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[2001] ZASCA 24
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Comshipco Shiffahrtsagentur GmbH v Commissioner for South African Revenue Service (472/98) [2001] ZASCA 24; 2001 (3) SA 38 (SCA) (19 March 2001)
The
Republic of South Africa
THE
SUPREME COURT OF APPEAL
reportable
case
no: 472/98
In
the matter between:
COMSHIPCO SHIFFAHRTSAGENTUR
GmbH
Appellant
and
THE COMMISSIONER FOR SOUTH AFRICAN
REVENUE
SERVICE
Respondent
Coram
:
Vivier, Olivier, Streicher, Zulman, JJ A and Mpati, A J A
Heard
:
29 November 2000
Delivered
:
19 March 2001
Summary
Address commission paid by a disponent owner of a
ship to the charterer is not expenditure for the purposes of section
11
bis
(4)
(f) of the income Tax Act 58 of 1962 as amended.
J U D G M E N T
OLIVIER
JA
[1]
The
issue on appeal is whether the appellant is entitled to deduct
the
so-called address commission paid by it as disponent owner of ships
to
charterers of these ships from its income for the years 1 October
1988
to
30 September 1992 as a marketing allowance for the purposes of
section
11
bis
(4) (f) of the Income Tax Act 58 of 1962 as amended (“the
Act”).
[2]
The
respondent (“the Commissioner”) disallowed the deduction
of
the
said commission. An appeal by the taxpayer, the appellant, against
such disallowance was dismissed by the Natal Income Tax
Special
Court, Galgut J presiding. The learned judge later granted leave to
the appellant to appeal the said decision to this
Court.
The
background
[3]
The
appellant conducts business in Durban as a ship charterer. It
is
a “domestic company” for the purposes of the Act, and is
liable for payment of income tax in terms of the Act.
[4]
The
appellant’s business operations were described as follows by
the
court
a
quo
:
“
The taxpayer’s business
operations consist of the chartering in by it of ships, and in turn
by chartering them out. When
chartering in it does so by means of
time charterparties, and when chartering out by means of either
voyage or time charterparties.
Unlike charters by demise, which are
charters whereby the vessel itself is leased to the charterer and is
therefore placed in
the possession and control of the charterer,
voyage and time charters are both contracts of carriage, in which the
owner retains
such possession and control and in which the owner
remains responsible for the navigation and management of the vessel.
In the case of a voyage charter the
carriage is on a defined voyage or series of voyages, the owner being
renumerated by the payment
of freight, which is usually fixed
according to the quantity of cargo shipped. The master and crew
remain the owner’s servants,
the owner retaining possession of
the vessel through them.
A time charter is one where, for a
specific period, the owner makes the vessel available to the
charterer, the consideration payable
by the charterer being fixed by
way of a rate for the time concerned (the rate being called hire,
despite the fact that it is not
a lease). Once again the owner
retains possession of the vessel through its master and crew, who
remain his servants, but the
charterer is entitled to determine how
the ship is to be used. Like in the case of a voyage charter, the
owner remains responsible
for the navigation and management of the
vessel, something that I will return to presently.
When a charterer in its turn charters
out the vessel, as does the taxpayer, for the purpose of chartering
out it is referred to
as the disponent owner. As such its
obligations to its charterer, whether it be a voyage or a time
charter, are essentially those
of an owner. It will therefore be
such a charterer out, as disponent owner, who will be responsible, to
the charterer at any
rate, for the navigation and management of the
vessel.
Important to the
issue in the instant appeal is the responsibility of an owner or
disponent owner for the navigation and management
of the vessel.
(In this regard any reference I make to an owner hereinafter will
include a disponent owner.) As part of the
said responsibility, and
in the absence of a provision to the contrary in the charterparty
concerned, in both voyage and time charters
it is the function and
obligation of the owner towards the charterer to arrange
inter
alia
that the vessel gets into and out of the ports it stops at and that
the loading and unloading are done, and in these connections
to pay
such disbursements as may be necessary, such as port charges, the
hire of labour, and the like. It even includes bribes
for the
purpose of getting a favourable berth. Because these services and
payments are vital to the issue in the instant appeal,
in the absence
of a better description I shall refer to them collectively as port
services.
