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[2012] ZAFSHC 206
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Thabo Mofutsanyana District Municipality v Rudnat Projects CC (3332/2008) [2012] ZAFSHC 206 (12 November 2012)
7/vv
FREE STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH AFRICA
CASE NO. 3332/2008
In the matter between:
THABO MOFUTSANYANA DISTRICT
MUNICIPALITY
.................................................................
Applicant/Plaintiff
and
RUDNAT PROJECTS CC
.......................................
Respondent/Defendant
HEARD ON
:
24 MAY 2012
CORAM:
MURRAY, AJ
JUDGEMENT BY:
MURRAY, AJ
DELIVERED ON:
12 NOVEMBER 2012
_______________________________________________________
[1] This is an application for leave to amend the
applicant’s particulars of claim. On
11 June 2008
the
Applicant issued summons against the respondent under case number
3332/2008.
It sought to claim from the respondent payment of
regional services levies and regional establishment levies (‘the
levies”)
in terms of the Regional Services Councils Act, Act
109/1985, (“the RSC Act”) and reg 11(1) of the
regulations for
the Calculation and Payment of Regional Services Levy
and Regional Establishment Levy (“the regulations”).
[2] A similar application against Afgri Operations Ltd
under case number 3724/2008 was set down with this application. By
agreement
only application 3332/2008 was argued and only one judgment
is given since the facts, issues and arguments in both are virtually
the same. The respondents in both applications are two of the
thousands of entities in the Free State against whom the applicant
issued summons in June 2008.
[3] Mr K Kemp, SC, and with him Mr S Grobler, appeared
for the applicant and Mr Danzfuss, SC, for the respondents. Because
of the
long and chequered history of this matter, it is apposite to
set out briefly the relevant background in order to view the
application
in its proper context.
[4] Section 12 of the RSC Act prescribed the specific
mechanisms to be used for calculating and collecting the levies. For
that
purpose the Minister of Finance issued the regulations in terms
of s 12(1)(b) read with subsection (1A) of the said Act and published
under Government Notice No 340 of 17 February 1987 (“the
Notice”). The regulations determined the parties and procedures
authorised to calculate and administer the payment or collection of
such levies.
[5] The reason why the applicant suddenly, on its own
version, issued between 6 000 and 11 000 summonses in June 2008
against respondents
who had never filed returns and had never paid
levies before, was s 59 of the Small Business Tax Amnesty and
Amendment of Taxation
Laws Act, Act 9 of 2006 (“the 2006-Act”)
which determined that liability for any RSC levies for which summons
was not
issued by 30 June 2008, would lapse on that date. This
followed on the insertion of subsection (1B) into s 12 of the RSC Act
by
s 19 of the Taxation Laws Amendment Act 9 of 2005 (“the
2005-Act”) to impose a 2-year prescription period on the
assessment
of RSC levies.
[6] The applicant, on its own version, had no documents
of the respondents. It could therefore not have known whether any of
the
registered respondents were indeed liable for unpaid levies, and
if they were, for what amount. It simply estimated random amounts
for
the 2008-summonses which it then “
assessed
” and
claimed from the thousands of respondents in terms of reg 11(1).
[7] By then, however, reg 11(1) had already been
declared invalid in two different Provincial Divisions, namely in
ALGOA REGIONAL SERVICES v NEIL BUCHNER,
an unreported
Eastern Cape Division judgment, case no.
1150/1994
, delivered
on
5 June 1995
, and in
THE CITY OF TSHWANE METROPOLITAN
MUNICIPALITY v CABLE CITY (PTY) LTD
an unreported North
Gauteng judgment, case no.
34431/2005,
delivered on 18
December 2007.
[8] In 2009 the Supreme Court of Appeal in
CITY OF
TSHWANE METROPOLITAN MUNICIPALITY v CABLE CITY (PTY) LTD
,
2010 (3) SA 589
(SCA) in para [17] at 599B - C struck down reg 11(1).
The provision was held to be invalid for inconsistency with the
empowering
provisions, and therefore unlawful, rendering the
council’s assessment invalid. Maya, JA, in para [24] at 600F –
H
held that the Legislature never intended councils to have the power
to summarily estimate levies and never granted the Minister
authority
to permit such exercise.
[9] The Constitutional Court in
CITY OF TSHWANE
METROPOLITAN MUNICIPALITY v CABLE CITY (PTY) LTD,
(CCT 85/09)
[2009] ZACC 34
;
2012 (5) BCLR 445
(CC) (3 DECEMBER 2009) refused
leave to appeal against the decision of the Apellate Division.
[10] Two months after issuing the flurry of summonses in
June 2008, the applicant sought to amend its particulars of claim. A
day
after effecting the amendment, the applicant gave notice of yet
another amendment. It then sought an order to compel the respondents
to submit to the applicant a true and proper statement of account,
the debatement thereof and other substantiating documents.
[11] Three entities, Steyn-Enslin, Rudnat Projects CC
and Afgri Operations Ltd in a test case excepted to the amended
particulars
of claim in this Court. They averred that the applicant’s
particulars of claim disclosed no cause of action since the RSC
Act
did not vest regional services councils with powers to estimate
levies or to demand the statement and debatement of accounts
from
levypayers in default.
[12] On
23 February 2010
Mocumie, J, in
THABO
MOFUTSANYANA DISTRICT MUNICIPALITY v STEYN-ENSLIN & PARTNERS;
RUDNAT (PTY) LTD; AFGRI (PTY) LTD,
Case No. 4281/2008,
upheld the exception.
[13] The applicant was granted leave to appeal to the
Supreme Court of Appeal, but on one question only, namely whether the
common
law ought to be developed in terms of S 39(2) of the
Constitution to vest councils with powers enabling them to demand
delivery
of a statement of account and the debatement thereof as an
extension of the procedural remedy in litigation. That was the
applicant’s
case on the papers.
[14] From the judgment of Mthiyane, JA, in
THABO
MOFUTSANYANA DISTRICT MUNICIPALITY v STEYN-ENSLIN & PARTNERS AND
OTHERS
, 2012(3) SA 179 (SCA), paras [6] and [9], it is clear,
however, that when the applicant during the hearing realised that reg
13(1)
which prohibited councils from demanding books or records,
stood in the way of a claim for the statement and debatement of
accounts,
its
viva voce
argument on appeal instead focused on
its alleged right to press for the submission of returns in terms of
reg 9(4) as part of its
right to claim levies. Instead of asking for
the common law to be developed to allow councils to demand statement
and debatement
of accounts, it then asked for the Court to be vested
with the power to order reluctant levypayers to submit returns.
[15] The Court in para [5] stated that it was never the
appellant’s pleaded case that it required the submission of
returns.
The Court declined to develop the common law in view of the
“
clear and sufficient” “wording of the
legislation”
regarding the applicant’s remedies in
the absence of returns. The appeal was dismissed.
[16] The applicant now seeks to justify its renewed
attempt at an amendment by relying as ‘advice’ on
Mthiyane JA’s
two
obiter
remarks in paras [10] and [12]
that nothing prevented the appellant from seeking a mandamus for
returns and that reg 13 provided
the remedy in the form of an
assessment by the Commissioner. Although Mr Kemp correctly conceded
that the Appellate Division was
never asked to consider prescription,
he averred that the said
dicta
and the last part of the order,
“
that the appellant may, if so advised, within 30 days
hereof give notice of intention to amend its particulars of claim”,
indicated that that Court did not consider the applicant’s
claim to be “
dead”.
[17] On
9 November 2011
the applicant accordingly
filed its fourth Notice of Intention to Amend since the original
summons was issued in 2008. The objection
thereto led to the two
opposed applications presently serving before this Court.
[18] The main issues in contention are whether the
applicant’s claim for returns has prescribed in terms of the
Prescription
Act; whether the respondent’s liability for levies
has lapsed in terms of s 59 of the 2006-Act and/or whether the
applicant’s
and the Commissioner’s authorisation for the
calculation and recovery of levies has prescribed due to s 12(1B) of
the RSC
Act.
PRESCRIPTION:
[19] It is common cause that the word “debt”
is used in its wide sense in the Prescription Act, Act 68 of 1969
(“the
Prescription Act”) and that a debt is not only the
payment of a monetary amount but also an action. Both parties claimed
to be relying on such wide meaning of “debt” as defined,
for instance, in
ESKOM v STEWARTS & LLOYDS OF SA (PTY) LTD
,
1981 (3) SA 340
(A) at 334E – F:
“
a debt is ‘that which
is owed or due; anything such as money, goods or services, which one
person is under an obligation to
pay or render to another’”.
[20] Regarding a monetary debt it was made clear in
THE
MASTER v IL BACK
, 1983(1) SA 986 (A) at 986H that:
“
... the words “debt
is due” in
S12(1)
of the
Prescription Act 68 of 1969
mean that
there must be a liquidated money obligation presently claimable by
the creditor for which action could presently be brought
against the
debtor”.
