 1278 p4
[6]
It is common cause that the relevant local assets pursued by SARS
for attachment and sale in execution in satisfaction of
the tax
liability of Ben Nevis were 100% of the issued shares and the
shareholders loan account in Talacar Holdings (Pty) Ltd ('Talacar'),
95% of the issued shares and the shareholders loan account in the
company then named Glenhurst Wine Farm (Pty)"Ltd and now
Quoin
Rock Winery (Pty) Ltd ('Quoin Rock Winery'), 100% of the issued
shares and the shareholders loan account in Hawker Air Services
(Pty)
Ltd ('Hawker Air Service'), 90% of the issued shares and the
shareholders loan account in Bothmasburg Farming (Pty) Ltd
('Bothmasburg Farming'), the shareholders loan account in SJ Bothma
Boerdery (Edms) Bpk ('SJ Bothma Boerdery'), and 50% of the issued
shares and shareholders loan account in Blair Atholl Farm (Pty) Ltd
('Blair Atholl Farm').
[7]
Agreement was reached to replace some of the assets interdicted
under the preservation order with a suitable guarantee ('the
guarantee agreement'). King represented all the parties, including
Metlika and Ben Nevis, in entering into the guarantee agreement.
It
was signed and made an order of this court on 30 April 2002 in the
proceedings in which the preservation order was granted.
It
facilitated the release of certain assets from the operation of the
preservation order against the furnishing of guarantees.
[8]
Clauses 3 and 4 of the guarantee agreement provide that Metlika
will arrange a bank guarantee in the amount of R70 million
to be
issued in favour of SARS. All the attached shareholdings and loan
accounts in Quoin Rock Winery and Quoin Rock Vineyards
(the latter
being a company owned by Talacar) and all the interdicted assets of
Quoin Rock Winery and Quoin Rock Vineyards as well
as a 2012 JDR 1278
p5 Cash amount of R2.76 million ('the released assets') will be
released from the provisions of the preservation
order upon the
delivery of the initial guarantee. I interpolate to mention that
Metlika caused the initial guarantee in the sum
of R70 million
envisaged in these clauses of the guarantee agreement to be issued by
Rand Merchant Bank, a division of First Rand
Bank Ltd, on 6 June
2002. The amount of R70 million did not represent the value of the
released assets, but was an arbitrary amount
agreed upon when the
parties failed to reach agreement on an amount that represents the
value of the released assests.
[9]
Clause 5 provides that a valuation will be done, as at 30 April
2002, in respect of the 'released assets' and what is referred
to as
the 'additional assets', which are further shares and loan accounts
attached in terms of the preservation order, save for
certain
excluded assets. Clause 11 prescribes the method of valuation. The
value of the released assets and of the additional assets
will be
determined on the basis of the value of the shareholding and loan
accounts thereof. The 'going concern' and the 'assets
realisation'
methods of valuation will be applied and the parties will be bound by
the greater. Clause 12 prescribes the procedure
to establish the
valuation. Metlika and SARS will each nominate an independent expert
within 7 days of signature of the guarantee
agreement, in the absence
of which the party who has not nominated its expert will be bound by
the valuations of the sole expert,
being the expert of the other
party. Any dispute between the two sets of valuers that they or the
parties cannot resolve within
two days of deadlock shall be resolved
by an umpire who is an independent expert whose identity will be
determined by the chairman
of the Cape Bar Council. The experts will
be required to make their valuation within 30 days of being
appointed. I again interpolate
to mention that on 6 May 2002 SARS
appointed Mr Jan Strydom as independent expert
2012
JDR 1278 p6 and Metlika appointed Rand Merchant Bank on 7 May 2002.
Notwithstanding the strict time periods prescribed in terms
of the
guarantee agreement the respective valuations have at present, which
is a decade later, not been made by the appointed independent
experts.
[10]
Clauses 6 and 7 provide that once a value for the released assets
and the additional assets have been established, the additional
assets and underlying assets included in the valuation will be
released from the provisions of the preservation order against the
provision of a 'substitute guarantee' for the amount of the value so
established. The substitute guarantee will make provision
for an
escalation at a rate of 10% per annum to be compounded monthly in
arrears from the day on which the valuations are finalised
until date
of payment in terms of the guarantee. Clause 10 provides that all the
assets 'presently' - in other words at the time
of the conclusion of
the guarantee agreement - subject to the preservation order, will
again automatically become subject thereto
should Metlika fail to
cause the final guarantee to be issued within 14 business days of the
value of the assets being established.
The value (plus an escalation
at 10% per annum annually compounded) of any asset which is no longer
available will continue to
be covered by the initial guarantee and
Metlika, Ben Nevis and King undertook, jointly and severally, to take
all steps to restore
SARS to a position equivalent to the position
which SARS would have occupied had such assets remained subject to
the preservation
order. It is common cause that a final guarantee has
not been issued.
[11]
Clause 8 provides that '[t]he guarantees will be payable 10 court
days after a certificate of the State Attorney has been
delivered to
the attorneys of record of Metlika and the banking institution
concerned to the effect that: 8.1 a court has 2012
JDR 1278
p7declared that the assets substituted as above by the guarantees,
are executable in respect of the tax liability for
years of
assessment up to and including 28 February 2002 ('the tax debt') of
either or both of Ben Nevis Holdings Ltd and Mr DC
King; and 8.2 the
tax debt is payable by either Ben Nevis Holdings Ltd and/or Mr DC
King and that payment is not suspended; unless
the declaration in
paragraph 8.1 or the obligation to pay in paragraph 8.2 is suspended
by law or unless a court on application
launched within the 10 court
day period suspends the payment of the tax debt, or suspends the
declaration that the assets are executable,
or unless a court orders
otherwise on the application of either party.' Clause 9 provides that
the 'final guarantee' will be the
full and only extent to which SARS
may at any time claim against and execute upon the assets, the
additional assets and all other
underlying assets attached and/or
interdicted in the preservation order, save for the excluded assets,
in so far as SARS succeeds
in establishing the conditions of clauses
8.1 and 8.2.
[12]
During July 2002, SARS instituted the piercing action contemplated
in the preservation order. The only claim presently relevant
is the
claim with which SARS succeeded. The assets which, in terms of
paragraph 5 of the particulars of claim, formed the subject-matter
of
this claim are: 100% of the issued shares and the shareholders loan
account in Talacar; 95% of the issued shares and the shareholders
loan account in Quoin Rock Winery; 100% of the issued shares and the
shareholders loan account in Hawker Air Services; 90% of the
issued
shares and the shareholders loan account in Bothmasburg Farming; the
shareholders loan account in SJ Bothma Boerdery; and
50% of the
issued shares and shareholders loan account in Blair Atholl Farm.
