REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number: 236/03
Reportable
In the matter between:
THE DIRECTOR-GENERAL:
DEPARTMENT OF TRADE
AND INDUSTRY FIRST APPELLANT
THE MINISTER OF TRADE
AND INDUSTRY SECOND APPELLANT
and
SHURLOCK INTERNATIONAL
(PTY) LIMITED RESPONDENT
CORAM
: HARMS, FARLAM, MTHIYANE, NUGENT
JJA et VAN HEERDEN AJA
HEARD: 2 MARCH 2004
DELIVERED
: 25 MARCH 2004
SUMMARY: General Export Incentive Scheme Guidelines (Revision 2) – whether
exporter must repay an incentive payment if original documents listed in para 3.9 of
Scheme Guidelines cannot be produced within five year period thereafter.
________________________________________________________
JUDGMENT
________________________________________________________
FARLAM JA
2
[1] The issue for decision in this appeal is whether, upon a proper
interpretation of Revision 2 of th e General Export Incentive Scheme
Guidelines (which became effectiv e on 1 October 1992), an exporter
whose claim for payment of an expo rt incentive unde r the Scheme had
been checked and paid by the Departm ent of Trade and Industry and who
is unable subsequently within the fi ve year period pr ovided for in the
Scheme Guidelines to furnish the orig inal documents listed in paragraph
3.9 thereof will automatically forfeit his right to the earlier payment.
[2] The scheme, which I shall hereinafter call GEIS, was introduced as
a State prerogative. It was designed to encourage the export of certain
goods in order to generate foreign currency income for the country. The
essential features of the original export incentive scheme introduced by
the Department of Trade and Industry and of GEIS, which replaced it,
have been considered by this Court in Dilokong Chrome Mines (Edms)
Bpk v Direkteur-Generaal, Departeme nt van Handel en Nywerheid 1992
(4) SA 1(A) and South African Co-operative Citrus Exchange Ltd v
Director-General: Trade and Industry and Another 1997 (3) SA 236
(SCA). In both of these cases (the Dilokong Chrome case at 22E and
32A-C and the Co-operative Citrus case at 239F) it wa s pointed out that
the scheme has pro tanto the force of legislation and must be interpreted
in the same manner.
[3] The paragraph to be interpreted in this case is paragraph 3.11, read
with paragraphs 3.9 and 3.10.
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These paragraphs read as follows:
‘3.9 The following documentary evidence in substantiation of claims is required:
Bill of Entry for Export (DA550 or DA25 or DA28 as the case may dictate),
Declaration in Regard to Foreign Exchange Proceeds (F178), Bill of Lading (or Air
Waybill) and Commercial Invoice. Of these documents, certified copies of the DA550
(or DA25 or DA28) and the F178 must be submitted with claims. The original copies
of all the above-mentioned documents must be kept available for inspection by the
Department for a period of at least five years. The Department may, however, request
the submission of any further export documents such as the Commercial Invoice
and/or the Bill of Lading (Air Waybill) at any time, if it so desires.
3.10 The Department will check all claims and make a determination as regards the
amount of the claim.
3.11 The decision by the Director-General as to the eligibility of any product for
benefits under the General Export Incentive Scheme as well as the determination of
the amounts of the incentives will be final and conclusive. Nothing in this document
shall be construed as an offer open to acceptance constituting any contractual or in
fact any other obligation or any enforceable right against the Department. The
Director-General may at any time conduct a full-scale investigation to verify any
information furnished by a claimant. If the Di rector-General is satisfied that the claim
was based on false information or that the claimant has furnished misleading
information, he may disallow the claim and recover the full amount paid out to the
claimant. Interest on bona fide overpayments will be levied at the rate prescribed in
terms of section 1(2) of Act No. 55 of 1975.’
[4] The Department of Trade and Indus try became liable in June 2000
to pay the respondent, an exporter, an amount of R387 644 as its export
incentive under the scheme for the period 1 January 1997 to 11 July 1997.
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It refused to pay this amount to th e respondent because, so it contended,
the respondent was obliged to repay to it sums totalling R106 422,
which had previously been paid as export incentives (plus interest
thereon) to the respondent in respect of the pe riods from July 1992 to
December 1992 and from January 1993 to June 1993. The respondent
instituted an action in the Transvaa l Provincial Division of the High
Court against the Director-General of the Department and the Minister of
Trade and Industry claiming payment of the amount of R387 644 plus
interest and costs. The appellant defe nded the action. They admitted that
the respondent became entitled to payment of the amount claimed but
averred that the department’s indebt edness to the respondent in this
amount was extinguished by set-off. Th e defence of set-off was based on
the allegation that the respondent o wed the Department the amount of
R1 066 422 to which I ha ve referred above. The first appellant also
brought a counterclaim against the respondent for R678 778, being the
balance of the amount of R1 066 422 (a fter deduction of the respondent’s
claim of R387 644) which he alle ged the respondent owed to the
department.
[5] The first appellant’s contention that the amount of R1 066 422 was
repayable to the department was ba sed on the fact that the documents
which the respondent was obliged to keep for five years were lost when it
moved offices at some stage after the export incentives in question were
paid. Although the first appellant orig inally averred also that he was
5
satisfied that the respondent had furnished misleading information in
respect of the claims, this contenti on was abandoned before the trial
commenced. (At no stage was it allege d that the responde nt’s claims had
been based on false information.)