[21] Mr Kemp’s main argument was that the levies
are a tax, subject to a 30-year prescription period in terms of the
Prescription Act. He
averred, furthermore, that the rendering of a
return was an ancillary debt or “
a debt in respect of a tax
imposed by legislation”
as defined in the said Act. With
reference to
COMMISSIONER OF CUSTOMS & EXCISE v TAYOB,
2002(6) SA 86 (T) he referred to the obligation to pay the
levy as the main debt whose prescription in terms of
s 10(2)
of the
Prescription Act would
also destroy the ancillary debt to provide
returns after 30 years.
[22] He maintained that the levies are not a fee or a
charge or proportionate to services and goods rendered to the
levypayers,
but a tax, very like sales tax or income tax because they
have the following features:
22.1 They are compulsory and arise
ex leg
e
,
as
with a tax; and are subject to a public law compulsion to pay in
terms of
s12(9)
;
22.2 They are imposed by general national legislation,
in this instance by the RSC Act, and more specifically S12(1)(b)
thereof,
to generate revenue for the councils in the general
interests of the public rather than for sectoral interests, e.g. in
terms of
s 12(5) for a Local Government Training fund and in terms of
s 12(6)(d) for establishing and improving the infrastructure of
transport
services;
22.3 They are controlled by the Minister of Finance who
also deals with tax affairs and disputes about levies and can be
referred
to the Special Tax Court under the Income Tax Act, Act 58 of
1962;
22.4 They are imposed on a wide sector of the community,
being all economically active business entities, rather than on a
particular
interest group or a narrow sector of the population.
[23] He argued, furthermore, that such debt was
automatically created by the promulgation of the Notice in the
designated areas
where the RSC levies applied. Once the areas were
designated, he averred, everyone who conducted business in those
areas would
know that they were liable to register, liable to render
returns and liable to pay, and that was all that was necessary to
make
such levypayers owe the money to the council and create the debt
the applicant is now entitled to claim.
[24] Mr Kemp could not refer me to any case law in which
the levies were indeed found to be a tax. The closest were two
decisions
in which indirect reference to taxation was made, namely
THE LAW SOCIETY OF TRANSVAAL v MINISTER OF CONSTITUTIONAL
DEVELOPMENT,
1989 (4) SA 914
(T) in which the Court did not
deal with the issue whether the levies are a tax or not, but referred
to the “
tax burden on levypayers”
and to the RSC
Act as being
in pari materi
to the Income Tax Act, and
ESKOM
v BOJANALA PLATINUM DISTRICT MUNICIPALITY AND ANOTHER,
2005(4)
SA 31 (SCA) in which the Appellate Division assumed that the RSC
levies were a tax even though it has never called them
such or
decided that they were indeed a tax.
[25] However, while it was indeed ‘assumed’
in
ESKOM v BOJANALA
,
supra,
in par [8] at
36H-37A that RSC levies ‘
constituted taxation’
,
that ‘assumption’ was expressly based on “
RSC
levies properly assessed, due and payable”
and “
RSC
levies – properly assessed but unpaid”
. In par [9]
the Court pertinently stated that “
it did not necessarily
follow”
that a claim for a refund of “
RSC levies
improperly assessed, and therefore not due, also constitutes
taxation”.
The Court’s rationale for the latter is
particularly apposite
in casu,
namely that the:
“
c
ouncils
had no power to collect or levy more by way of tax than was due to
them in terms of Act 109 of 1985 and the regulations
made thereunder.
Such payments, even if believed to be due at the time, were thus not
taxes but something else.”
[26] The respondent indeed averred that levies were not
taxes but something else. With reference to
MAIZE BOARD v EPOL
,
supra
, Mr Danzfuss averred that the RSC levy applied to a
limited sector only within areas delineated by the council, which
areas could
in terms of s 2(1)(b) of the RSC Act be excluded, changed
or re-delineated. He also maintained that the RSC levies were not
being
collected from all inhabitants of the delineated areas or from
the public in general, but only from economically active employers
and enterprises registered for VAT in any delineated area.
[27] Although he conceded that s 12(6) did determine
that a certain portion of the levies could be applied for the
administration,
improvement and maintenance of the infrastructure and
for the transport system in the given area, as averred, he pointed
out that
s 4(1)(a) specifically prohibited councils from collecting
tax on immovable property and that s 12(11) determined that the
levies
were deemed to be a “debt”, not a “tax”,
to the council.
[28] Mr Danzfuss argued that tax cannot be imposed on
tax and pointed out that on
21 August 1992
the Minister of
Finance in Government Gazette Notice 2370 of August 1999 made Value
Added Tax applicable to the Eastern Free State
RSC levies presently
under consideration. The applicant, in fact, claims VAT in the
proposed
pro forma
return.
[29] For this argument he relied on
MAIZE BOARD v
EPOL,
2009 (3) SA 110
(D & CLD), para [27.3] at 121G
where it was found that the levies levied by the Maize Board for
purposes of service delivery,
maintenance and administration, and
which levypayers were obliged to pay, were not a tax, which is why
VAT could be imposed on
them.
[30] He argued, furthermore, that VAT is not payable on
rates in municipal accounts, but only on the municipal services
provided.
He contended that it was apparent from Schedule 2 of the
RSC Act that the Regional Services Council was indeed a service
delivery
organisation which
inter alia
provided water,
electricity, sewerage, transport planning, roads, and passenger
transport services.
[31] Mr Kemp’s counter-argument was that when the
RSC Levies were introduced they were intended to be a tax and the
mere fact
that VAT was subsequently imposed on those levies by the
VAT Act did not change the original nature of the levies as a tax.
[32] Mr Danzfuss contended, furthermore, that the levies
were not a tax but a different type of debt which is subject to the
normal
3-year prescription period. He submitted that, had there been
any question of a tax, a levy could only have become a tax subject
to
a 30-year prescription period once all the prescribed procedural
steps had been followed and the levy had been properly assessed
and
was due and payable as a liquidated amount. In view of
ESKOM v
BOJANALE
,
supra,
I find this argument persuasive.
[33] He maintained, furthermore, that a 3-year
prescription period also applied to the duty to deliver a return. The
latter, he
contended, was a separate independent debt which merely
constituted one of several administrative steps in the process of
calculating
a levy.
[34] That there is no unanimity about when a charge is a
fee or a levy or a tax for purposes of the
Prescription Act, is
very
clear from
EXTINCTIVE PRESCRIPTION
where, on p. 41,
Loubser states with reference to some definitions in
MASTER v
IL BLAKE & CO LTD
,
1983 (1) SA 986
(A) at 1000H, that a
tax constitutes a pecuniary charge imposed by a public authority upon
persons or property for public purposes
but may also be called a
“levy” or “duty”, while a charge by a public
authority for rendering services
or performing its functions is a
“fee”, not a tax.
[35] The RSC Act itself in s 1 defined the RSC Levy not
as a “tax” but as “
a levy”
“
(a) on remuneration …
paid or payable by an employer to the employees employed or deemed to
be employed by him within the
region in question; and
(b) in the case of a person (other than a company)
carrying on or deemed to be carrying on an enterprise in the region
for his sole
account or in partnership of one or more other persons
on his drawings in relation to such enterprise. …”
[36] The RSC Act, furthermore, in terms of s 12(8)
allowed the levies to be deducted “
as an operating expense
for the purposes of income tax by any employer or person”
.
And it determined in s 16 that no laws regarding
exemption
from taxes or levies were applicable to the RSC levies.
[37] Although
s 11(a)
of the
Prescription Act assigns
a
30-year prescription period to “
any debt in respect of
taxation”,
it is important to distinguish between a ‘
debt’
pertaining to taxation and other administrative matters
pertaining to taxation. In
ESKOM v BOJANALA
,
supra,
at [13] at 38, for instance, the Court stated that:
“
it seems to me rather that
the expression
“in
respect of”
was
used by the Legislature to cover ancillary debts claimable by the
State such as interest and penalties”
[38]
In casu
the debt claimed is delivery of a
return, in other words an administrative duty, not a duly assessed,
properly calculated debt.
[39] And even if the levies were indeed to be found to
be a tax, the 30-year prescription period would not necessarily apply
to
the unassessed levies or to the administrative steps involved in
the determination of the levies. Even the Income Tax Act itself,
for
instance, imposes certain other prescription, limitation or expiry
periods on specific powers relating to the recovery of taxes.
S 79
thereof, for instance, limits to three years the Commissioner’s
authority to withdraw or amend an official’s decision,
notice
or communication regarding taxation. S 79(1) limits the
Commissioner’s power to raise an additional assessment to
three
years from the date of an assessment (if any) in terms of which any
amount which should have been assessed to tax was not
so assessed, or
in terms of which tax was assessed in a lesser amount than it should
have been, except in cases of fraud or misrepresentation.
S 73A
compels a taxpayer to retain the relevant documentation for five
years after submission of its income tax return. (See:
DE KOKER &
URQUHART, INCOME TAX IN SOUTH AFRICA,
Vol 1A at 27-6).
[40] It is significant, as found in
OERTEL AND
ANOTHER NNO v DIREKTEUR VAN PLAASLIKE BESTUUR,
1983(1) SA 354
(A), that even though the 1969
Prescription Act is
applicable to
public law debts, it did not mean that every obligation to do or not
to do something constitutes a debt for purposes
of the Act.