What is at issue in the instant
appeal, as I said earlier, are so-called address commissions.”
[5]
Three
witnesses were called by the appellant to explain to the court
a
quo
the nature of address commission. The court
a
quo
summarised its nature and effect as follows:
“
These are peculiar to the
shipping industry, and have been in existence for a few centuries.
They are commissions paid by an owner
to a charterer. When such a
commission is demanded by a charterer it is because, despite the fact
that what I call the port services
are the obligation of the owner,
it is the charterer who, in the interests of the owner no less than
in its own interest, as a
rule
undertakes them. The address
commission is in other words paid by the owner for the benefit of
having the charterer undertake
the port services for which the owner
would otherwise have been responsible. The commission is not
reimbursive in the sense of
compensating the charterer for its
expenses, firstly because it is not only for disbursements but also
in part for services rendered
that it is intended to remunerate the
charterer, and secondly because to the extent that it serves to cover
disbursements that
the charterer will incur, it is not intended to be
an exact remuneration. On the contrary the amount, which is fixed
in advance,
is always expressed to be a percentage of ‘the hire
earned and paid’ under the charterparty, the percentage usually
being 1.25%. The percentage is by no means fixed, however, because
in some cases, very much in the minority, the address commission
is
not demanded by the charterer, and in other cases the percentage
demanded might be less or more that 1.25%.”
[6]
The
description by the judge
a
quo
of the nature and ambit of
“
address
commission” seems to me to be in accordance with the universal
understanding of that concept. In the Oxford English
Dictionary,
2
nd
ed, 1989 one finds as one of the meanings of the word “address”,
“ ... the action of directing or dispatching
(to a person or
place). Still said of ships.” As example the following is
quoted “1882 Charter-party, ship to be
addressed to Charterers
or their Agents at port of discharge, paying 3% address commission”.
See also the discussion of
“address commission” by
Ackner, L J in
Harmony
Shipping Co. S.A. v Saudi-Europe Line Ltd
(The
“Good Helmsman”)
,
Court of Appeal, 1981 vol 1 Lloyd’s Law Reports 377 at 419 -
421.
[7]
It
appears from the exhibits before the court
a
quo
that the address
commissions
claimed by the appellant for the years in issue were provided for in
terms of the written charterparties entered into
between the
appellant and the various charterers. The charterparties were
concluded on the commonly used
New
York Produce Exchange
form. Clause 28 thereof provides for the address commission and
reads as follows:
“
28 An address commission of
1.25% payable to charterers on the hire earned and paid under this
charter.”
[8]
The
peculiar character of the address commission is, therefore, that
it
is paid by the “lessor” to the “lessee”. Was
this commission deductible by the lessor from its income
for taxation
purposes?
The
Act
[9]
The
appellant relies on the provisions of section 11
bis
(4) (f) of the
Act.
In order to understand the provision, it is necessary to refer to
its history.
[10]
Section
11
bis
of the Act was enacted and introduced in 1962. It
created
a deduction which was additional to the usual deductions claimable by
a taxpayer who derived income from trade. It created
an exporter’s
“
market
development allowance
”
and at that time it was intended, and so worded, to benefit the
exporter of
goods
only (see section 11
bis
and the remarks in
Secretary
for Inland Revenue v Consolidated Citrus Estates Limited
1976 (4) SA 500
(A) at 510 E - G and 517 H).
[11]
In
1972, however, and by various amendments to section 11
bis
,
the
ambit of the section was broadened to embrace not only the export of
goods
,
but of certain
services
as well, such services being those which had to do with what the
section as amended called the “export service industry”.