[6] At the trial there remained two issues for determination, viz.
(a) whether the payments made to the respondent in respect of the
claims for the two periods refe rred to in para 4 above were
provisional payments which were conditional upon the claims
being capable of verification; and
(b) whether the automatic consequen ce of the respondent’s having lost
the relevant documents and thus being unable to furnish them to
the department on request was that the department became entitled
to recover the amounts paid to the respondent in respect of its
claims for the said periods.
[7] The trial came before De Vos J, who rejected both of the
contentions advanced on be half of the appellants and gave judgment in
favour of the respondent in the amount claimed. The present appeal is
against that judgment.
[8] Counsel for the appellants c ontended that upon a proper
interpretation of the GEIS Guidelines a claimant’s entitlement to payment
of an export incentive is conditional upon compliance with its obligation
to keep for verification purposes the prescribed documents and that the
respondent, having lost the docume nts in question before a full-scale
6
investigation as envisaged by paragraph 3.11 had been conducted, was
not entitled to retain the benefit of the payments received, which (so it
was contended) were provisional. In de veloping this submission counsel
contended that the Guidelines en visage a two-phase process of
determination by the department of an exporter claimant’s entitlement to
the incentive. The first phase, which is conducted in terms of paragraphs
3.9 and 3.10, culminates in what was described as a provisional
determination, which is followed by a provisional payment. The
provisionality of the determination a nd of the subsequent payment falls
away and the initial determination an d payment become final either on
the effluxion of the five year period re ferred to in paragraph 3.9 or when
a full-scale investigation under paragrap h 3.11 leads to the verification of
the claim.
[9] Counsel conceded that neither the provisionality of the initial
determination and the subsequent pa yment nor the conditionality of a
claimant’s entitlement to an in centive were expressly stated in the
Guidelines but he submitted that they were a necessary inference from the
Guidelines. When asked to formul ate what precisely the necessary
inference was, he said that it read as follows: the entitlement to the
incentive is conditiona l upon compliance by the claimant with the
obligation imposed upon the exporter in the third sentence of paragraph
3.9. This obligation he contende d was a mandatory obligation. It
followed, so he submitted, that a mere failure on the part of the exporter
7
to keep the necessary original do cumentation led automatically to
forfeiture of the entitlement even if certified copi es were available and/or
a full-scale investigation to verify the entitlement was still possible.
(As a fact copies of all the neces sary documents were not available and a
full-scale investigation to verify the entitlement was not possible. This is,
however, not relevant in the present matter because the correctness of
counsel’s submission has to be tested in the context of cases where copies
are available and where a full-scale inve stigation is possible. It is also
only fair to the respondent to record that the appellants accepted that the
respondent had acted bona fide at all times and that the loss of the
documents in the present case does not give rise to any sinister inference.)
In my opinion it is not possible to draw the necessary inference for which
counsel contended.
[10] On the face of it there is no e xpressly stated sanction for a failure
on the part of an exporter to keep the necessary documents but it hardly
needs stating that such a failure may well give rise, in appropriate cases,
first to a suspicion and thereafter satisfaction on the part of the first
appellant that a claim was either based on false information or that
misleading information had been furnis hed. If the first appellant were so
satisfied, then the necessary jurisdic tional fact for the invocation by him
of his power to disallow a claim a nd recover the full amount that had
been paid would be present. It is significant in my view that the first
appellant’s power to disallow a clai m and to recover what was paid was
8
expressly made subject to the pr esence of one or other of the
jurisdictional facts I have mentione d. It is clear, however, from the
wording used that, even if one or othe r of those jurisdictional facts were
present, the first appellant still had a discretion as to whether he would
use his power to disallow a claim. On the other hand, if counsel’s
argument is correct, the mere failure of an exporter to keep the necessary
original documents (even if such fa ilure were due to a factor entirely
beyond his control, such as a fire at his premises, and even if the missing
documentation could be reconstructed and/or a full scale investigation
still be conducted) will l ead automatically to a fo rfeiture of the claim,
which would be a very harsh result indeed.
[11] I cannot see the necessity to dr aw such an inference from the
wording of the Guidelines nor do I see any necessity to read in the word
‘provisional’ in paragraph 3.10 before the word ‘determination.’ After all,
the determination in paragraph 3.10 was intended to follow the
submission of certified copies of th e bill of entry for export and the
declaration in regard to foreign ex change proceeds and the department
had the full right, while checking a claim and before making a
determination, to request the submission of any further export documents.
It is true that claims were provisiona l in the sense that they were subject
to disallowance by the appellant, but on the plain wording of paragraph
3.11 the power of disallowance was made expressly subject, as I have
said, to the presence of one or othe r of the jurisdictional facts stated,
9
neither of which is present in this case.
[12] In the circumstances I am satisfied that the contentions advanced
by counsel for the appellants cannot be accepted and it follows that the
appeal must fail.
[13] The following order is made:
The appeal is dismissed with costs, including those occasioned by the
employment of two counsel.
……………..
IG FARLAM
JUDGE OF APPEAL
CONCURRING
HARMS JA
MTHIYANE JA
NUGENT JA
VAN HEERDEN AJA