It also stated that in extinctive prescription the
emphasis is on default by the creditor and not on the conduct of the
debtor.
Although failure to pay tax is in most instances an offence,
the 1969 Act does provide specifically for prescription of tax
assessments
in general.
[41] Thus, even if I were to decide, or to assume
without deciding, as in
ESKOM v BOJANALA,
supra,
that the levies, when properly assessed and due and payable would
constitute ‘taxation’, in my view the viability of
the
applicant’s claim is ultimately determined by the two 2-year
periods imposed on the Commissioner’s and the council’s
powers by s 12(1B) of the RSC Act in 2005 and by s 59 of the 2006-Act
The applicant denies that either of them affects its claim
while the
respondent avers that they are both fatal to the claim.
[42] In
EXTINCTIVE PRESCRIPTION
at p.
33-34 Loubser confirmed that the general 3-year prescription period
applies to any liability of whatsoever kind that is subject
to
extinctive prescription “
and for which another prescription
period is not specifically provided by the
Prescription Act or
any
other Act”.
He made it clear that where such other Act
provides for particular prescription or limitation periods in respect
of specific debts,
the application of the
Prescription Act is
excluded
to the extent that its provisions are inconsistent
with the specific provisions of such other Act. (See also:
COMMISSIONER FOR CUSTOMS AND EXCISE v STANDARD GENERAL
INSURANCE CO LTD,
2001(1) SA 978 (SCA) at paras [12] and [13]
at 985B/C-C and 985D-E.)
[43] One therefore has to examine the effect of
subsection (1B) and of s 59 on the applicant’s claim since both
prescribe
2-year periods instead of any of the prescription periods
in
s 12
of the
Prescription Act. In
order to do so one needs to
determine the nature of the provisions and the extent to which they
are inconsistent with and would
therefore oust the relevant
provisions of the
Prescription Act.
>
[44] That necessitates a closer look at the said
provisions and the context in which they occur, and especially at the
intention
of the Legislature as it appears from the two Acts in terms
of which the prescription, limitation or expiry periods were
introduced.
(See:
COMMISSIONER FOR CUSTOMS AND EXCISE v
STANDARD GENERAL INSURANCE CO LTD,
supra,
at para
[11].)
[45] In order to determine the effect of
S 12(1B)
on the
claim and to determine whether the applicant can still rely on
regulations 9(4)
and
13
, one needs to start with the enabling
provision,
s 12(1)(b).
As was stated in
THE MASTER v IL BACK
,
supra,
at 1001C:
“
no authority is needed for
the statement that when interpreting an enabling statute, it, and the
regulations passed pursuant thereto,
must be construed in the light
of its subject-matter and its objects to determine what it
authorises.”
[46] The object of s 12(1)(b) of the RSC Act was to
empower the Minister of Finance to, by notice in the
Gazette,
determine in the manner in which the levies were to be calculated
and paid, which he duly did in peremptory terms (“
shall
be...”)
in the regulations (set out in ‘
the
Schedule’),
in the Notice promulgated as GN R340 in the
Government Gazette
10613 of 17 February 1987.
[47] The introduction of the said s12(1)(b) Notice reads
that the Minister of Finance:
“
Under paragraph (b) of
subsection (1) of section 12 of the Regional Services Councils Act,
1985 (Act No. 109 of 1985), read with
subsection (1A) of the said
section 12, … hereby determine that the regional services levy
and the regional establishment
levy shall be calculated and paid in
the manner set out in the provisions contained in the Schedule.”
[48] The said regulations were therefore promulgated in
terms of two sub-sections, namely s 12(1)(b) which authorised the
Minister
to determine the method of calculation and payment of the
levies and s 12(1A) which authorised the Minister to do all the
things
listed under s 12(1A), the relevant ones of which are set out
below.
[49] S12(1A) empowered the Minister of Finance to “
in
any notice contemplated in subsection (1)(b)” inter alia:
“
(c) determine how an amount
upon which the regional establishment levy is payable shall be
calculated;
(dA)
authorise the Commissioner for Inland
Revenue:
to take such steps as the Commissioner may deem
necessary to ensure that any levy payable under this Act is paid;
to conduct audits of the affairs of any person who
is or may be liable for the payment of any such levy;
to require any person to produce for examination any
books, records or accounts or any other document which in the
opinion of
the said Commissioner are or may be necessary to
determine the liability of such person or any other person for the
payment of
any such levy;
to determine or estimate the liability of any person
for any such levy and to direct a council to make an assessment of
such levy;
and
to furnish the council with a ruling or directives
on the interpretation of any provision of Act or any such notice
relating to
the determination of the liability of any person for the
payment of any such levy, which ruling or directive the council
shall
be obliged to apply;
(
dB
)
authorise a council to administer,
subject to any ruling or directive furnished by the said Commissioner
under the provisions of
paragraphs (dA)(v), any provision of this Act
or of any such notice in so far as it relates to the determination of
the liability
of any person for or the payment or recovery of any
such levy;
(dD) provide for an appeal against any decision of a
council or the said Commissioner to the special Court referred to in
S 83 of
the Income Tax Act, 1962 (Act 58 of 1962) and for an appeal
against any decision of the said court;
(e) make such other provisions as he deems necessary
to enable a council to impose and claim any such levy.”
[50] In
CITY OF TSWANE METROPOLITAN MUNICIPALITY v
CABLE CITY (PTY) LTD,
(CCT 85/09)
[2009] ZACC 34
;
2010 (5)
BCLR 445
(CC) (3 DECEMBER 2009) the Constitutional Court in footnote
6 quoted as follows from
ALGOA REGIONAL SERVICES v BUCHNER,
at
pp 9-12:
“
[T]he wording of
subparagraph (1A)(e) specifically empowers the Minister to authorise
things which are
necessary
to enable the
council to
impose
and
claim
a levy. Wide though
the wording is, it relates solely to authority, firstly, for things
which are essential to enable a council
to assess what the levy is so
that it can be imposed, and, secondly, for things which are essential
for it to be claimed...”
[51] This supports the submission by Mr Danzfuss that s
12(1) is a continuous section consisting of various components of the
action
which the Minister of Finance was empowered to take regarding
the determination and collection of the RSC levies.
The empowerment of the Commissioner and the council to
determine liability and to collect levies in terms of subsections
(1A)(dA)
and (1A)(dB), respectively, was their only authorisation to
do so in terms of the Act and the regulations.
[52] The
sine qua non
for their powers therefore
was the Minister’s authorisation. That was made clear in
CITY
OF TSHWANE METROPOLITAN MUNICIPALITY v CABLE CITY
(SCA)
supra,
para [24] at 600F – H in which it was held that
the legal force of the levies lay in the legal validity of the
provisions
made by the Minister’s empowering the council to
collect the levies, and that the Legislature never granted the
Minister
authority to permit councils to have the power to summarily
estimate levies.
[53] It is indeed trite law that administrators have no
inherent powers and that any exercise of public power which is not
inferred
from a lawful empowering source, such as legislation, is
illegal or
ultra vires.
(See:
ADMINISTRATIVE LAW IN
SOUTH AFRICA.
2
nd
Ed, at 256.)
[54] I find nothing in the enabling legislation that
empowered the Commissioner to assess the levypayers’ liability
or the
council to collect such levies without authorisation by the
Minister of Finance. (See:
AFFORDABLE MEDICINES TRUST v
MINISTER OF HEALTH ,
2006(3) SA 247(CC).)
[55] In 2005 the Legislature, by way of s 19 of the
2005-Act amended the said enabling provision by inserting into s 12 a
further
subsection:
“
(1B) The Commissioner may
not act under subsection (1A)(dA)(iv) and the council may not act
under any authorisation in terms of
subsection (1A)(dB) after the
expiration of two years from the date the return from the employer or
person concerned was received
by the council or if no return was
received, from the date on which a return was required to be
submitted to the council unless
the levy was not paid due to fraud or
misrepresentation.”
[56] Subsection (1B) was inserted by s 19 of the
Taxation Laws Amendment Act No 9 of 2005 (“the 2005-Act”)
with effect
from 8 June 2005. The Legislature’s purpose with
the said amendment appears from the long title of the 2005-Act:
namely:
“
to amend the Regional
Services Councils Act, 1985, so as to provide for a prescription
period in respect of assessments
”.
[57] In order to determine what powers of the
Commissioner would be curtailed by the 2-year prescription period
introduced by subsection
(1B), one needs to look at the specific
words used in subsection (iv). In terms of subsection (1A)(dA)(iv)
the Minister authorised
the Commissioner to do three things;
57.1 to
determine the liability
of any person for
a levy, or
57.2 to
estimate
the liability of any person for
a levy; and
57.3 to
direct a council to make an assessment
of
such levy.
[58] Subsection (1B) limits those subsection (iv) powers
to two years. The prayers in Part B of the applicant’s proposed
amendment
rely on exactly those powers, however: the applicant prays
for the Court to authorise an “
estimate”
by the
Commissioner after doing audits and examining books and records “for
the purpose of “
determining the liability”
of the
respondent for such levies.