For this purpose the definition of “exporter” was
supplemented to include, not only an exporter of goods, but also
any
person who conducted an export service industry, and the definition
of “export trade” was supplemented to include
any trade
recognised by the Minister of Finance under sub-section (4B) as an
export service industry. Sub-section (4B) provided
in turn that the
Minister might by notice in the
Government
Gazette
recognise as an export service industry any trade carried on in the
Republic if he was satisfied that in the course of that trade
income
was derived in a manner calculated to result directly in an inflow of
foreign currency into the Republic. Acting in terms
of sub-section
(4B), the Minister caused Government Notice no 1184 to be published
in
Government
Gazette
no 5208 dated 9 July 1976, and in terms thereof one of the trades
that he recognised as an export service industry for the purposes
of
section 11
bis
was that of the “owners or charterers of ships”.
[12]
It
is common cause that the appellant then duly took the necessary
steps,
and was registered as an exporter for the purposes of sub-section
(4C). Consequently it is not in dispute that for the
tax years in
question the appellant was involved in the “export service
industry” for the purposes of section 11
bis
,
and that it was an exporter as defined in sub-section 11 (1) and that
it would qualify for the exporter’s marketing allowance
should
it meet the other requirements of the section.
[13]
Section
11
bis
(2) provides that the marketing allowance would be
available
to exporters who have incurred the sort of
marketing expenditure
provided for in paragraphs (a) to (o) of sub-section (4), and
sub-section (3) provides that the marketing allowance would be an
amount equal to seventy-five percent of the marketing expenditure.
[14]
This
brings me to sub-section (4) and in particular to paragraph (f)
thereof.
It reads as follows:
“
(4)
For
the purposes of subsection (3) the marketing expenditure on which the
marketing allowance is to be calculated shall be so much
of the
expenditure incurred by the exporter during the year of assessment
and allowed to be deducted from his income under sections
11 and 17
as is proved to the satisfaction of the Commissioner to have been
incurred directly -
............
............
...
in
respect of commission or other remuneration for orders for goods
exported to any export country or the clearing or forwarding
of any
such goods in such country and,
in
the case of an exporter who carries on any trade defined or
recognised under subsection (4B) as an export service industry,
any
commission
or other remuneration for orders for services or goods obtained in
the course of such trade from persons based in an
export country
.”
(My italics)
[15] This
means that to qualify for the exporter’s marketing allowance,
the
marketing expenditure must be proved to be:
“
... so much of the expenditure
... as is ... incurred directly ... in respect of ... commission or
other remuneration for orders
for services ... obtained ... from
persons based in an export country.”
[16]
Grammatically
and logically one must insert the words “the
procurement
of” after the words “commission or other remuneration
for” in subparagraph (f). It is clear that,
as in the case of
the export of goods, the legislature intended to encourage the export
of services by a South African taxpayer
in order to stimulate an
inflow into the Republic of foreign currency, paid by the user of
such services. Subsection 11
bis
(4B) (a) says this in so many words.
[17]
It
follows that the situation envisaged by the legislator which would
qualify
for the benefits under section 11
bis
(4) (f), is one where the provider of services in South Africa,
ie
the taxpayer,
pays commission to an agent, to remunerate the agent for procuring
orders for the services of the South African taxpayer in question,
from persons based in a foreign country.
[18]
Only
if one reads the subsection in this way does it become
reconcilable
with the other provisions of section 11
bis
(4), where a marketing allowance is recognised for expenditure
incurred by the exporter for research into or obtaining information
(including the remuneration of consultants, agents or
representatives) in respect of the marketing of goods in any export
country
or for the rendering of services to persons based in an
export country (subparagraph (a)); in advertising in an export
country
or in soliciting orders in, or participating in trade fairs
in export countries (subparagraph (b)),
etc
.
[19]
The
position is thus that subparagraph (f) envisages that the South
African
exporter of a particular service employs an agent to procure orders
from users of that service in an export country. The
users pay the
service provider for the services provided; the agent is entitled to
a commission for the procurement of the order
for the services
provided by the South African exporter.
[20]
The
words “or other remuneration” must be read in the context
of
the
situation described above. It extends the concept of “commission”.
Perhaps
the intermediary who procures the orders for the exporter’s
service
is not an agent of whom it can be said that he earned a
commission.
He may be a broker or an intermediary, who does not work
for
a commission but for another form of remuneration,
eg
a salary.