Other relevant paragraphs of the particulars of claim
and the relief
prayed for By SARS, read as follows: 2012 JDR 1278 p8
'11.1
Ben Nevis was the beneficial owner of the assets referred to in
paragraph 5 above.
11.2
On a date or dates unknown to the Plaintiff the assets referred to
in paragraph 5 above were transferred to, or put into
the name of
Metlika.
11.3
The transfers of the said assets to, and/or placing them into the
name of Metlika, were carried out in order to prevent the
Plaintiff
from ascertaining that Ben Nevis was the owner of such assets,
alternatively in order to prevent the said assets from
being attached
and sold in execution to satisfy in whole, or in part, the liability
of Ben Nevis to the Plaintiff and thereby to
enable Ben Nevis to
evade the payment of income tax for which it was or would become
liable.
11.4
In the premises, Metlika and Ben Nevis were misused in order to
achieve the improper purpose referred to in paragraph 11.3
above.
11.5
In the premises, the Plaintiff is entitled to an order that the
separate corporate personalities of Ben Nevis and Metlika
should be
disregarded to the extent of the transfers referred to in paragraph 5
above and an order declaring that insofar as the
liability of Ben
Nevis for income tax is recoverable, or as it becomes recoverable,
that the assets referred to in paragraph 5
above are to be regarded
as assets owned by Ben Nevis and that they may be attached and sold
in execution to satisfy in whole,
or in part, the liability of Ben
Nevis to the Plaintiff.
13.1
....
13.2
The liability of Ben Nevis to the plaintiff exceeds the value of
all its known assets and more in particular the value of
the assets
referred to in paragraph 5 above ...
13.3
In the result, neither Mr King nor Ben Nevis has sufficient assets
available against which the plaintiff can execute in order
to be paid
in full what is due by any of them in terms of the Income Tax Act.
14.1
In terms of the preservation order referred to in paragraph 1.2.2
above, Metlika, Ben Nevis, Talacar, Mr King and ten other
entities
were interdicted from disposing of the assets referred to in
paragraphs 5 and/or 7.1 above, pending the finalisation of
this
action.
14.2
On 30 April 2002 the Plaintiff on the one hand and Metlika as
Grantor on the other hand (as well as certain other parties,
who did
not incur any rights/liabilities in terms of the guarantee referred
to in the agreement), entered into an agreement, which
agreement was
made an order of Court on 30 April 2002 under case number 4745/02
(hereinafter referred to as the Agreement").
A copy of the
Agreement is annexed hereto as "SARS 16".
14.3
As appears from 'SARS 16' hereto, the parties inter alia agreed
that:
14.3.1
Some of the assets referred to in paragraphs 5 and/or 7.1 above
would be released from the preservation order, against
the
substitution thereof with suitable guarantees; and
14.3.2
To the extent that some of the assets referred to in paragraphs 5
and/or 7.1 above are substituted by the said bank guarantees,
the
Plaintiff would be entitled to execute the order moved for in this
action, only against the guarantees; and
14.3.3
The guarantees will be payable 7 (seven) days after a certificate
from the State Attorney has been delivered to the attorneys
of record
of Metlika and the banking institution concerned to the effect that a
court has declared that the assets referred to
2012
JDR 1278 p9 in paragraphs 5 and/or 7.1 above are executable in
respect of the tax debts of either or both of Ben Nevis and
Mr King.
14.4
Meilika has already procured the issuing of the initial guarantee
provided for in clause 3 of the Agreement and is expected
to procure
the issuing of the substitute guarantee provided for in clauses 6 and
7 of the Agreement, in the near future.
14.5
In the premises, and insofar as the guarantees provided for in the
Agreement are in place when this matter is heard, the
Plaintiff's
entitlement to an order in respect of the assets referred to in
paragraphs 5 and/or 7.1 above is subject to the provisions
of the
Agreement, to the extent as provided for in the Agreement.
WHEREFORE
THE PLAINTIFF CLAIMS, SUBJECT TO THE PROVISIONS OF THE AGREEMENT
(ANNEXURE 'SARS 16' TO THE PARTICULARS OF CLAIM) INSOFAR
AS THE
GUARANTEES PROVIDED FOR IN THE AGREEMENT ARE IN PLACE:
6.1
That the separate corporate personalities of Ben Nevis and Metlika
should be disregarded to the extent of the transfers referred
to in
paragraph 5 above; and
6.2
That insofar as the liability of Ben Nevis for income tax is
recoverable, or as it becomes recoverable, the assets referred
to in
paragraph 5 above are to be regarded as assets owned by Ben Nevis and
that they may be attached and sold in execution to
satisfy in whole,
or in part, the liability of Ben Nevis to the Plaintiff.'
[13]
The piercing action was tried in this court before my brother
Ledwaba, J during the period May to October 2008. The trial
judge
found that SARS had succeeded in proving that the corporate veil
between Methka and Ben Nevis should be disregarded to the
extent of
the transfer of the South African assets, and the order granted, as
subsequently rectified, in favour of SARS mirrors
the applicable
relief that SARS had claimed in terms of its particulars of claim.
The order of Ledwaba, J reads:
'1.
Subject to the provisions of the agreement, annexure "SARS16"
to the particulars of claim, insofar as the guarantees
provided for
in the agreement are in place:
1.1
The separate corporate personalities of the second defendant [Ben
Nevis] and the first defendant [Metlika] should be disregarded
to the
extent of the transfers referred to in paragraph 5 of the particulars
of claim; and
1.2
That insofar as the liability of the second defendant for income
tax is recoverable, or as it becomes recoverable, the assets
referred
to in paragraph 5 of the particulars of claim are to be regarded as
assets owned by the second defendant and that they
may be sold in
execution to satisfy in whole, or in part, the liability of the
second defendant to the plaintiff.
2.
The first and second defendants are jointly and severally, ordered
to pay the plaintiff's costs of suit, which costs include
the
services of two senior and two junior counsel.'
2012
JDR 1278 p10
[14]
Metlika and Ben Nevis sought leave to appeal against the judgment
and order in the piercing action, but were unsuccessful,
both in this
court and in the Supreme Court of Appeal. On 18 February 2011, the
Supreme Court of Appeal dismissed the application
for leave to
appeal. The order of Ledwaba, J is accordingly final and binding on
the parties.