[59] A closer look at the powers conferred by the
Minister on the Commissioner in subsections (i), (ii), (iii) and (v)
in my view
indicates that all of those powers are aimed at
“
determining the liability”
of the levypayers for
levies in order to enable the council to assess the levypayers for
payment of the levies, which power is exactly
what was limited to two
years by subsection (1B).
[60] It appears therefore that such powers cannot escape
the 2- year curtailment imposed by subsection (1B), especially in
view
of the concomitant curtailment of the council’s powers to
use the RSC Act and the regulations to determine and recover levies.
[61] I am therefore unpersuaded by Mr Kemp’s
argument that only subsection (iv) prohibited the Commissioner from
determining
or estimating liability for levies after the expiry of
two years, and that he still retains the power to act in terms of the
other
subsections to determine liability, e.g. by way of audits and
examination of books and records.
[62] The curtailment of the council’s powers
appears to go even wider than those of the Commissioner: subsection
(1B) prohibits
the council from acting under “
any
authorisation
under subsection (1A)(dB)”
to
determine liability and to collect and recover levies after two years
had expired from the due date of a return.
[63] The council’s only authorisation to collect
levies is that which was granted by the Minister in terms of
subsection (dB),
namely:
“
to administer any provision
of the RSC Act or of any such notice”
in
so far as it relates:
63.1 to the
determination
of any person’s
liability
for levies; or
63.2 to the
payment
of levies; or
63.3 to the
recovery
of levies.
[64] Subsection (1B) therefore expressly prohibits the
council from acting in terms of its authorisation to administer the
payment
of levies, the recovery of levies or the determination of
liability for levies outside of the 2-year prescription period,
whether
in terms of the provisions of the Act or in terms of the
provisions of the Notice, i.e. the regulations.
[65] The council therefore has no authorisation to
collect levies or to ask the Commissioner to determine liability
without the
Minister’s authorisation. (See:
FEDSURE LIFE
ASSURANCE LTD v GREATER JOHANNESBURG TRANSITIONAL METROPOLITAN
COUNCIL,
1999(1) SA 374 (CC) where the Constitutional Court
in para [58] at 440D-E found that:
“
it seems central to the
conception of our constitutional order that the Legislature and
Executive in every sphere are constrained
by the principle that they
may exercise no power and perform no function beyond that conferred
upon them by law.”
[66] With effect from 8 June 2005, therefore, subsection
(1B) restricted to two years from the due date of returns the
validity
of the only authorisation that the council had been granted
to use the provisions of the Act or the Notice to determine liability
for levies or to recover levies. The council’s powers to ask
the Commissioner to assess or estimate liability, and its powers
to
ask for returns in order to collect payment of or recover levies were
therefore restricted to two years.
[67] In part B of the proposed amendment the applicant
prays for an order for ‘
payment’
of an amount
‘
assessed’
upon the respondent by the council,
based on the Commissioner’s determination of the respondent’s
liability. In other
words, the applicant also asks for an order
pertaining to exactly those of the council’s powers that were
limited to two
years by subsection (1B).
[68] The Legislature’s stated purpose with the
introduction of subsection (1B) as set out in the long title of the
2005-Act,
namely “
to introduce a prescription period for
assessments”
taken with the clear wording of the Act in my
view merely confirms that the Legislature did not intend the
Commissioner’s
and the council’s authorisation to perform
the actions relied on for the relief prayed for in Part B of the
proposed amendment
to last beyond two years from 8 June 2005.
[69] Mr Kemp’s averment that the relief prayed for
would not depend on s 12(1)(b) but on s 12(11) which creates the debt
which
the applicant now claims and on s 12(10) which gives concrete
content to the debt by determining how to calculate the interest on
the levy does not persuade, either. The only authorisation which the
applicant had to recover levies, stemmed from s 12(1)(1A)(dB).
It is
my considered opinion that that authorisation was limited by
subsection (1B).
[70] I therefore cannot accept Mr Kemp’s averment
that regulations 13 and 9(4) are still available to the applicant.
The regulations,
including regulations 9 and 13, are not original
regulations or powers. They are derived powers in that the Minister
in terms of
the RSC Act had to authorise the Commissioner to
determine liability and the council to claim payment and recover
levies. The regulations
therefore have no substantive status. Reg 13
merely specified in more detail the Commissioner’s powers
conferred in terms
of subsection (1A)(dA). If such powers were to be
used to determine or estimate liability for levies, therefore, their
use would
also be limited to two years by subsection (1B).
[71] Mr Danzfuss’s proposition that reg 13 and s
12(1)(b) are actually the same provision since the power to place reg
13
on the Statute Book stems from s 12(1A)(dA)(iv) and s 12(1A)(dB)
is confirmed, in my view, by the definition of “
Act”
in reg 1, namely:
“
Act means the Regional
Services Councils Act, 1985, (Act No. 109 of 1985), including any
regulation made under that Act and any
notice published under that
Act by the Minister of Finance in the Gazette”.
[72] In my view the applicant therefore cannot be
correct in alleging that reg 13 gives the Commissioner a separate
substantive
authorisation which he then has regardless of the
provisions of s 12(1A)(dA)(1B). Thus I cannot agree with Mr Kemp the
applicant
can still use reg 13 to obtain the Commissioner’s
assistance if no returns are provided. All the regulations are part
of
the s 12(1)(b) Notice and as stated, the council’s and the
Commissioner’s only empowerment to determine and collect
levies
stem from that Notice, and more specifically from subsections (dA)
and (dB) thereof.
[73] In my view, furthermore, the introduction of
subsection (1B) into the empowering provision in the RSC Act was
clearly intended
to pave the way for the Legislature’s ultimate
purpose of abolishing “
regional services councils and the
levies that the Act allowed them to impose”
with s 59 of
the 2006-Act. (See:
CITY OF TSWANE METROPOLITAN MUNICIPALITY v
CABLE CITY (PTY) LTD,
(CC),
supra,
para 4 at 3.)
[74] The long title is now considered to be part of the
statute for interpretative purposes and it is permissible to have
regard
to it, or to the preamble, to discover the intention of the
Legislature or to confirm the clear and unambiguous meaning of a
section.
(See:
G E DEVENISH, INTERPRETATION OF STATUTES
,
2
nd
Impression, 1996, at 103 and 105.)
[75] The 2006- Act, in order to achieve its purpose (as
stated in the long title) of withdrawing councils’ power to
claim
RSC levies, introduced with effect from 1 July 2006 s 59 which
provided as follows:
75.1 S59(2) :
“
any regional establishment
levy or regional services levy for which liability arose in terms of
the Regional Services Councils Act,
1985 (Act 109 of 1985) ... before
or on 30 June 2006 may be collected by a municipal council in
accordance with the provisions
of the Regional Services Councils
Act
”;
75.2 S59(3):
“
the liability for any
regional establishment levy or regional services levy referred to in
subsection (2) in respect of which a
summons for the collection
thereof has not been issued before or on 30 June 2008 lapses on that
date”
75.3 S59(4)
“
Subsection (2) is deemed to
have come into operation on 1 July 2006.”
[76] The 2006-Act therefore granted municipal councils a
2-year window period, starting on 1 July 2006 and ending on 30 June
2008
within which to still claim unpaid levies in terms of the
provisions of the RSC Act, the Notice or the regulations.
[77] It is clear from the wording of the provision that
the 2-year window-period granted in S59(2) of the 2006 Act applied to
calculation
and collection of the levies by 30 June 2008 not only in
terms of the provisions of the RSC Act itself but also in terms of
the
Notice and the regulations. Liability for any levies not so
claimed by that date lapsed in terms of S 59(3).
[78] Instead of using the 2-year grace period between
July 2006 and June 2008 to claim the returns and/or determination of
the levies
by the Commissioner in terms of the procedures expressly
provided for that purpose by the RSC Act and the regulations, the
applicant
waited until two weeks before liability for all unclaimed
levies would lapse and then, on its own version, launched the
thousands
of summonses based on estimates and “assessed”
respondents who had never filed any returns and had therefore never
paid any levies.
[79] The 2006-Act determined that the last levies
Councils were authorised to claim, were those for June 2006. The last
relevant
return would therefore have been due 20 days later, namely
on 20 July 2006. At the very latest, therefore, by 20 July 2008,
because
of subsection (1B) the Commissioner would have had to have
done his determination of the respondent’s liability and the
council
to have served such assessment on the respondent. Similarly,
because of subsection (1B) if the council had wanted to rely on
returns
in order to assess the respondents’ liability, by that
date it would have had to have done so.
[80] In
CITY OF TSWANE METROPOLITAN MUNICIPALITY v
CABLE CITY (PTY) LTD,
(CC),
supra,
the Constitutional
Court at 11 referred to the “
somewhat ambiguous legal status
of the Notice”
which “
leaves the Notice lingering
in a legal limbo”
since it has not yet been formally set
aside and has therefore legally not been conclusively extinguished.
It is indeed true that
it seems incongruous for the Act to still be
on the statute-book in view of the clear and explicit wording of s 59
of the 2006-Act
, but it is my considered opinion that that is only
because the Court has not been asked to consider the effect of
subsection (1B)
of the RSC Act and of s 59 of the 2006-Act in respect
of prescription and lapsing of liability before.