Clearly
it was the legislature’s intention that whether it is
commission that
is
paid or any other form of remuneration, the amount thus paid by the
exporter
qualifies for tax deduction.
[21]
I
am, therefore, in respectful agreement with the view taken of the
meaning
of the word “commission” in the context of section 11
bis
(4)
(f) by Corbett CJ in
Commissioner
for Inland Revenue v Wandrag Asbestos (Pty) Ltd
[1994] ZASCA 148
;
1995 (2) SA 197
(A) (“
Wandrag
”).
In delivering a minority judgment the learned Chief Justice pointed
out at p 214 B that the word “commission”
is not a term
of legal art. He also referred to the Oxford English Dictionary
where “commission” is defined as
“
A
remuneration for services or work done as an agent, in the form of a
percentage on the amount involved in the transactions; a
pro
rata
remuneration to an agent or factor.”
[22]
The
learned Chief Justice dealt also with the phrase in section
11
bis
(4) (f) which is also now under consideration, but in the context of
the export of goods. He said (at 214 E) that the words “commission
or other remuneration for orders for goods exported to any export
country” are cryptic, but that their meaning is reasonably
clear. He then stated :
“
What the
Legislature had in mind, in my view, was expenditure incurred in the
payment of, or an obligation to pay, commission or
other remuneration
to a person for services rendered in obtaining orders for goods which
in terms of the order are exported to
any export country. ... A
simple, but typical, case satisfying the requirements of section 11
(
bis
)
(4) (f) would be where A, an exporter, has paid R 1 000 to agent B
for obtaining an order in terms of which a quantity of A’s
goods are sold to a purchaser in an export country.”
[23]
Because
the judgment of the learned Chief Justice was a minority
one,
it is necessary to analyse the facts of the case and the
ratio
of the majority judgment in order to ascertain whether the view put
forward in paragraphs [17] to [20] is correct. The facts
in
Wandrag
were the following: Wandrag was a mining concern, mining and
producing asbestos at Kuruman. Towards the end of 1967, and in
order to secure the marketing of its asbestos,
Wandrag
concluded a contract with Griqualand Exploration and Finance Co Ltd
(“Gefco”), which was also a producer and
seller of
asbestos. Wandrag’s aim in the contract was to make use of
Gefco’s existing facilities both for upgrading
Wandrag’s
product (Gefco would further fiberise and blend it with its own
fibres) and for marketing the product overseas.
Having blended
Wandrag’s fibres with its own, Gefco would export the product
to overseas buyers acquired by Gefco through
its marketing
facilities. Clause 4 (a) of the agreement provided that Gefco was
entitled to a “selling commission of 15%
on the fob price of
the fibre”. The Commissioner disputed that the 15%
“commission” constituted marketing expenditure
within the
meaning of that term in section 11
bis
(4)
(f), because the “selling commission” so called in the
contract was not a true commission.
[24]
The
Commissioner argued that the contract was in reality one of
sale,
and the “commission” clause was merely a mechanism to
calculate the net price to be paid by Gefco. Wandrag argued
that
the contract was one of agency or, alternatively, a joint venture.
[25]
The
majority held that the contract was
sui
generis
,
but that its
purpose
was clear : Wandrag was totally dependent upon an export market but
lacked the marketing and processing facilities to
obtain such a
market. The agreement enabled Wandrag to overcome this problem.
The reciprocal benefit it held for Gefco was that
it eliminated
potential competitors in the export market (at 206 G-H per Kumleben
JA on behalf of the majority).
[26]
The
majority held that the “commission” payable by Wandrag to
Gefco
was commission as envisaged in section 11
bis
(4) (f). Kumleben JA (at 208 F - H) stated as follows:
“
It cannot be
gainsaid that this payment was, and was intended to be, remuneration
for Gefco for such procurement through its (Gefco’s)
appointed
agents and perhaps employees. It was conceded that had Wandrag
appointed and paid its own foreign agents for this purpose,
the
expenditure would have been directly incurred by Wandrag whether or
not they in turn appointed subagents who actually secured
the orders.