[15]
The appeal against the tax assessments of Ben Nevis was heard by
the Tax Court of this court during the period June 2010
to September
2010. The principal ground of appeal was that the profits earned by
Ben Nevis on the sale of shares were not made
with a revenue intent
but came about as a result of the disposal by Ben Nevis of its
capital assets. The appeal of Ben Nevis was
dismissed on 6 October
2010. Ben Nevis then appealed to the Full Court of this court against
the dismissal of its tax appeal. It,
however, withdrew that appeal on
9 February 2011. On 4 March 2011, SARS filed a statement as
contemplated in terms of s 91(1)(b)
of the Income Tax Act with the
registrar of this court. It is undisputed that the filing of that
statement had the effect of a
judgment in favour of SARS against Ben
Nevis in the amount of R2 697 831 373.00.
[16]
During March 2011, the attorneys acting for Metlika and Ben Nevis,
Messrs Bell Dewar Inc., informed the attorneys acting
for SARS,
Messrs Mahlangu Inc., of the intention of Metlika and Ben Nevis to
implement the guarantee agreement. SARS took issue
with its validity
and enforceability on the grounds that it had lapsed or had been
cancelled. Metlika and Ben Nevis requested that
the disputes
regarding the guarantee agreement be referred to arbitration. SARS
declined the request. Its attorneys notified the
attorneys acting for
Metlika and Ben Nevis that there no longer existed any impediment to
SARS proceeding with execution steps
and that it would
2012
JDR 1278 p11 be proceeding to execute in terms of the judgment and
order of Ledwaba, J, dated 5 August 2010.
[17]
On 28 April 2011, the present application was launched on behalf of
Metlika and Ben Nevis, wherein they seek interim interdictory
relief
against SARS. A Court's approach in a matter for an interim interdict
pending the finalisation of an action or application
for final relief
and the requirements that need to be established by an applicant for
the interim interdict, are to be found in
Eriksen Motors (Welkom) Ltd
v Protea Motors, Warrenton, and Another
1973 (3) SA 685
(A), at p
691C-G, and the accepted test for a prima facie right in the context
of an interim interdict, especially where there
are disputes of fact,
is formulated in Simon NO v Air Operators of Europe AS and Others
[1998] ZASCA 79
;
1999 (1) SA 217
(SCA), at p 228G — H.
[18]
The relief which Metlika and Ben Nevis presently seek is for the
dispute that has arisen between them and SARS about the
validity of
the guarantee agreement to be determined by action proceedings and
for their disputes concerning its interpretation
and implementation
by arbitration in accordance with its arbitration provisions. In the
meantime, pending the final determination
of such disputes, they seek
for SARS to be interdicted from taking any further steps to execute
upon Metlika's assets, namely 100%
of the issued shares and
shareholders loan accounts in Talacar, 95% of the issued shares and
shareholders loan accounts in Quoin
Rock Winery, 90% of the issued
shares and shareholders loan accounts in Bothmasburg Farming, and its
shareholders loan account
in SJ Bothma Boerdery. The initial relief
which Metlika and Ben Nevis seek by way of action, if granted, will
have the result that
the guarantee agreement is declared valid. The
ultimate relief which they seek on arbitration is for Metlika to be
permitted to
still cause a final guarantee to be 2012 JDR 1278 p12
issued and to have the additional assets released from the ambit of
the
preservation order. It is stated in the founding affidavit that
'[i]n that event SARS will be entitled to be paid the proceeds of
the
final guarantee but will not be entitled to execute upon the assets
themselves.'
[19]
SARS instituted a conditional counter-application founded upon the
provisions of
s 3(2)(a)
of the
Arbitration Act 42 of 1965
, in which
it seeks that the arbitration agreement embodied in clause 13 of the
guarantee agreement either be set aside or that
it ceases to have
effect on the disputes between the parties to the main application.
Clause 13 of the guarantee agreement provides
that
'[s]hould
there be any dispute regarding the interpretation or implementation
of this agreement, then an aggrieved party will be
entitled to
formulate such dispute and to request the Chairman of the Cape Bar
Council to nominate an arbitrator to make a written
ruling, which
ruling will be final and binding on all the parties. Each party shall
bear half the costs of the arbitrator and its
own costs in regard to
any dispute.'
That
'good cause' exists for bypassing the arbitration clause of the
guarantee agreement should Metlika and Ben Nevis succeed in
the
relief they seek in their application was, in my view, correctly
conceded by counsel on behalf of Metlika and Ben Nevis and
counsel on
behalf of King. Various disputed questions of fact that are the same
will require adjudication by the court and by an
arbitrator. It is
'most undesirable' to have such disputed issues be decided in two
proceedings in two separate tribunals. See:
Universiteit van
Stellenboschv JA Louw
1983 (4) SA 321
(AD), at p 335H. I should add
that the reason why King agreed that the entire matter requires
adjudication by a court is so that
the conduct of SARS, as an organ
of state, be investigated by a court and not by an arbitrator.
[20]
The contentions of SARS, which are pertinent to the disputes that
have arisen between it on the one hand and Metlika, Ben
Nevis and
King on the other, are that
2012
JDR 1278 p13 the guarantee agreement is invalid ab initio since it
from the outset formed part of a strategy to fraudulently
dissipate
assets to make tax collection impossible or that it is no longer
valid and enforceable, either because it has lapsed
or because it has
been cancelled. SARS contends that the guarantee agreement has lapsed
either in accordance with its unexpressed
provisions or because the
valuation as at 30 April 2002 as contemplated in the guarantee
agreement can no longer be undertaken
since the valuators were unable
to undertake such valuation. SARS contends that the guarantee
agreement has been validly cancelled,
either because its conclusion
had been induced by the fraudulent representation of Metlika and Ben
Nevis, represented by King,
that the companies were essentially debt
free in circumstances where King had created or was creating false
loan account claims
against both Talacar and Quoin Rock Winery in the
name of Rossenfeld Holdings Limited, which company, it is common
cause, also
belongs to the trust, totalling about R145 million to
which the Metlika loans had allegedly been subordinated and thereby
ostensibly
making the two companies valueless, or because the raising
of such 'false claims' constituted a repudiation of the guarantee
agreement
or because Metlika and Ben Nevis have not made available
accurate financial information and instead raised the R145 million
claim
in the name of Rossenfeld, which does not even accord with
their own records, and which constitutes a material breach of the
guarantee
agreement.
[21]
The assets which form the subject-matter of the present application
were assets in respect of which the preservation order
was granted.
The only asset which was released from the operation of the
preservation order against the delivery of the initial
guarantee and
which is included in the order of Ledwaba, J, is the shareholding and
loan account of Metlika in Quoin Rock Winery.
All the other assets
2012 JDR 1278 p14 to which the order of Ledwaba, J relates are assets
which were still subject to the preservation
order.