[81] In my view the effect of subsection (1B) and of s
59 is exactly such that the RSC Act and the Notice can no longer be
used
to collect levies unless the defective summons issued in 11 June
2008 effectively stayed prescription in respect of the council’s
and the Commissioner’s powers granted in subsections (dA) and
(dB) and prevented the respondents’ liability from lapsing
in
terms of s 59.
[82] The real question in the instant matter, in my
view, is whether in the light of the two 2-year limitation or
prescription periods
imposed by the 2005- and 2006 Acts, the
respondent is liable to the applicant at all since more than two
years have lapsed since,
for instance, the cut-off date of 30 June
2012. (See:
COMMISSIONER FOR CUSTOMS AND EXCISE v STANDARD
GENERAL INSURANCE CO LTD,
supra,
para [10].
)
[83] The next issue that needs to be determined,
therefore, is whether the respondent’s liability for levies
lapsed after
30 June 2008 in accordance with s 59 of the 2006-Act and
whether the council’s and Commissioner’s powers
prescribed
in accordance with subsection (1B) because of the
defective summons issued on 11 June 2008. That would be the case if
the proposed
amendment introduces a new claim since service of the
original summons would then not have interrupted prescription or
stayed the
lapsing of liability.
[84] In order to do so, one would first of all need to
determine the true nature of s 59.
[85] For several reasons I consider s 59(3) to be
providing for an expiry period (“vervaltermyn”) rather
than a prescription
period. The first is the wording of the section,
namely that “
liability ... lapses on that date”.
The
second is the purpose of s 59 as stated in the long title of the
2006-Act, namely “
to withdraw the power of the
municipalities to levy and claim regional services levies”.
[86] In par [14] of
COMMISSIONER FOR CUSTOMS AND
EXCISE v STANDARD GENERAL INSURANCE
,
supra,
for
instance, Plewman, JA, found that nothing could better demonstrate
the inconsistency of, for example, the delaying provisions
of the
Prescription Act, with
the relevant provision of the Act under
scrutiny than the words ‘
liability shall cease’
.
In the instant matter that is exactly what s 59 of the 2006-Act
provides, namely that “
the liability”
for a levy
for which a summons for its collection has not been issued before or
on 30 June 2008 “
lapses on that date”.
[87] The third reason is that, if s 59 of the 2006-Act
is interpreted with reference to s 19 of the Taxation Laws Amendment
Act
9 of 2005 (“the 2005-Act”), which just a year earlier
inserted subsection (1B) into s 12 of the RSC Act “
to
provide for a prescription period in respect of assessments”
,
the fact that both provisions imposed 2-year curtailments regarding
the recovery of levies was no co-incidence. There is no indication
that the Legislature did not deliberately decide not to use the words
“
prescription period”
in the regard to s 59.
Neither is there any indication that the words: “
to withdraw
the power ... to collect regional services levies”
were not
deliberately chosen to make clear its intention to abolish the
council’s powers. Such intention was made even clearer
by
explicitly providing for a cut-off date for liability exactly two
years later, namely 30 June 2008.
[88] And the fourth reason is that the provision is
compatible with what has been found to be one of the principal
distinguishing
characteristics of an expiry period as opposed to a
prescriptive period, namely that expiry periods are “
viewed
from the point of view of the debtor only”
and runs from
the time that “
the debt arises in theory until the period
has expired”.
(See:
MEINTJIES NO v ADMINISTRASIERAAD
VAN SENTRAAL-TRANSVAAL
, 1980(1) SA 283 (T), at 293.)
[89] The stated purpose of s 59, namely “
to
withdraw the powers of councils to collect RSC levies”
in
my view clearly confirms that the Legislature indeed intended to
terminate such powers. (See:
MINISTER OF SAFETY AND SECURITY v
MOLUTSI AND ANOTHER,
1996(4) SA 72 (A) at 95.)
[90]
In casu
the condition imposed to prevent
lapsing of liability was that summons must have been issued before 30
June 2008 to collect the
levy. In the absence of impossibility,
failure to comply with s 59 would result in the extinguishment of the
plaintiff’s
cause of action. (See:
MONTISI v MINISTER VAN
POLISIE
, 1984(1) SA 619 (A);
MINSTER OF SAFETY AND
SECURITY v MOLUTSI
,
supra,
p. 95.)
[91]
S 15(2)
of the
Prescription Act determines
that
unless the creditor successfully prosecutes his claim under the
process in question to final judgment, the interruption of
prescription shall lapse and the running of prescription shall not be
deemed to have been interrupted at all. I see no reason why
the same
principle would not apply to expiry periods. I
respectfully agree with Van Reenen, J, in
BRANDON v THE
MINISTER OF LAW & ORDER AND ANOTHER,
1997(3) SA 68(C), at
77C-I, that the purpose of the expiry period would be defeated
if an amendment introducing a new cause of action, or,
for that matter a new claim, were to be allowed.
[92] Since summons was issued before the cut-off date,
one would have to determine if the defective summons indeed
interrupted prescription
and prevented the levy from lapsing. The
claim
instituted on 11 June 2008 could only have interrupted
prescription of the applicant’s claim or prevented lapsing of
the respondent’s
liability for levies if it were prosecuted to
finality. That would only be possible if the claim now sought to be
introduced by
the amendment were still the same claim as the original
one instituted then.
[93] Unless the proposed claim is still recognisable as
a claim for the same debt as that which was claimed in the 2008
summons,
liability for the payment of the levies would therefore have
lapsed on 1 July 2008.
[94] Mr Kemp averred that the debt has remained
fundamentally
the same, namely the respondent’s obligation to
pay the Rx due to the applicant. He maintained that the applicant
relies on
the wide sense of the word “debt” in the
Prescription Act, Act
108 of 1969, and that all the amendments had
merely been new quantifications of that debt. That might have been
applicable had
the claim
in casu
been for damages in a
delictual claim. But it is not.
[95] The
IL
BACK-case cannot be support for this
argument, either, since, as made clear in
BENSON AND ANOTHER v
WALTERS AND OTHERS,
1984 (1) SA 73
(A) at 82H, a debt is not
due for the purposes of the
Prescription Act unless
it is or can be
rendered immediately exigible at the will of the creditor.
Furthermore, in
BACK
the relevant obligation was
one to pay an already liquidated amount of money and the only
question was whether that amount was presently
claimable. The
Appellate Division in that case did not pertinently consider the
question whether the non-fulfilment of a mere procedural
requirement
for the institution of legal proceedings was a bar to the running of
time against the creditor.
[96] The respondent, on the other hand, averred that the
debt claimed in the present Notice of Intention to Amend is the duty
to
submit returns, not the duty to pay a random amount calculated by
the applicant itself in terms of an invalid regulation as in the
original summons. The question the Court should ask itself, it was
submitted, is whether the random amount claimed in the 2008
summons
is the same or materially the same as the proposed claim for delivery
of returns, and in doing so to keep in mind that
a mere overlap of
facts is not enough to make it the same claim.
[97] Although Mr Danzfuss, in my view correctly so,
conceded that the applicant did previously claim payment of an
amount, he submitted
that the grounds on which the proposed prayers
were based, as well as the contents of the prayers were totally
different, based
on totally different provisions and regulations. He
argued that the mere fact that the applicant in the end wants money,
did not
change the fact that by implication the debt which the
applicant originally claimed was its right to obtain payment as part
of
its right to recover levies as compared to the respondent’s
obligation to furnish returns which is merely a preparatory
administrative
action preceding calculation of the levy.
[98] Mr Danzfuss submitted that the returns which form
the subject of this application, which is a claim for documents in
the process
of becoming a levy, should not be confused with a claim
for a debt which is already a levy and which has the status of a
levy.
He pointed out that it is only once all the administrative and
procedural steps had already been taken that the levy can be
calculated
and only then that the money can become due and payable.
In other words, only then the debt is created.
[99] He maintained that the debt is now the duty to
submit returns (one of several administrative steps prior to
calculating the
levy) as opposed to payment of the estimated amount
which the applicant originally claimed. Although the
purpose
may be to calculate the claim with the furnished returns, the source
and content of the prayers claimed, are totally different.
And, as he
pointed out, the test is not whether the claim has the same purpose,
but indeed whether it is for the same debt.
[100] He also averred that although the theme is the
same, namely that the levypayer is liable for money, that the
Applicant wants
to claim the money, and that the Applicant needs the
returns in order to be able to claim the money, the fact that the
theme is
the same only means that there is an overlap of similar
averments. It does not mean that it is the same claim on the same
cause
of action.
[101] He therefore maintained that the proposed claim
was a totally different claim, based on different statutory
provisions, a
different source in law, a different cause of action
and different prayers which are not recognizable in the original
unamended
particulars of claim, and therefore constitutes a new
claim. (See:
STANDARD BANK OF SA v ONEONATE INVESTMENTS (in
liquidation)
, 1998(1) SA 811 (SCA).)
[102] Mr Kemp, on the other hand, averred that the
applicant
in casu
had a pre-existing right to be paid the
amount owed by the respondent and that it was that right that it now
seeks to enforce.