I can see no distinction in principle between that situation and
the present in which Gefco was commissioned and
paid to undertake
this task and it in turn appointed agents who obtained the orders.
It is true that the agreement as a whole
cannot be classified as one
of agency. But, on the assumption that the selling commission in
clause 4 (a) was the
quid
pro quo
for marketing Wandrag’s asbestos and for nothing else, one may
validly regard this term of the agreement as one of agency
in the
sense of a mandate given by Wandrag (the mandator) to Gefco (the
mandatory) in terms of which the latter undertook to perform
the task
of procuring orders for export for the former.”
[27]
The
view taken in paragraphs [17] to [20] hereof in respect of the
interpretation
of section 11
bis
(4) (f) is therefore in line with the interpretation given to it by
both the majority and by the learned Chief Justice,
ie
that the true meaning of “commission or other remuneration”in
section 11 bis (4) (f) represents, in a case such as
the present, an
amount paid by the disponent owner to an agent or broker or other
intermediary who obtains, from a third party
in an export country,
orders
for the services provided by the disponent owner
.
[28]
The
question then becomes a factual one : can it be said that in the
cases
now under consideration the charterers acted as agents, brokers or
some other form of intermediary for the appellant in the
procurement
of
orders
for the services
,
provided
by the appellant
,
by users of such services in an export country?
[29]
As
was correctly pointed out by the judge
a
quo
,
address
commission
is paid by the disponent owner to the charterer for the benefit of
having the charterer undertake the port services for
which the owner
would otherwise have been responsible. The “commission”
is not reimbursive in the sense of compensating
the charterer for its
expenses, firstly because it is not only for disbursements made by
the charterer but also in part for services
rendered by it at the
port of discharge, and secondly because, to the extent that it serves
to cover disbursements that the charterer
may incur, it is not an
exact remuneration.
[30]
In
a certain sense one can describe the charterer who undertakes
and
pays for the port services for which the owner would otherwise have
been responsible as the agent of the disponent owner.
Non
constat
that the “commission” paid qualifies for the benefits
provided by section 11 bis (4) (f) of the Act. The disponent
owner
who pays address commission to the charterer of the owner’s
ship does not pay such commission to remunerate the charterer
for
procuring orders
for
the services of the disponent owner
.
On the contrary, the commission is paid as remuneration
for
port services rendered by third parties for the benefit of the
disponent owner
.
This commission is not paid as a marketing expenditure incurred for
the procurement of orders for the services rendered
by
the taxpayer (the disponent owner), but is an expenditure for the
procurement of port services rendered
to
the taxpayer. It follows that “address commission” does
not qualify for the tax benefits in terms of section 11 bis
(4) (f)
of the Act.
[31]
In
the result, the appeal is dismissed with costs, including the costs
of
two counsel.
P
J J OLIVIER JA
STREICHER JA:
[1]
I agree with Olivier JA
that the so-called address commissions to which the charterers were
entitled in terms of the relevant charterparties
did not constitute
marketing expenditure which entitled the appellant to a marketing
allowance in terms of s 11
bis
of the Income Tax Act 58 of 1962.
[2]
In terms of s 11
bis
(2)
an exporter who has during the year of assessment incurred marketing
expenditure (determined as provided in s 11
bis
(4))
is allowed to deduct from his income a marketing allowance determined
as provided in s 11
bis
(3).
S 11
bis
(4)(f) provides
as follows:
“
(4) For the purposes of subsection (3) the
marketing expenditure on which the marketing allowance is to be
calculated shall
be so much of the expenditure incurred by the
exporter during the year of assessment and allowed to be deducted
from his income
under sections 11 and 17 as is proved to the
satisfaction of the Commissioner to have been incurred directly-
. . .
in respect of commission or other remuneration for
orders for goods exported to any export country. . .and, in the
case of
an exporter who carries on any trade defined or recognized
under subsection (4B) as an export service industry, any commission
or other remuneration for orders for services or goods obtained in
the course of such trade from persons based in an export
country;”
[3]
It is common cause
between the parties that the appellant does business in Durban and
that it is an “exporter” carrying
on a trade, namely
that of a charterer of ships, “recognized as an export service
industry” within the meaning of
those words in the section. It
follows that in order for the address commissions to qualify as
marketing expenditure on which
a marketing allowance could be
calculated they had to be expenditures which had been incurred
“directly” in respect
of “any commission or other
remuneration for orders for services or goods obtained in the course
of” the trade of
the appellant, within the meaning of those
words in s 11bis(4)(f). Whether that was the case is the issue to be
decided in this
appeal.