[22]
The assets represented by 100% of the issued shares and the
shareholders loan account in Hawker Air Services and the 50%
of the
issued shares and shareholders loan account in Blair Atholl Farm were
specifically excluded from the operation of the guarantee
agreement
and they remained subject to the preservation order. Both companies
have been wound up. The liquidation dividends that
were due to
Metlika in the winding up of each company had been paid over to SARS.
No dispute exists between Metlika and Ben Nevis
on the one hand and
SARS on the other about the entitlement of SARS to have received
payment of those dividends in reduction of
the tax liability of Ben
Nevis. These assets are therefore not relevant for purposes of the
present application and have also not
been included in the relief
which Metlika and Ben Nevis presently seek in terms of their notice
of motion.
[23]
It is common cause that the assets of Bothmasburg Farming and of SJ
Bothma Boerdery have been converted into cash and are
held in trust
by attorney Dale Cohen. There are accordingly no businesses or assets
of these companies which require to be preserved,
and there appears
to be no justifiable reason on the papers before me why the cash is
not simply paid to SARS.
[24]
Quoin Rock Winery and Quoin Rock Vineyard have during the past year
been placed under liquidation. King states that it is
unlikely that
the loan account and shareholding of Metlika in Quoin Rock Winery
would yield any value. In this regard he states
that '[tjaking into
account the other claims and the liquidators and auctioneers' fees,
it is unlikely that there will be any liquidation
dividend due to
Metlika whose loan accounts rank after all third party creditors.'
These averments of 2012 JDR 1278 p15 King are
undisputed. I am
advised by counsel for SARS that there is no real prospect of SARS
seeking to execute against the shares and loan
account held by
Metlika in Quoin Rock Winery.
[25]
This application accordingly essentially concerns the execution
against Metlika's shares and loan accounts in Talacar. This
was
conceded by counsel for Metlika and Ben Nevis. Control over these
shares gives control of and access to the luxurious and valuable
underlying assets of Talacar, which, amongst many others, include the
shareholding and loan account in Quoin Rock Vineyards, a
house in
Coronation Road, Sandhurst, Johannesburg, in which King and his
family reside (valued at R70 million by Strydom and at
R33 million by
North), and one in Plettenberg Bay (valued at R10 million by Strydom
and by North).
[26]
SARS resists the relief claimed by Metlika and Ben Nevis on the
grounds that none of the requisites for the granting of interim
interdictory relief have been established and that the balance of
convenience favours SARS. The points raised on behalf of SARS
in
initio, which I ruled should not be argued separately in order to
prevent a piecemeal adjudication of this application, are,
firstly
that the application is fatally defective since the order of Ledwaba,
J in the piercing action permits SARS to execute
against the assets
included in that order when the tax debt of Ben Nevis is payable,
which is the case, unless a final guarantee
is in place, which is not
the case, and, secondly, that Metlika and Ben Nevis failed to
promptly institute the proposed proceedings
pending the finalisation
of which they now seek the present interim relief.
[27]
Whether or not the attachment and sale in execution of the assets
in respect of which Metlika and Ben Nevis presently seek
interim
interdictory relief have already
2012
JDR 1278 p16 been authorised by an order of this Court requires an
interpretation of the order made by Ledwaba, J in the piercing
action.
[28]
The approach in interpreting a court's judgment or order was thus
stated by Trollip JA in Firestone South Africa (Pty) Ltd
v Genticuro
A. G.
1977 (4) SA 298
(A.D.), at p 304 D-H:
'The
basic principles applicable to construing documents also apply to the
construction of a court's judgment or order: the court's
intention is
to be ascertained primarily from the language of the judgment or
order as construed according to the usual, well-known
rules. See
Garlick v Smartt and Another,
1928 A.D. 82
at p. 87; West Rand
Estates Ltd. v. New Zealand Insurance Co. Ltd.,
1926 A.D. 173
at p.
188. Thus, as in the case of a document, the judgment or order and
the court's reasons for giving it must be read as a whole
in order to
ascertain its intention. If, on such a reading, the meaning of the
judgment or order is clear and unambiguous, no extrinsic
fact or
evidence is admissible to contradict, vary, qualify, or supplement
it. Indeed, it was common cause that in such a case
not even the
court that gave the judgment or order can be asked to state what its
subjective intention was in giving it (cf. Postmasburg
Motors (Edms.)
Bpk., v Peens en Andere,
1970 (2) S.A. 35
(N.C.) at p. 39F-H). Of
course, different considerations apply when, not the construction,
but the correction of a judgment or
order is sought by way of an
appeal against it or otherwise – see infra. But if any
uncertainty in meaning does emerge, the
extrinsic circumstances
surrounding or leading up to the court's granting the judgment or
order may be investigated and regarded
in order to clarify it; for
example, if the meaning of a judgment or order granted on an appeal
is uncertain, the judgment or order
of the court a quo and its
reasons therefor, can be used to elucidate it. If, despite that, the
uncertainty still persists, other
relevant extrinsic facts or
evidence are admissible to resolve it. See Garlick's case, supra,
1928 A.D. at p. 87, read with Delmas
Milling Co. Ltd. v Du Plessis,
1955 (3) S.A. 447
(A.D.) at pp 454F- 455A; Thomson v. Belco (Pvt..)
Ltd. and Another,
1960 (3) S.A. 809
(D)."
[29]
Ledwaba, J inter alia ordered that the assets referred to in the
order are to be regarded as assets owned by Ben Nevis and
that they
may be attached and sold in execution to satisfy, in whole or in
part, the tax liability of Ben Nevis to SARS. The precursor
to this
order is presently relevant. It reads:
'Subject
to the provisions of the [guarantee] agreement ... in so far as the
guarantees provided for in the agreement are in place
...'.
2012
JDR 1278 p17
[30]
Harms, JA, in Pangbourne Properties Ltd v Gill & Ramsden (Pty)
Ltd
1996 (1) SA 1182
(AD), at p 1187 I — 1188B, said the
following about the use of the phrase 'subject to':
'The
phrase 'subject to' has no a priori meaning. Reference to any
dictionary establishes that. In statutory contexts it is often
used
to establish what is dominant and what is subordinate (cf Rennie NO v
Gordon and Another NNO
1988 (1) SA 1
(A) at 21D - 22D). In
contractual settings, especially insurance contracts, it is usually
used to create a suspensive condition,
but also (always depending on
the context) a resolutive condition (SA Eagle Versekeringsmaatskappy
Bpk v Steyn
[1991] ZASCA 109
;
1991 (4) SA 841
(A) at 848 B - D). Frumer v Maitland
1954
(3) SA 840
(A) is an example of an instance where, in a contract, it
simply introduced a condition of the contract, ie a material term (in
contradistinction to a suspensive or resolutive condition).'