He argued that the calculation of the levy was just
a procedural step which did not amend or complete the cause of action
but merely
determined the quantum of the levies.
[103] In order to assess the impact and implication of
the proposed amendment and determine whether a new claim is indeed
being
introduced, one needs to compare the debt and cause of action
in the original particulars of claim issued on
11 June 2008
with
those in the proposed amendment. (See:
STANDARD BANK OF SA LTD
v ONEANATE INVESTMENTS (PTY) LTD 1995(4) SA 510 (C)
, at
555B-C;
EVINS v SHIELD INSURANCE CO LTD
, 1980(2) SA 814
(A) at 836D;
IMPREFED (PTY) LTD v NATIONAL TRANSPORT
COMMISSION
, 1990(3) SA 324 (T) at 329H – 330C.)
[104] I agree with Mr Danzfuss that the test to
determine whether the cause of action is still the same is not
whether the applicant’s
prayers have the same purpose, but
indeed whether they are for the same debt. The
original
particulars of claim and the relief prayed for therefore has to be
recognizable in the proposed amendment.
[105] In its original 2008 summons the applicant’s
stated cause of action was its “
statutory entitlement to
recover”
from respondent ‘
being a person or entity
not so exempted”
[from paying levies] the levies in terms
of
s 12
and
s 12(1)(a)
and the interest in terms of s12(10) of the
RSC Act and in terms of s 59(2) of the 2006-Act. Roughly speaking,
the claim was for
payment of an estimated amount.
[106] The applicant then in terms of reg 11(1) simply:
“
assessed the defendant to
be liable to it in respect of regional levies
probably payable in
respect of the relevant period in the estimated amount”
and claimed:
“
(1) payment of the amount
of R 33 140,46
;
(2) payment of interest on the aforesaid amount at
the rate of 15.5% per annum a tempore morae, from date of issue of
summons till
date of payment;
(3) costs of suit.”
[107] The applicant now seeks leave to amend its amended
particulars of claim by deleting it in its entirety, save for the two
paragraphs
identifying the parties, and by substituting the entire
body of the previous particulars of claim with new paragraphs 3 to 15
and
new prayers. In the proposed amendment the applicant relies on:
107.1 the respondent’s obligation in terms of reg
9 to pay to applicant levies ... calculated in terms of regs 2-4 and
5-8
107.2 the respondent’s obligation to provide
applicant with monthly returns as from 1 March 2000, irrespective
whether any
relevant levy was payable or not;
107.3 breach of respondent’s statutory duty to
effect payment or render returns in terms of reg 9;
107.4 the applicant’s own inability to “calculate,
determine, levy and claim” because of such breach;
107.5 the applicant’s entitlement to the provision
of a statutory return;
107.6 applicant’s entitlement to submit the matter
to the Commissioner to determine liability in accordance with s 12
(1A)(dA)
and reg 13;
[108] The proposed prayers are for:
“
A. An order in the
following terms:
that defendant be ordered to render to the plaintiff
within sixty (60) days from the date of this order, a true and
proper return
in the form of annexure “
A”
hereto
for the relevant monthly periods of June 2004 to and inclusive of
June 2006 irrespective whether or not any relevant levy
is payable
in respect of such month or period;
payment by defendant to plaintiff within sixty (60)
days from the date of this order of whatever amounts appear to be
due to the
plaintiff in respect of Regional Services Levies and
Regional Establishment Levies as calculated and set forth in the
monthly
returns rendered in terms of prayer 1 above;
interest on the said amount at the rate of 11.5%
effective from 1 July till 31 October 2004; 10.5% effective from 1
November 2004
till 31 October 2006; 11% effective from 1 November
2006 till 28 February 2007; 12% effective from 1 March 2007 till 29
February
2008; 14% effective from 1 March 2008 till date of payment;
costs of suit;
further and/or alternative relief;
B. In the event of
(i) the defendant failing to render the returns as
ordered in prayer
A.1
above; and/or
(ii) the defendant not paying in full any levy for
which the defendant is liable; and/or
(iii) the plaintiff having reason to believe that the
information submitted by defendant in any of the returns is
incomplete, incorrect,
suspect or unreliable and payment not being a
full discharge of the defendant’s true liability for levies
that leave be granted to plaintiff to approach the
above Court for an order in the following terms:
payment by defendant of such amounts in respect of
Regional Services Levies and Regional Establishment Levies as
assessed upon
the defendant by the plaintiff on such amounts as
estimated by the Commissioner for Inland Revenue subsequent to an
audit of
the affairs of the Defendant and examination of the books,
record, accounts, statements, tax invoices or any other documents
which in the opinion of the South African Revenue Service are or may
be necessary for the purpose of determining the liability
of the
defendant for such levies, such assessment from the Receiver being
placed before this Court;
interest on the said amount at the rate of 11,5%
effective from 1 July 2004 till 31 October 2004; 10,5% effective
from 1 November
2004 till 31 October 2006; 11% effective from 1
November 2006 till 28 February 2007; 12% effective from 1 March 2007
till 29
February 2008; 14% effective from 1 March 2008 till date of
payment;
cost of suit;
further and/or alternative relief.”
[109] In the original particulars of claim the applicant
relied on
its
statutory right to demand payment of the
levy
.
In the proposed amendment it relies on breach of the
respondent’s
statutory duty to submit
returns
. Neither the delivery of
returns,
nor the referral to the Commissioner for the
determination of liability has ever been claimed before, as is also
clear from para
[5] of
THABO MOFUTSANYANA DISTRICT MUNICIPALITY
v STEYN-ENSLIN & PARTNERS AND OTHERS
, 2012(3) SA 179
(SCA).
[110] As found in
FIRSTRAND BANK LTD v NEDBANK
(SWAZILAND) LTD
, 2004(6) SA 317 (SCA) at 322H:
“
... the mere fact that
there is some overlapping of factual allegations contained in the
pre- and post-amendment particulars of
claim is not enough... The
right of action disclosed in the amended particulars of claim must at
least be recognisable as the same
or substantially the same as the
right disclosed in the original claim”.
[111] In
ONEONATE INVESTMENTS (PTY) LTD (in
liquidation) v STANDARD BANK OF SOUTH AFRICA
LTD, 1998(1) SA
811 (SCA) at 826B-D, regarding the interruption of prescription,
Zulman JA quoted with approval the following from
MAZIBUKO V
SINGER,
1979(3) SA 258 (W)
at 266A:
“
in deciding whether
prescription was interrupted, in relation to a particular claim, by
prior process served during the prescriptive
period, one looks to see
whether in the earlier process the same
claim
is preferred, not
whether the same cause of action (or any cause of action) was made
out in the earlier process”.
(See
also:
PROVINSIE
VAN DIE VRYSTAAT v WILLIAMS NO,
2000(3)
SA 65 (SCA).)
[112] In the instant case, I am unable to find that the
proposed claim for the submission of returns based on respondent’s
breach of a statutory duty to submit returns is recognisable as the
claim in the original summons of June 2008 for payment of a
fictional, estimated amount based on the applicant’s statutory
entitlement to the payment of levies. As Zulman JA stated
at 826H-J
of
ONEONATE INVESTMENTS v STANDARD BANK OF SA
LTD,
supra,
the real question which arises is whether the
subsequent pleading is inconsistent with the claim proffered in the
initiating summons.
In my view it is.
[113] I cannot find that the proposed amendment merely
clarifies or adds details which do not appear in the original summons
(See:
ONEONATE INVESTMENTS v STANDARD BANK OF SA LTD
,
supra,
at 826H), nor that it seeks to enforce a debt
recognisable in the original summons. Neither can I find that the
original claim
was ‘part and parcel’ of the original
claim and that the amendment merely introduces a fresh quantification
of the
original debt (as at 827B-C) (See also:
EVINS v SHIELD
INSURANCE COMPANY LTD
, 1980(2) SA 814A) or that the original
cause of action was ‘insufficiently or imperfectly set out’
but nevertheless
‘relied upon’ throughout (as at 827C-D).
[114] In my view, rather, as found in
MINISTER OF
SAFETY & SECURITY v MOLUTSI AND ANOTHER,
1996(4) SA 72
(A) at 85B/C - D, the contention that the amendment should not be
construed as introducing a new cause of action but
merely as an
amplification of the grounds upon which the cause of action rested
which was originally invoked, cannot be upheld.
The source of the
obligation on which application now depends, differs from the one on
which he originally relied. The same
facta probanda
cannot
sustain the proposed claim and the amendment therefore constitutes a
separate and distinct cause of action upon which the
new claim is
based.
[115] In
ALFA LAVAL AGRI (PTY) LTD v FERREIRA NNO,
2004(2) SA 68 (O) in which a party initially claimed payment
based on a contract but then amended to claim in terms of enrichment,
the Court found that even though the claim was still for the same
money, the debt was now the result of enrichment and even though
the
purpose still was to claim the same money, the debt could not be
regarded as the same or materially the same debt. (See also:
MINISTER
OF SAFETY & SECURITY v MOLUTSI,
supra,
at 85B/C –
D, where both claims pertained to vicarious liability, but the source
thereof differed; and
BRANDON v MINISTER OF LAW AND ORDER AND
ANOTHER,
supra,
at 78H/I-I/J where both claims were
delictual in nature, but their elements and characteristics were not
identical and the respective
facta probanda
for their proof
differed.)