[4]
At all material times
the appellant’s mode of carrying on business was to charter
ships in and to charter ships out. Both
charters in and charters
out by the appellant were either time or voyage charters. In the
case of a time as well as a voyage
charter the services of the
vessel were made available to the charterer, but possession of the
vessel and employment of the master
and the crew remained with the
owner of the vessel.
[5]
In terms of the relevant
charterparties between the appellant and the charterers an address
commission was payable by the appellant
to the charterers. The
appellant tendered evidence as to what an address commission was.
According to this evidence, historically,
vessels were addressed to
the master of the vessel or an agent at the port of loading or
discharging and an amount of money was
provided by the owner to the
master or to the agent for whatever services were required in
respect of the ship in a port, for
example services required for
getting the ship in and out of the port and for the loading and the
discharging of the cargo.
That is the origin of the expression
“address commission”. At present, according to the
evidence, when a ship is
chartered, it is the charterer who has to
render the service of providing the cargo for the vessel and who has
to ensure that
the vessel gets into the port, loads and gets out
quickly. In most cases the charterer requires an address commission
to be
paid by the person from whom he charters the ship in respect
of the provision of such services. In short an address commission
is, according to the evidence tendered by the appellant, a
commission payable for the provision of services in respect of a
ship. However, the address commission is not actually paid to the
charterer, it is deducted from the hire at the time the hire
is
paid.
[6]
The standard form of
charterparty approved by the New York Produce Exchange is the form
most commonly used by the appellant.
In terms of clause 2 of one
such charterparty referred to in the evidence the charterer is
obliged to pay for all “Port
Charges, Compulsory Pilotages,
Canal Dues, Agencies, Commission, Consular Charges (except those
pertaining to the Crew), and
all other usual expenses except those
before stated . . . ”.In terms of clause 8 thereof the
charterers “are to load,
stow, trim, secure and discharge the
cargo at their expense under the supervision and responsibility of
the Captain, . . .”
.Clause 28 thereof provides as follows:
“An address commission of 2½ per cent payable to
Charterers on the hire
earned and paid under this Charter.”
[7]
On behalf of the
appellant it was submitted that the payment of an address commission
was required by the relevant charterers
and that it was therefore a
commission paid for an order for services (being the agreement to
charter a ship) as required by
s 11bis (4)(f). It was suggested to
counsel for the appellant that if the address commissions were not
commissions they could
nevertheless qualify as remuneration.
However, counsel persisted in his argument that they were
commissions.
[8]
In my view it cannot be
said that the address commissions were commissions or remuneration
for the orders received from the charterers.
In
Commissioner
for Inland Revenue v Wandrag Asbestos (Pty) Ltd
[1994] ZASCA 148
;
1995 (2) SA 197
(A) this court had to decide whether what was called
a “selling commission”, payable by Wandrag Asbestos
(Pty) Ltd
(‘Wandrag’) to Griqualand Exploration and
Finance Co Ltd (‘Gefco’)
,
in clause 4(a) of an agreement which spoke of a
sale of asbestos by Wandrag to Gefco, was a commission within the
meaning of that
word in s 11
bis
(4)(f).
Corbett CJ said at 214B-D:
“
Turning to para (f) of s 11
bis
(4),
I would point out that the word ‘commission’ is not a
term of legal art. The relevant meaning in the
Oxford English Dictionary
reads:
‘
A remuneration for services or work done as
agent, in the form of a percentage on the amount involved in the
transactions; a
pro rata
remuneration to an agent or factor.’