[31]
The dictionary meaning of the phrase 'in so far as' is 'to the
extent or degree that.' See: The New Shorter Oxford English
Dictionary on Historical Principles Clarendon Press Oxford 1993 Ed
Vol I, at p 1330.The guarantee agreement provides for two guarantees,
namely the 'initial guarantee' and a 'substitute guarantee' or 'final
guarantee'.
[32]
The initial guarantee may, in terms of the guarantee agreement, be
replaced by a substitute or final guarantee. If a final
guarantee is
issued, it will be the full and only extent to which SARS may claim
against and execute upon the assets that were
released on delivery of
the initial guarantee and the additional assets and underlying assets
in so far as SARS had succeeded in
establishing the conditions of
clauses 8.1 and 8.2 of the guarantee agreement, viz once the
declaration in respect of the relevant
assets are made and the tax
debt becomes payable. If a final guarantee is not issued, all assets
that were subject to the preservation
order will again automatically
become subject thereto. The value (plus an escalation at 10% per
annum annually compounded) of any
asset that is no longer available
will 'continue' to be covered by the initial guarantee. This
provision clearly pertains to the
assets 2012 JDR 1278 p18
that
were provisionally released upon the delivery of the initial
guarantee, viz the shareholdings and loan accounts in and the
interdicted assets of Quoin Rock Winery and Quoin Rock Vineyard as
well as a cash amount of R2, 75 million, since only such assets
can
'continue' to be covered by the initial guarantee. The initial
guarantee, in my view, accordingly serves as security for the
full
restoration of all the assets that were conditionally released upon
the delivery of the initial guarantee. This provision
also contains
an undertaking by Metlika, Ben Nevis and King to jointly and
severally take all steps to restore SARS to a position
equivalent to
the position which SARS would have occupied had such assets remained
subject to the court order. The shareholdings
and loan accounts in
and the interdicted assets of Quoin Rock Winery and Quoin Rock
Vineyard as well as a cash amount of R2, 75
million would, if a final
guarantee is not issued, automatically become subject to the
preservation order in so far as they are
available, and SARS has the
security of the initial guarantee and the under-takings of Metlika,
Ben Nevis and King, insofar as
the conditionally released assets are
no longer available,
[33]
Clause 8 of the guarantee agreement provides that the 'guarantees',
which, in my view, must accordingly mean either the initial
or the
final guarantee, will be payable to SARS ten court days after a
certificate of the State Attorney has been delivered to
the attorneys
of record of Metlika and 'the banking institution concerned'. The
reference to 'the banking institution concerned'
also supports the
interpretation that the 'guarantees' referred to in this clause are
either the initial or the final guarantee.
Otherwise one would have
expected the reference to be to the banking institution which issued
the final guarantee.
2012
JDR 1278 p19
[34]
The limitation or qualification contained in the introductory part
of the order in so far as the guarantees provided for
in the
agreement are in place' is, in my view, accordingly also a reference
to either the final guarantee or the initial guarantee.
[35]
The meaning of the order is, in my view, clear and unambiguous on a
reading thereof and the trial court's reasons for the
order or
judgment do not in any way detract from such meaning. The 'subject
to' phrase in the introductory part of the order is
used to establish
what is dominant and what is subordinate. The phrase in its context
denotes and must be given the meaning that
the order that deems Ben
Nevis to own the applicable assets and that authorises their
attachment and sale in execution was to be
subservient to —
'... or to use an Afrikaans equivalent ... 'onderworpe aan' ...' (per
Harms JA in Pangbourne (supra) at
p1188E — F) — the
guarantee agreement to the extent that the initial or the substitute
guarantee is in place.
[36]
It is common cause that only the initial guarantee was in place at
the time when the order was made and that a final guarantee
has never
been put in place. The order of Ledwaba, J that the assets referred
to in the order are to be regarded as assets owned
by Ben Nevis and
that they may be attached and sold in execution to satisfy, in whole
or in part, the tax liability of Ben Nevis
to SARS, is accordingly
only subordinate to the guarantee agreement to the extent of the
initial guarantee having been in place.
The order in its terms is
also limited to the extent that the liability of Ben Nevis for income
tax 'is' or 'becomes' recoverable.
It is common cause that the
liability of Ben Nevis for income tax has been established and is
recoverable in the amount of approximately
R2,7 billion, which amount
by far exceeds the value of the assets to which the order applies.
2012
JDR 1278 p20
[37]
I am accordingly of the view that the order of Ledwaba, J, on a
correct interpretation thereof, is presently operative and
binding
and the assets referred to therein — except, perhaps, the asset
represented by the 95% shareholding and loan account
of Metlika in
Quoin Rock Winery, but I need not make any definitive finding in
respect of this asset for the reasons that follow
— are
declared to be regarded as assets owned by Ben Nevis and the order
authorises their attachment and sale in execution
in order to
satisfy, in whole or in part, the tax liability of Ben Nevis to SARS.
[38]
Counsel for King submitted that SARS is constitutionally bound to
observe the rule of law and duty bound to observe the conditions
of
the guarantee agreement, which was made an order of court, until set
aside. The order of Ledwaba, J, however, has superseded
the
preservation order as amended by the order which made the guarantee
agreement an order of court. Counsel for King unexpectedly
raised
further constitutional issues in connection with the interpretation
of the order of Ledwaba, J from the Bar without such
issues having
been clearly raised on the papers nor in counsels' heads of argument
that were filed before the hearing of this application.
King, in his
answering affidavit, made the submission '... that on an ordinary
interpretation of the order, it does not have the
meaning alleged by
the Commissioner ...'. Counsel on behalf of King, nevertheless
submitted that the order is ambiguous, not capable
of literal
interpretation, susceptible to three meanings, and that extrinsic
facts or evidence should accordingly be resorted to
in order to
resolve its meaning. Counsel for King submitted that if I were to
find on a proper interpretation of the order that
the interpretation
contended for by SARS is the correct one, but that there were other
less convincing but nevertheless plausible
meanings, then I would be
enjoined to adopt the one that promotes the values set
2012
JDR 1278 p21
out
in s 165(1)(c) of the Constitution, if it is found that SARS possibly
or probably acted improperly. The disputes relating to
the correct
interpretation of the order of Ledwaba, J are, however, possible to
decide without reaching the constitutional issues
raised by King, or
by his counsel unexpectedly. See: S v Mhlungu and Others
[1995] ZACC 4
;
1995 (3) SA
867
(CC), para [59]. The meaning of the order of Ledwaba, J is clear
and unambiguous and effect must be given thereto. It is, in my
judgment, not open to other plausible interpretations nor does it
undermine the constitutional values and norms referred to by
counsel
for King. My interpretation of the order of Ledwaba, J, I should add,
is in material respects at variance with the construction
contended
for by SARS.
