REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
( I) REPORTABL E: NO Case Number: 2026-124143
(2) OF INTEREST TO OTHER JUDGES: NO
(3/:; /2bREV ISE
DATE r . SIGNATU RE
In the matter between:
MBONENI BENEDICTA MAUMELA
and
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
WENTZEL-THOMPSON J
Introduction
JUDGMENT
Applicant
Respondent
..
[1] This application came before me in the urgent c6ud-under circumstances where
the matter was no longer urgent. This notwithstanding , counsel for the applicant
proceeded in seeking punitive costs ir:, the urgent court, that I ought properly
never to have permitted . Costs are generally never urgent and should not occupy
the time of extremely busy urgent courts.
[2] The applicant initially sought urgent interim relief restraining the respondent, the
Commissioner for the South African Revenue Service ("SARS"), from enforcing
payment of an assessed tax debt owing by the applicant pending the
determination of review proceedings directed at SARS' refusal to suspend
payment in terms of s 164 of the Tax Administration Act 28 of 2011 ("the T AA").
[3] In its application, the applicant challenged SARS' refusal to suspend payment.
Before the Court was required to adjudicate the merits of that challenge, SARS
revisited its decision and withdrew it. The consequence was that the principal
relief sought in the notice of motion ceased to be contentious, leaving only the
appropriate order as to costs for determination.
[4] As a consequence, the hearing became concerned solely with the question of
costs, and more particularly whether the respondent's conduct justified an order
directing it to pay the applicant's costs on the punitive attorney and client scale.
[5] Although the issue remaining for determination is confined to costs, it raises
questions of broader significance concerning the proper exercise of the Court's
discretion where litigation is rendered unnecessary by the subsequent conduct
of one of the litigants. It also requires consideration of the statutory framework
created bys 164 of the TAA, the legislative policy commonly described as the
"pay now, argue later" principle, and the extent to which the withdrawal of an
administrative decision after litigation has commenced may properly influence
the nature of the costs order ultimately made.
The arguments advanced by the parties
[6] The applicant submitted that the respondent's withdrawal of its refusal to
suspend payment amounted, in substance, to an acknowledgment that the
urgent application ought never to have been necessary. It was contended that
the respondent had failed to respond appropriately to the applicant's requests
the respondent had failed to respond appropriately to the applicant's requests
before litigation commenced and had only reconsidered its position once served
with court papers. On that basis, counsel argued that the respondent's conduct
warranted not merely an adverse costs order but the Court's marked disapproval
through an award of attorney and client costs.
[7] SARS refuted its obligation to pay the costs of the application, let alone the
punitive costs sought by the applicant. The respondent maintained that the
withdrawal of its decision had occurred through its ordinary administrative
processes rather than as a consequence of the institution of proceedings. It
further emphasised that SARS administers a complex statutory scheme involving
the collection of national revenue and the consideration of numerous requests
for suspension of payment under s 164 of the T AA. The mere fact that
reconsideration occurred after proceedings had been launched, it argued, did not
establish mala fides, unreasonableness or conduct deserving of censure
warranting a punitive order of costs.
[8] In my view, the applicant was justified in approaching the Court on an urgent
basis. Equally, however, I am unable to conclude that the respondent's conduct
in not previously consenting to an Order staying its obligation to pay the assessed
amount was so unreasonable, oppressive or reprehensible as to justify the
exceptional order sought. Whilst the chronology of events plainly supports an
award of costs in the applicant's favour, it does not follow that it warrants a
departure from the ordinary rule that such costs should be taxed on the party and
party scale.
The statutory framework
[9] The dispute arises against the backdrop of the statutory scheme established by
the T AA. The Act was enacted to provide a coherent framework for the
administration of tax, balancing the imperative of efficient revenue collection
against the procedural rights afforded to taxpayers who dispute assessments or
other administrative decisions.
[1 O] Central to the present matter is s 164 of the T AA. That section embodies a
legislative policy of long standing in South African revenue law, namely that the
lodging of an objection or appeal does not suspend the taxpayer's obligation to
pay tax. Unless SARS exercises its statutory discretion to suspend payment, the
pay tax. Unless SARS exercises its statutory discretion to suspend payment, the
assessed tax remains payable notwithstanding the existence of pending dispute
resolution proceedings, objections or appeal proceedings .