[116] I therefore find that the amendment seeks to
introduce a new claim. It is trite law that where by way of amendment
a new claim
is introduced, prescription would only be interrupted as
from the date the amendment is granted (See:
CORDIER v CORDIER,
1984(4) SA 524 (C) at 532H-533A;
STROUD v STEEL ENGINEERING CO
LTD AND ANOTHER,
1996(4) SA 1139 (W) 1141F and 1142B, read
with 1141E.) It has also been held that, where one is dealing with an
expiry period and
not prescription, there is no reason why a similar
approach should not prevail. (See:
BRANDON v MINISTER OF LAW &
ORDER AND ANOTHER
, 1997(3) SA 68 (C) at 75D-F/G.)
[117]
In casu
a claim for the delivery of returns
is not discernible in the original summons. It follows, then, that
service of that summons in
2008 could not have stayed or interrupted
prescription of this debt since in terms of
S 15(2)
of the
Prescription Act, prescription
is stayed by service of a pleading on
a debtor in which payment of the debt is claimed and on which the
claim is prosecuted to
finality.
[118] In
ITC 1671
,
(1999) 62 SATC 39
, for
instance, the Commissioner withdrew certain original assessments in
terms of s 3(2) of the Income Tax Act. The Court held
that such
adjustments do not restart the three-year prescription periods for
the reopening of assessments contained in s 79(1)
so that the date of
the original assessment remains the commencement date for the
prescriptive period (this view was endorsed by
the Supreme Court of
Appeal in
C: SARS v BRUMMERIA RENAISSANCE (PTY) LTD and OTHERS
,
(2007) SCA 99).
[119] The date of service of the Notice of Intention to
Amend, namely 11 November 2011, would therefore be the conclusive
date to
determine whether the claim has prescribed because that is
the first date on which the proposed new debt was being claimed. More
than three years have elapsed since the original summons was issued
and since the cut-off date for liability to lapse.
[120] Mr Kemp’s argument that it could never have
been the intention of the Legislature to leave the applicant in a
position
in which he is unable to calculate the amount due in my view
is clearly addressed by the provisions of both the RSC Act (S 12(1B))
and the 2006-Act and the stated purpose of s 59.
[121] I am sure, furthermore, that the Legislature with
the imposing of the said 2-year time limits in the two applicable
Acts made
it clear that they did not envisage a 30-year term for the
determination of liability for payment or for the Courts to allow
countless
further attempts to determine liability by amending the
summons in the hope of sometime striking it lucky and finding a
viable
claim.
[122] I find that the lack of empowerment of the
Commissioner and council to assess or collect the levies due to the
passage of
time not only offends the principle of legality, but also
deprives applicant of a viable cause of action. To allow the
amendment
would be to allow an excipiable particulars of claim. It
has been found that save in exceptional cases an amendment ought not
to
be allowed where its introduction into the pleading would render
such pleading exceptionable. (See:
ALPHA (PTY) LTD v
CARLTONVILLE READY MIX CONCRETE CC
, 2003(6) SA 289 (W) at
293I-J and
KRISCHKE v RAF
, 2004(4) SA 358(W) at 363.)
[123] Especially in view of the purpose of s 59 of Act
2006 to abolish RSC levies, as confirmed in
CITY OF TSHWANE v
CABLE CITY
(CC),
supra,
I do not consider this to be
an exceptional case which would justify allowing the amendment under
such circumstances.
[124] It has been found, furthermore, that an amendment
which introduces a new claim will not be allowed if it would
rescussitate
a prescribed claim or defeat a statutory limitation as
to time. (See:
ASSOCIATED PAINT & CHEMICAL INDUSTRIES (PTY)
LTD t/a ALBESTRA PAINT & LACQUERS v SMIT
2000(2) SA 789
(SCA) at 794C-G and
BLAAUBERG MEAT WHOLESALERS CC v ANGLO DUTCH
MEATS (EXPORTS) LTD ,
[2004] 1 ALL SA 129
(SCA) at 133g to
134H.)
[125] It is my considered opinion, therefore, that the
Commissioner’s and the council’s authorisation to
determine liability
and collect levies in terms of the RSC Act and
the regulations as curtailed by subsection (1B) has prescribed and
that the respondent’s
liability for payment of the levies has
lapsed. Since the applicant no longer has the power to insist on
returns or on determination
of liability or payment of the levies, as
prayed for in its proposed amended particulars of claim, granting
such amendment would
merely be an exercise in futility.
[126] It is trite law that an amendment would not
normally be decided on a claim of prescription. In reliance on
CORDIER v CORDIER
,
1984(4) SA 524 (C), and
STROUD v STEEL ENGINEERING COMPAY LTD AND ANOTHER,
1996(4)
SA 1139 (W) Mr Kemp argued that in order to refuse leave to amend,
this Court would have to find that respondent had such
a strong case
regarding the issue of prescription and of non-empowerment that even
without a plea the applicant does not have a
case and will never have
a case on the proposed amendment. In my view such is the effect of
subsection (1B) and s 59.
[127] In
STROUD v STEEL,
supra,
at
1142, the Court cautioned that though the application for an
amendment is not ‘
normally’
the place to decide
the issue of prescription, there ‘
may be special cases’
which merely depend on the legal interpretation of facts which
are common cause. In my view the instant case is such a case in which
prescription depends on legal interpretation of the relevant statutes
and the facts of the case are not in dispute. It has been
held,
furthermore, that where the proposed amendment raised a point of law
which would dispose of the case in whole or in part,
the court should
determine that point of law. (See:
KRISCHKE v RAF
,
supra,
2004(4) SA 358 (W) at 363F-G.)
[128] I have to agree with Mr Danzfuss that the
circumstances in the instant case warrant a refusal of the amendment
based on the
defence of prescription at this stage. The applicant has
indeed never raised any factor which would either stay or interrupt
the
prescription. Throughout its case has simply been that the levy
was a tax, alternatively that the debt was for the same or materially
the same debt as the one claimed in the original summons, but its
argument is not sustained by the facts.
COMMON LAW:
[129] It was submitted on behalf of the respondent that,
apart from the merits, three further reasons for dismissing the
application
are that the applicant failed to address and prove in its
founding affidavit the following prerequisites for allowing an
amendment:
129.1 that the amendment would not prejudice
respondents;
129.2 that it has a good explanation for not instituting
much earlier the present amendments and the present claim and
129.3 that it is
bona fide.
[130] It is trite law that an applicant for an amendment
seeks an indulgence. It has been held that the greater the disruption
caused
by the amendment, the greater the indulgence sought and the
greater the burden upon the applicant to convince the court to
accommodate
him. (See:
CIBA-GEIGY (PTY) LTD v LUSHOF FARMS
(PTY) LTD 2002(2) SA 447 (A),
at 463E, 462J – 463B and
464E-H.)
PREJUDICE
[131] It is trite law that that an amendment will not be
allowed in circumstances which will cause the other party such
prejudice
as cannot be cured by an order for costs, or, where
appropriate, a postponement, in other words if a party cannot be put
back for
the purposes of justice in the same position as it was when
the pleading which it is sought to amend was filed. (See:
EUROSHIPPING CORPORATION OF MONROVIA v MINISTER OF AGRICULTURE,
1979(2) SA 1072 (C) at 1087C).)
[132] Although it has been held that in terms of its
inherent powers a court may grant an amendment even of a fatally
defective
summons, the prerequisite for doing that is that it will
occasion no prejudice and will prevent a waste of costs. (See:
PRUDENTIAL ASSURANCE CO LTD,
1963(1) SA 66(T), at
69F-H,
BANKKORP LTD v ANDERSON MORSHEAD,
1997(1) SA 251
(W) and
MEYERS v ABRAMSON
1951(3) SA 438 (C) at 450F -
451D.) I cannot find that such is the case
in casu.
[133] In
RAND STAPLE MACHINE
,
1977
(3) SA 199
(W) at 202C it was found that a long delay between the
date of institution of the action and the application for amendment
might
prima facie
prejudice the defendant and should be
explained in the particulars of claim.
[134] I consider the instant case to be one in which
this Court’s power to allow a material amendment is indeed
limited by
considerations of material prejudice or injustice to the
respondent in view of the applicant’s 11-year delay before
claiming
returns. (See:
ROSNER v LYDIA SWANEPOEL TRUST,
1998(2)
SA 1123 (W) at 127D-G.)
[135] The applicant in its proposed amended particulars
relies on returns not submitted as far back as 2000 and proposes to
claim
returns as from 2004, in other words returns from 8 year ago.
No such returns were claimed when the summons was issued in 2008.
Nor
were they claimed in the amendment against which the exception was
upheld by the Supreme Court of Appeal. (See:
THABO MOFUTSANYANA
DISTRICT MUNICIPALITY v STEYN-ENSLIN & PARTNERS AND OTHERS
,
(SCA),
supra,
para [5]). No explanation was offered for the
applicant’s failure to do so on either of the two occasions.
Since then, furthermore,
four further years have already elapsed and
three attempts to amend have already failed.