[39]
I have mentioned that the only asset of all the assets to which the
order of Ledwaba, J apply that was provisionally released
from the
operation of the preservation order upon the delivery of the initial
guarantee is the asset represented by the 95% shareholding
and loan
account of Metlika in Quoin Rock Winery (in liquidation). It is on
King's own version unlikely that the loan account and
shareholding of
Metlika in Quoin Rock Winery would yield any value and it is
accordingly similarly unlikely that SARS would execute
twice against
that asset in the sense of having received payment for that asset
under the initial guarantee and then to also execute
against the
asset for which payment had been received. There is no conceivable
apprehension - let alone a reasonable and well-grounded
one - of
irreparable harm to Metlika or to Ben Nevis in the unlikely event of
SARS receiving payment of any liquidation dividend
pursuant to
Metlika's shareholding and loan account in Quoin Rock Winery nor
would a suitable alternative remedy not be available
to them nor is
there any possibility of prejudice to them, particularly in the light
of the undertaking of SARS to repay to Metlika
with relatively
substantial
2012
JDR 1278 p22 interest, any amount which it is not entitled to retain,
if the interim interdict they seek in respect of the
Quoin Rock
Winery asset is withheld.
[40]
I now turn to the second preliminary point raised by SARS, which is
that Metlika and Ben Nevis have forfeited any right to
the temporary
relief they seek, because of the long delay for which no satisfactory
explanation is given in instituting the principal
action pending the
finalisation of which the present interim relief is sought.
[41]
The attorneys acting for SARS notified the attorneys acting for
Metlika and Ben Nevis during March 2011 that SARS would be
proceeding
to execute against the assets included in the order of Ledwaba, J.
The present application for interim interdictory
relief was issued on
28 April 2011. It thereafter took nearly a year before the principal
action to which their claimed interim
interdictory relief is
ancillary was instituted. No satisfactory explanation is given for
such long delay. Arbitration proceedings
have not commenced since the
end of 2005 when it became clear that the parties had irreconcilable
differences. It was also SARS,
which took the initiative of
ultimately ensuring the finalisation of this application for interim
relief by causing the required
index to be prepared, by filing its
heads of argument first and by arranging a case management meeting
with the Deputy Judge President.
The delays are highly prejudicial to
SARS, which is in the public interest enjoined to obtain '... full
and speedy settlement of
tax debts...'. See: Metcash Trading Ltd v
Commissioner, SARS
2001 (1) SA 1109
(CC), para [60].
[42]
I agree with the submissions made by counsel for SARS that the
following principle referred to in Juta & Co Ltd v legal
and
Financial Publishing Co (Pty) Ltd
1969 (4) SA 443
(C), at p 445C —
F, and approved by the Supreme Court of Appeal
2012
JDR 1278 p23
in
National Council of SPCA v Openshaw
2008 (5) SA 337
(SCA), paras [16]
and [18], finds application in the present matter and that the
application of Metlika and Ben Nevis falls to
be dismissed on account
of the delay in instituting the principal action to which their
claimed interdictory relief is ancillary:
'If
one bears in mind the long delays for which no explanation has been
given, that as far back as December the applicant had numerous
clear
cases of copying in its possession, according to the letter written
by the applicant, and that up to now no action has been
instituted,
it seems that the applicant has erred in selecting this method,
namely, an application for an interdict pendent lite,
but even if it
was the appropriate procedure at the time the applicant has, by
reason of the facts stated above, forfeited its
rights to this
temporary relief. Had it issued summons at the time when the notice
of motion proceedings were instituted, the trial
could already have
taken place.
There
is such a thing as the tyranny of litigation, and a Court of law
should not allow a party to drag out proceedings unduly.
In this case
we are considering an application for an interdict pendent lite,
which, from its very nature, requires the maximum
expedition on the
part of an applicant.'
[43]
My findings thus far make it unnecessary to deal with the other
grounds of opposition or the numerous factual disputes regarding
the
validity, enforceability, interpretation and implementation of the
guarantee agreement or the many submissions made by counsel
during
the course of the week long hearing of this matter. I should,
however, mention that counsel for Metlika and Ben Nevis conceded,
correctly in my view, that the constitutional issues raised by King
in connection with the calling up by SARS of the initial guarantee
and the receipt by it of the guarantee amount in the sum of R70
million, do not assist in resolving the question that is relevant
in
this application, which is whether such conduct amounts to an
approbation and reprobation of the guarantee agreement on the
part of
SARS.
[44]
In terms of a notice of motion dated 17 March 2012, the second
respondent, King, sought leave to intervene as the third applicant
in
the application of Metlika and Ben Nevis at the commencement of the
hearing. King wished to seek the same
2012
JDR 1278 p24
relief
as that which Metlika and Ben Nevis seek and he also wished to
introduce a new cause of action' that is essentially 'based
on the
conduct of SARS in taking payment of the interim guarantee' while
avoiding the guarantee agreement and attempting to execute
against
the South African assets of Metlika despite the court order that made
the guarantee agreement an order of court not having
been set aside.
King contends that such conduct on the part of SARS is unlawful and
unconstitutional since it is offensive to the
rule of law and
therefore inconsistent with s 1(c) of the Constitution; in breach of
the duties of SARS to ensure the dignity and
effectiveness of the
courts and to respect the binding nature of court orders and
therefore inconsistent with the duties of SARS
in terms of s 165(4)
and s 165(5); of the Constitution; and in breach of its
constitutional duty of good faith and its obligation
under s 25(1) of
the Constitution not to deprive persons of property arbitrarily. King
contends that his new cause of action supports
the interim relief
sought by Metlika and Ben Nevis and also the granting of independent
appropriate, just and equitable relief
to Melika, Ben Nevis, and to
himself against SARS in terms of s 38 or s 172 of the Constitution in
the form of final or interim
interdictory relief that is aimed at
preventing SARS from proceeding to execute directly against the
shares and loan accounts of
Metlika in violation of the guarantee
agreement unless and until it repays the R70 million initial
guarantee payment it took on
17 November 2011. What follows are my
reasons for having refused King's application to intervene with a
costs order in favour of
SARS, which order included the costs of two
counsel.
[45]
King avers that he has an interest in a declaration of validity and
enforceability of the guarantee agreement. The outcome
of the
application by Metlika and Ben Nevis might result in him and his
family being removed from their family home since it might
be sold
and the proceeds used to pay part of the outstanding income tax
2012
JDR 1278 p25
liability
of Ben Nevis. The contention of King is that if SARS is allowed to
execute against Metlika's South African assets, it
is likely to lead
(at least indirectly) to the liquidation of Talacar as a result of
its loan indebtedness to Metlika, and the
resultant sale of the home
in Sandhurst, Johannesburg in which King and his family reside as
well as one in Plettenberg Bay, which
properties are owned by
Talacar. It is contended by King that he, as a party to the guarantee
agreement and the court order embodying
it and as the occupant with
his family of these properties, has an interest in the enforcement of
the court order and in preventing
SARS from acting in a manner
inconsistent with the Constitution to secure the sale in execution of
his family home.