[11] Section 164(1) accordingly provides that the obligation to pay tax, and SARS'
entitlement to recover tax, are not suspended merely because an objection or
appeal has been lodged. Subsection (2) empowers a senior SARS official to
suspend payment having regard to the circu_mstances of the particular case,
whilst subsection (3) identifies a non-exhaustive list of factors to which regard
may be had in exercising that discretion. Those include the taxpayer's
compliance history, the risk of dissipation of assets, the taxpayer's ability to
furnish security, the prejudice likely to be suffered by either party and whether
the taxpayer is able to demonstrate irreparable hardship if payment is enforced
before the dispute is finally determined.
[12] Parliament has therefore deliberately departed from the ordinary consequence
that might otherwise follow from the institution of legal proceedings. Whereas
litigation ordinarily suspends enforcement until rights have been finally
determined, the TAA reverses that position in relation to tax debts. The
assessment remains enforceable unless SARS decides otherwise. The
discretion conferred by s 164 is consequently exceptional and is directed at
mitigating hardship in appropriate cases without undermining the fundamental
objective of securing the fiscus' ability to collect revenue efficiently.
[13] The constitutional validity of this legislative policy was confirmed more than two
decades ago by the Constitutional Court in Metcash Trading Ltd v Commissioner ,
South African Revenue Service .1 In rejecting the contention that the predecessor
provisions unjustifiably limited the constitutional right of access to courts, Kriegler
J observed that the uninterrupted collection of revenue constitutes a matter of
considerable public importance. Government cannot function if taxes become
routinely unenforceable pending lengthy disputes. The legislature was
accordingly entitled to require payment first whilst simultaneously creating
accordingly entitled to require payment first whilst simultaneously creating
mechanisms through which taxpayers might challenge assessments and, in
appropriate cases, obtain administrative relief from the obligation to pay
immediately.
1
Metcas h Trading Ltd v Commissioner, South Africa n Revenue Service 200 l ( I) SA 11 09 (CC) paras 46-62.
[14] That principle has repeatedly been reaffirmed by our Courts. The Supreme Court
of Appeal has consistently recognised that the "pay now, argue later" regime
serves an important fiscal purpose and that suspension of payment constitutes
an exception rather than the rule.2 It follows that a taxpayer enjoys no entitlement
as of right to the suspension of payment merely because an objection or appeal
has been noted. The power remains a discretionary one vested in SARS, to be
exercised judicially and in accordance with the statutory criteria.
[15] The statutory scheme also recognises that administrative decisions are not
immutable and SARS is not functus officio as are judges. Section 9 of the T AA
empowers SARS, in specified circumstances, to withdraw or correct decisions
where it is satisfied that this is warranted. The existence of that power reflects an
important feature of modern administrative tax governance; administrative
decision-makers are not invariably required to persist in defending decisions
once they become persuaded that reconsideration is appropriate. On the
contrary, good tax administration often requires the correction of decisions
without compelling a litigant to approach the courts to pronounce upon their
validity.
[16] The present matter illustrates precisely such a situation where the respondent,
after receiving the current application or, on its version, correspondence from the
applicant, exercised its discretion to reconsider and withdraw its decision.
The factual background
[17] The material facts are largely common cause. During October 2024, SARS
raised additional assessments against the applicant in respect of the 2017 to
2023 tax years, resulting in an alleged liability of approximately R39.9 million
inclusive of penalties and interest. The applicant objected to those assessments
2
See, for examp le, Commissioner for the South African Revenue Service v Capstone 556
(Pty) L td 2016 (4) SA 68 (SCA); Commissioner for the South African Revenue Service v
(Pty) L td 2016 (4) SA 68 (SCA); Commissioner for the South African Revenue Service v
Hawker Air Services (Pty) Ltd 2006 ( 4) SA 292 (SCA).
and, contemporaneously , requested that payment of the disputed tax be
suspended in terms of s 164 of the T AA pending the resolution of the tax dispute.