In
Drielsma v Manifold
[1894] 3 Ch 100
, at 107, Davey LJ said:
‘
Commission is
prima facie
the payment made to an agent for agency work, usually according to a
scale - it may be an
ad valorem
scale, but not necessarily an
ad valorem
scale, It is in my opinion the most general word that can be used to
describe the remuneration paid to an agent for an agency
work other
than a salary. . .’ ”
Although Corbett CJ found it unnecessary to decide
exactly how much wider the net was spread by the words ‘other
remuneration’
he did say at 214E:
“
The words ‘commissions or other
remuneration for orders for goods exported to any export country’
are cryptic, but
I think that their meaning is reasonably clear.
What the Legislature had in mind, in my view, was expenditure
incurred in the
payment of, or an obligation to pay, commission or
other remuneration to a person
for services
rendered in obtaining orders
for goods which
in terms of the order are exported to any export country.” (My
emphasis.)
[9]
The address commissions
were not payable to the charterers as agents and it was not
submitted on behalf of the appellant that
they were. What was
submitted was that Corbett CJ’s judgment was a minority
judgment and that the majority held that an
amount paid by Wandrag
as seller to Gefco as purchaser qualified as a commission within the
meaning of that word in s 11
bis
(4)(f).
Corbett CJ’s judgment was a minority judgment but there is no
indication in the majority judgment that the majority
disagreed with
him in respect of the meaning of the word ‘commission’
or in respect of the meaning of the words “commissions
or
other remuneration for orders for goods” in s 11
bis
(4)(f)
.
On the contrary, they would seem to have agreed. It is probably for
this reason that Kumbleben JA found it necessary to hold,
firstly at
206E, that if one had regard to substance rather than form, the
agreement between Wandrag and Gefco could not be said
to be one of
sale, and secondly, at 208H:
“
It is true that the agreement as a whole cannot
be classified as one of agency. But, on the assumption that the
selling commission
in clause 4(a) was the
quid
pro quo
for marketing Wandrag’s
asbestos and for nothing else, one may validly regard this term of
the agreement as one of agency
in the sense of a mandate given by
Wandrag (the mandator) to Gefco (the mandatory) in terms of which
the latter undertook to
perform the task of procuring orders for
export for the former”
[10]
To me it is likewise
reasonably clear that the words ‘commission or other
remuneration for orders for services or goods
obtained in the course
of . . . trade from persons based in an export country’ in the
second part of s 11
bis
(4)(f)
are to be interpreted to mean expenditure incurred in the payment
of, or an obligation to pay, commission or other remuneration
to a
person
for services rendered in obtaining
orders
for services or goods in the course
of a trade recognized as an export service industry, from persons
based in an export country.
[11]
The question to be
decided is therefore whether the address commissions constituted
payments to persons for services rendered
in obtaining the orders
that is to say for services rendered in obtaining the charterers’
agreement to charter the ships.
In my view they did not. The
charterer of a ship does not by simply placing the order to charter
the ship render a service to
the owner or the disponent owner
(himself a charterer) of the ship. If an address commission is paid
simply because of the order
being placed or as an inducement to
place the order and not for services
to be rendered in respect of the ship it is in the
nature of a discount and not for services rendered in obtaining the
order.
[12]
In any event, the
evidence establishes that the address commissions were not agreed to
simply because of the order being placed
or as an inducement for the
placing of the order but were agreed to as remuneration to the
charterers for services to be rendered
by them in respect of the
ships chartered. However, those services were services that were to
be rendered after conclusion of
the relevant charterparties, as a
result of the conclusion of the charterparties and were thus not
rendered in obtaining the
charterers’ agreement to charter the
ships. The fact that the charterers required to be paid an address
commission and
that the charters would probably have been lost had
appellant refused to pay address commissions does not change the
nature of
the services in respect of which the address commissions
were to be paid, they were still not payable for services rendered
in
obtaining the charters.
[13]
For these reasons I
agree that the appeal should be dismissed with costs including the
costs of two counsel.
__________________
P E STREICHER JA
Vivier, JA)
Zulman, JA)
Mpati, JA) concur