[46]
Even though Rule 12 of the Uniform Rules governs the intervention
of persons as plaintiffs or defendants, which Rule is made
mutatis
mutandis applicable to applications by Rule 6(14), an application to
intervene as an applicant has to meet the test for
joinder under Rule
10(1). See: Vitorakis v Wolf
1973 (3) SA 928
(W), at p 930D - H;
Shapiro v SA Recording Rights Association Ltd
2008 (4) SA 145
(W),
paras [12] – [18].
[47]
In my view King's direct and substantial interest in the relief
sought and his locus standi to sue, either in a separate
action or
application or in the present one of Metlika and Ben Nevis, have not
been established nor has it been established that
the additional
relief that he wished to introduce '... depends upon the
determination of substantially the same question of law
or fact
which, if separate actions were instituted, would arise in such
action ...'.
[48]
King had responded at length to the second SARS affidavit and he
had instituted the action, which he had undertaken to institute,
whether or not he was
2012
JDR 1278 p26
permitted
to intervene as an applicant. King's interest in the relief claimed
by Metlika and Ben Nevis and an opportunity to be
heard are
sufficiently protected by King having been cited as a respondent in
that application, by him having filed extensive affidavits,
and by
him being represented in that application by senior and junior
counsel. This was conceded by King's counsel insofar as the
relief
which King wished to claim is the same as that claimed by Metlika and
Ben Nevis.
[49]
King is one of the discretionary beneficiaries of the trust which
owns all the shares in Metlika. The trustee of the trust
appoints the
directors of Metlika and exercise control over it. The assets against
which SARS wishes to execute and in respect
of which the interim
interdict is sought, are assets of Metlika. King only has a mere
indirect financial interest in the assets
in respect of which the
interim interdictory relief is sought. If the assets of Metlika were
to be sold by SARS in execution of
the tax debt of Ben Nevis it will
result in a diminishing of the assets of the trust and accordingly
the aggregate value of the
assets available to the trust to
distribute in the discretion of the trustee to the beneficiaries,
including King, would be less.
[50]
King is not the bearer of any right nor of any obligation arising
from the guarantee agreement. Assets belonging to King
and his wife
are expressly excluded from the provisions of the guarantee agreement
and remained subject to the preservation order.
The only contingent
right which SARS could enforce directly against King in terms of the
guarantee agreement and the only concomitant
contingent obligation
upon King arose from the provisions of clause 10 of the agreement in
terms whereof Metlika, Ben Nevis and
King undertook, jointly and
severally, in the event of a final guarantee not being issued, to
take all steps to
2012
JDR 1278 p27
restore
SARS to a position equivalent to the position which SARS would have
occupied had the released assets remained subject to
the preservation
order. SARS, however, had expressly released King of this contingent
obligation. The assets that had been provisionally
substituted by the
initial guarantee and those that could be substituted by a final
guarantee in terms of the guarantee agreement
had also not been
declared executable for the tax liability of King. The claims against
King in the piercing action were postponed
sine die at the time of
the hearing of that action and expressly abandoned on behalf of SARS
at the hearing of this application.
The assets conditionally released
or those that could be released upon the issuing of a final guarantee
pursuant to the terms of
the guarantee agreement accordingly no
longer serve, to use the words of counsel for King, as a 'pool for
King's tax liablity'.
[51]
The shareholdings and loan accounts in and the interdicted assets
of Quoin Rock Winery and Quoin Rock Vineyard as well as
a cash amount
of R2, 75 million were provisionally released from the provisions of
the preservation order on delivery of the initial
guarantee. Quoin
Rock Winery and Quoin Rock Vineyard have during the past year been
placed under final liquidation. The State attorney
then issued a
certificate contemplated in the guarantee agreement and the attorneys
for SARS notified the attorneys for Metlika
and Ben Nevis on 12
October 2011 that SARS would be presenting the certificate to Rand
Merchant Bank Ltd ('RMB') and claim payment
of the R70 million
initial guarantee. On 17 October 2011, Metlika launched an urgent
application against SARS and RMB in the South
Gauteng High Court,
Johannesburg under case no 39479/2011 to interdict payment of the
initial guarantee amount to SARS. On 16 November
2011, Tshabalala, J
dismissed Metlika's application with costs on the basis of Metlika's
own assertion of validity of the guarantee
agreement.
2012
JDR 1278 p28
[52]
The shareholding and loan account of Metlika in Talacar and the
Sandhurst and Plettenberg homes occupied by King and his
family did
not form part of the assets released upon the delivery of the initial
guarantee. The R70 million that SARS received
under the initial
guarantee, which is central to the new cause of action which King
wished to raise, does not concern the shareholding
and loan account
of Metlika in Talacar nor Talacar's assets other than its
shareholding and loan accounts in Quoin Rock Vineyards.
King is not
the right bearing entity to demand and to claim repayment of the R70
million which SARS had received under the initial
guarantee.
[53]
Constitutional issues relating to the conduct of SARS in attempting
to obtain payment under the initial guarantee were raised
on behalf
of Metlika at the hearing to interdict payment of the initial
guarantee to SARS. The only relevance, however, which the
calling up
of the initial guarantee and the receipt by SARS of its proceeds has
to the determination of the questions in the Metlika
and Ben Nevis
application is whether SARS is precluded from raising the invalidity,
lapsing or cancellation of the guarantee agreement
on the grounds
that it had approbated the guarantee agreement by calling up the
initial guarantee, whilst at the same time, reprobating
the guarantee
agreement by contending that it is void, has lapsed or has been
cancelled. The authorities on which counsel for Metlika
and Ben Nevis
rely in his heads of argument are Merry Hill (Pty) Ltd v Engelbrecht
2008 (2) SA 544
(SCA), at p 550A; Mgogi v City of Cape Town and
Another; City of Cape Town v Mgogi and Another
2006 (4) SA 355
(C),
at p 394;and Spencer, Bower & Turner: Estoppel by Representation,
3rd Ed at 359-60 in which reference is made to the case
of Smith v
Baker (1873) LR 8CP 350 at 357,where Honyman J said:
2012
JDR 1278 p29
'A
man cannot at the same time blow hot and cold. He cannot at one time
say that the transaction is valid and thereby obtain some
advantage,
to which he could only be entitled on the footing that it is valid,
and at another time say it is void for the purpose
of securing some
further advantage.'