[136] The question of prejudice was not even addressed
in the founding affidavit. As appears from the application to amend
itself,
for many years the applicant never claimed returns from the
respondent. Even if s 75 of the Income Tax Act, had indeed been
applicable
to levypayers, which it is has not been declared to be, a
levypayer would only have been obliged to retain the relevant
documentation
for five years after it had rendered a return. The RSC
Act made no provision for the compulsory retention of documentation.
[137] When an income tax return has not been rendered,
the Commissioner in terms of the Income Tax Act makes an estimated
assessment
of the taxpayer’s liability and the taxpayer then
has the right to object to or appeal such assessment. The taxpayer
then
bears the onus of showing that the estimate is incorrect. In the
absence of books and records it would be difficult or impossible
to
do so. (See:
DE KOKER & URQUHART
, Vol 1A,
supra,
at 27-27.) The RSC Act also granted levypayers the right to
object to or appeal assessments. But the onus to prove their case
would
be on them. Without documentation that would be virtually
impossible.
[138] The 2006-Act made it clear that the levies were to
be abolished. The applicant only issued summons two years later, two
weeks
before the grace period expired in June 2008, on a claim based
on a regulation that had already been declared invalid and amounts
that were clearly fictitious in a summons which it has been unable to
successfully prosecute to final judgment. For four years
nothing
further happened except the attempts to amend and one further High
Court judgment, two further Appellate Division judgments
and one
Constitutional Court judgment against regional councils.
[139] By the time the applicant filed its application
for leave to amend to claim the submission of returns in November
2011, more
than five years had already elapsed since the due date for
submission of the last return it was allowed to claim, namely that of
June 2006 which would have been due no later than July 2006. There is
no evidence that at that time there was any litigation against
the
respondent. By then for years the respondent has not been sued for
delivery of returns, or, presumably, for payment of levies.
In the
absence of any obligation to retain documentation in terms of the RSC
Act and in the absence of having been sued for failure
to render
returns or pay levies, the probability that the respondents would
have retained the relevant documents even up to June
2008 was
negligible.
[140] I therefore find the applicant’s
viva
voce
argument that the respondents should have been aware of the
continuing litigation and would have been advised to retain the
relevant
documents, and can therefore not be said to be prejudiced if
they did not do so, unpersuasive.
[141] The respondent would in my view be severely
prejudiced if, in the absence of such documents, it were to be
ordered to render
monthly returns, between 6 and 8 years later, for
each of the 24 months between June 2004 and June 2006, as proposed.
[142] In order to comply with an order to render
returns, up to 11 000 other enterprises and employers, many of which
might not
even exist or trade any longer, would after between 6 and 8
years later also have to find for each of the months between 2004 and
2006 the details not only of the enterprise’s:
monthly income;
142.2 monthly expenditure and summaries;
142.3 monthly drawings;
142.4 monthly turnover;
142.5 monthly taxable transactions;
142.6 monthly sale of movable assets,
but also the evidence and financial details of salaries
paid to each employee every month in order to compute, for every
relevant
month, between 6 and 8 years ago, the applicable levy, if
any, that they were liable for.
[143] Should the respondent, and all the other thousands
of respondents, be unable to render such returns, it/they would be
prejudiced,
furthermore, by an order allowing the Commissioner to
estimate an assessment which it/they would be unable to challenge in
the
absence of the same documentation the lack of which had prevented
them from rendering the returns in the first place.
[144] In my view, that is exactly what the Legislature
intended to prevent with the introduction of the two 2-year periods
introduced
by the 2005- and 2006-Acts when it decided to withdraw the
power of the councils to collect levies. It is clear that the
Legislature’s
intention with the 2-year periods imposed by the
RSC Act as well as the 2006-Act was to finally dispose of the levies
and to terminate
liability for their payment, not to allow litigation
to continue
ad infinitum.
[145] On the applicant’s own version the decision
affects thousands of virtually identical summonses issued in the Free
State
alone. I have to keep in mind that that makes it vital to
consider the application with great circumspection, especially if it
were to be found that the applicant failed to explain the delay or to
provide any facts to prove that its conduct was
bona fide.
[146] A further important consideration is that, if the
proposed amendments were to be allowed, thousands of amended
summonses which
the recipients would almost certainly want to defend
would be unleashed. Even though without the relevant documents, they
might
be unable to defend themselves effectively, inevitably
thousands of trials would suddenly need to be set down to clog the
court
rolls. On its own, of course, that would not be sufficient
grounds to refuse the amendment, but it is certainly an important
factor
to take into consideration, especially if all the requirements
for an amendment to be allowed are not met.
[147] In my view, then, there is no doubt that the
amendment would prejudice this and thousands of other respondents .
GOOD EXPLANATION
:
[148 ] In its founding affidavit the applicant offers no
explanation of why the submission of returns was never claimed before
June
2008, or in any of the subsequent amendments, until November
2011. All that was explained was how the process evolved, not why.
[149] In the founding affidavit the applicant only
averred that the parties agreed to make the exception a test case. Mr
Danzfuss
pointed out, however, that there was never any agreement
that the applicant could rely on a certain cause of action or that
that
certain cause of action would stand over. The parties merely
agreed that the arguing of the exception in the other cases would
stand over until after the Supreme Court of Appeal had decided the
exception in this case. The applicant therefore cannot use that
as an
excuse for once again trying to revive its claim.
[150] The applicant failed in its first attempt to claim
payment from the respondent by simply, on its own version, pulling
amounts
out of a hat without any documentary proof or books or
financial figures. Why the applicant did not follow the correct
procedure
when it applied for the first amendment two months after
issuing summons, or as soon as the exception against its particulars
of
claim was upheld in early 2009, is not explained at all in the
founding affidavit.
[151] And, as stated in
HARMS: CIVIL PROCEDURE IN
THE SUPREME COURT
, Issue 23 at 294, an amendment is not
granted for the mere asking, some explanations must be offered
therefore. In the instant
application the only ‘explanation’
offered was the applicant’s reliance on Mthiyane, AJ’s
obiter
‘advice’.
BONA FIDES:
[152] In order to establish applicant’s
bona
fides
Mr Kemp relied on the said ‘advice’ to amend
and to use regulations 9(4) and (13), even though he correctly
conceded
that that point had not served before the Appellate
Division.
[153] The respondent contended that the applicant is not
bona fide
in attempting to introduce yet another amendment
after two Courts had already dismissed its right of action,
especially in the absence
of a proper explanation for doing it in
this way.
[154] I unfortunately have to agree that one gains the
distinct impression that the applicant painted itself into a corner
by failing
to follow the prescribed process in the time allowed, and
is now simply using or abusing the legal process to make one attempt
at amendment after the other to keep its claim afloat at all costs.
Even more so in view thereof that Mr Kemp has already indicated
that
the applicant might still not let the matter rest if this application
for leave to amend were to be refused, but might attempt
to approach
the Constitutional Court in terms of s 172 regarding the
constitutionality of the effect of the declaration of invalidity
of
reg 11(1). That is, despite the fact that the Constitutional Court
has already refused leave to appeal in the
CITY OF
TSHWANE
-matter.
[155] In my view the unacceptably long delay caused by
applicant’s own failure to follow or to timeously apply the
procedures
prescribed in peremptory terms for the calculation and
collection of levies has already
prima facie
caused prejudice
which is
prima facie
no indication of
bona fide
conduct.
[156] I therefore agree that the applicant has failed to
discharge the onus of proving that the amendment would cause no
prejudice,
or that the applicant is
bona fide
in bringing yet
another application for amendment
,
or that it has a good
explanation for the inordinate delay in bringing this matter to
finality.
[157] In the premises I find that even should I be wrong
about the applicant’s ability to claim having prescribed and
the
respondent’s liability for levies having lapsed, the
amendment should be refused anyway because of the applicant’s
failure to discharge the onus of proving the common-law requirements
for allowing material amendments, especially in the face of
the
patent prejudice the proposed amendment would entail.
COSTS:
[158] I see no reason why costs should not follow the
outcome.
WHEREFORE the following order is made:
The application for leave to amend is dismissed with
costs.
_____________________
H MURRAY, AJ
Mero motu
correction in terms of Rule
42(1)(b):
As stated in para [2] of this judgment, the parties
agreed that the judgment in this case, no 3332/2008, will also apply
to case
no
3724/2008, THABO MOFUTSANYANA DISTRICT MUNICIPALITY v
AFGRI OPERATIONS LIMITED
which was set down simultaneously with
case no 3332/2008.
WHEREFORE the following order is made with regard to
case no 3724/2008 as well:
1.The application for leave to amend is dismissed with
costs.
______________________
H MURRAY, AJ
On behalf of applicant: KJ Kemp, S.C.
With him: S Grobler Instructed by:
Honey Attorneys Inc BLOEMFONTEIN
On behalf of respondent: FWA Danzfuss, S.C.
Instructed by:
Naudes Inc
(In case no 3332/2008)
BLOEMFONTEIN
FWA Danzfuss, S.C.
Instructed by:
Lovius Block Attorneys
(In case no 3724/2008)
BLOEMFONTEIN