[54]
I was accordingly of the view that the 'new cause of action'
founded upon secs 1(c), 25(1), 165(4) and 165(5) of the Constitution
and in respect of which King sought appropriate, just and equitable
relief in terms of s 38 or s 172 of the Constitution did not
depend
upon the determination of substantially the same questions of law and
fact which have arisen in the Metlika and Ben Nevis
application in
which King wished to join and that the constitutional issues
substantially broaden the questions pertinent to the
Metlika and Ben
Nevis application.
[55]
I now turn to an application that was launched on behalf of King
after I had reserved judgment in this matter, in which an
order is
prayed for in terms of prayer 1 of the notice of motion to permit
King to place further evidence before me for consideration
prior to
the handing down of judgment. SARS opposed the application and filed
an answering affidavit whereafter a replying affidavit
was filed by
King. Metlika and Ben Nevis did not involve themselves in the issues
raised in this interlocutory application. The
relief prayed for in
prayer 1 of the Notice of Motion is hereby granted.
[56]
It appears from this application that after SARS had notified Ben
Nevis and Metlika during March 2011 that it would proceed
to execute
against the assets declared executable in terms of the order of
Ledwaba, J and after SARS had on 22 March 2011 refused
to accede to
undertakings requested from Metlika and Ben Nevis that it would
desist from doing so, SARS, prior to the launching
of the application
by Metlika and Ben Nevis, had caused writs of execution to be issued
2012
JDR 1278 p30
and
had given instructions to the sheriff to attach the assets, including
the shareholdings and loan accounts in respect of which
Metlika and
Ben Nevis presently seek interim interdictory relief. The sheriff
executed the writs and rendered returns to SARS.
Metlika and Ben
Nevis thereafter launched the application for interim interdictory
relief on 28 April 2011. In terms of their notice
of motion they seek
an interim order for SARS to 'be interdicted and restrained from
taking any further steps to execute' upon
the assets referred to
therein. SARS, prior to the hearing of the matter, '.... was
concerned that Metlika and Ben Nevis could
possibly raise certain
technical issues in respect of the attachments which were done during
2011.' In order to ensure that there
would be no further delays to
have the assets sold in execution should SARS be successful in its
opposition to the application
of Metlika and Ben Nevis, it caused
writs to be issued on or about 14 May 2012 and it requested the
sheriff again to attach the
assets. A letter was addressed to King's
attorneys in which an undertaking was given that SARS will not
proceed to arrange for
a sale in execution prior to judgment in the
matter being given.
[57]
I am of the view that it can hardly be said that the conduct of
SARS complained of in this interlocutory application constitutes
an
abuse of its position as an organ of state and that SARS took the law
into its own hands. No plausible or reasonable inference
can be drawn
from the further evidence presented in this interlocutory application
that SARS would not have abided an order in
terms of which the relief
prayed for by Ben Nevis and Metlika is granted.
[58]
Finally, the matter of costs. Counsel for Metlika and Ben Nevis
submitted that King and SARS should each bear their own costs
in
connection with all the affidavits filed by them subsequent to the
filing of the replying affidavit on behalf of Metlika and
2012
JDR 1278 p31
Ben
Nevis on 28 June 2011. The proliferation in the papers, which now run
to more than 3000 pages, in counsel's submission, cannot
be
attributed to Metlika and Ben Nevis. Counsel for King conceded that
King should be treated as an applicant for the purpose of
an
appropriate costs order in the event of Metlika and Ben Nevis not
succeeding in their application and that the three of them
should in
such event be ordered to pay the costs of SARS jointly and severally
the one paying the others to be absolved, except
for the costs
occasioned by the proliferation of the papers, which counsel roughly
estimated to be in the region of about 33% of
the papers, because
such proliferation, in counsel's submission, was caused by collateral
attacks by SARS upon King. All the parties
were, however, ad idem
that I should permit all the affidavits that were filed out of the
ordinary in these proceedings and such
an order was accordingly made.
There was no application to strike out any matter on the basis of
irrelevancy. Much of the proliferation
is caused by the numerous
factual issues that arose once King had filed his answering affidavit
and many of his allegations supplemented
the founding papers of
Metlika and Ben Nevis and were adopted by them. The veracity of the
disputes raised by SARS can at face
value not be questioned and the
inherent credibility of King's factual averments on the disputed
issues became relevant. King too
has made serious allegations against
SARS and its representatives and much of his counsel's address
concerned alleged wrongful
and unconstitutional conduct on their
part. I am accordingly of the view that the costs of the main
application and of the counter-application
should follow the result
of the main application. It was, in my view, prudent for SARS to
engage the services of three counsel.
They all participated in the
proceedings, each addressing me on different aspects of the case.
Counsel for Metlika and Ben Nevis
also conceded this. The costs of
the interlocutory application that was launched by King
2012
JDR 1278 p32 after I had reserved judgment should be borne by King. I
consider the opposition of SARS to that application to
be reasonable.
[59]
In the result the following order is made:
1.
The application dated 26 April 2011 is dismissed.
2.
The first applicant, the second applicant and the second
respondent, jointly and severally, the one paying the others to be
absolved, are ordered to pay the first respondent's costs of the
application referred to in paragraph 1 of this order and of the
counter-application in those proceedings, including the costs
attendant upon the engagement of three counsel.
3.
The second respondent is ordered to pay the first respondent's costs
of his interlocutory application dated 6 June 2012, including
the
costs attendant upon the engagement of two counsel.
P.A.
MEYER
JUDGE
OF THE HIGH COURT
20
July 2012
2012
JDR 1278 p33
ATTORNEYS
FOR THE APPLICANTS: BEL DEWAR
Inanda Greens, 54 Wierda Road
West
Building 2, Sandton
PO Box 652057, Benmore, 2010
Docex 71, Johannesburg
ATTORNEYS
FOR THE SECOND RESPONDENT: MAHLANGU ATTORNEYS
MacRobert Building
c/o Jan Shoba and
Justice Mahomed Streets
Formerly Duncan and
Charles Streets
Brooklyn. Pretoria
ATTORNEYS
FOR THE FIRST RESPONDENT: EVERSHEDS
22 Fredman Drive
Sandton. Johannesburg
COUNSEL
FOR THE APPLICANTS: R HUTTON
SC
COUNSEL.
FOR THE FIRST RESPONDENT: JL VAN DER MERWE SC
NGD MARITZ SC
HGA SNYMAN SC
COUNSEL
FOR THE SECOND RESPONDENT: M CHASKALSON SC
M GIOIA
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2005 Juta and Company, Ltd.