[18) The request for suspension was refused. In a written decision SARS explained
that it considered, amongst other matters, the statutory factors identified in s
164(3). It concluded that there was prima facie evidence of fraud, that the
applicant had failed to establish irreparable hardship, that she possessed
substantial assets and income, and that the interests of the fiscus outweighed
any prejudice asserted by the taxpayer. SARS accordingly required payment of
the outstanding tax debt and advised that collection proceedings could follow in
the event of non-payment.
[19] The applicant disputed both the correctness of the underlying assessments and
the lawfulness of the refusal to suspend payment. She maintained that SARS
had misconstrued the evidence, had failed properly to evaluate the statutory
criteria prescribed bys 164(3), and had reached conclusions unsupported by the
available material. Those issues, however, never ultimately came before the
Court for adjudication because the respondent subsequently withdrew the
impugned decision.
The institution of the urgent application
[20] Following SARS' refusal to suspend payment, the applicant's attorneys
addressed further correspondence to the respondent requesting that the decision
be reconsidered and that payment of the assessed tax be suspended pending
the final determination of the underlying tax dispute. The correspondence made
plain that, absent such reconsideration, the applicant intended approaching this
Court on an urgent basis for appropriate interim relief.
[21) It is common cause that the reconsideration sought was not granted.
Accordingly, the applicant accordingly launched the present application on an
urgent basis. In Part A of the notice of motion the applicant sought interim relief
restraining SARS from enforcing payment of the disputed tax debt pending the
restraining SARS from enforcing payment of the disputed tax debt pending the
determination of review proceedings directed at the lawfulness of the refusal to
suspend payment. Part B contemplated the review and setting aside of that
administrative decision. The notice of motion further sought costs on the attorney
and client scale in the event that the application was opposed.
[22] The founding affidavit emphasised the enormous amount of the assessed liability
and the prejudice which the applicant contended would result were SARS to
proceed with collection before the review could be determined. The applicant
alleged that the refusal to suspend payment was reviewable because SARS had
failed properly to apply the statutory criteria contained in s 164(3) of the T AA,
had reached irrational conclusions on the evidence before it and had thereby
exercised its statutory discretion unlawfully.
[23] Those allegations were met by a comprehensive answering affidavit in which
SARS defended the lawfulness of the impugned decision and disputed the
existence of urgency. The respondent maintained that the senior SARS official
who considered the application had taken into account each of the factors
identified by the legislature and had exercised the discretion entrusted to SARS
in a manner that could not be impugned on review. The merits of those competing
contentions, however, ultimately ceased to require determination on withdrawal
of the impugned decision.
[24] This is because, before the matter was argued, SARS withdrew the decision
refusing the suspension of payment. The effect of that withdrawal was that the
proceedings before me became academic.
[25] Accordingly , at the hearing before me, the argument became confined to the
appropriate costs order.
The parties ' submissions
[26] On behalf of the applicant it was submitted that SARS' conduct justified the
exceptional order of attorney and client costs. Counsel argued that the
application should never have been necessary because the applicant had alerted
SARS to its intention to seek urgent relief and had afforded it an opportunity to
reconsider its position before litigation became necessary. Notwithstanding that
reconsider its position before litigation became necessary. Notwithstanding that
opportunity, so the argument goes, SARS had persisted in maintaining the
refusal to suspend payment. The applicant's counsel maintained that it was only
after the application had been served that the respondent withdrew its decision
and consented to the relief sought. The applicant submitted that the chronology
itself demonstrated that the institution of proceedings had been necessary to
secure the relief ultimately obtained.
[27] It was further argued that, had SARS acted reasonably, it would have suspended
payment or, at the very least, agreed not to pursue collection measures pending
reconsideration of the applicant's request. By failing to do so, SARS compelled
the applicant to incur the considerable expense associated with urgent High
Court proceedings. Counsel submitted that ordinary costs would not adequately
compensate the applicant for having been forced to resort to litigation in
circumstances where the respondent subsequently accepted that the impugned
decision should be withdrawn.
[28] SARS approached the matter differently; it disputed that its conduct warranted
judicial censure. Counsel emphasised that the respondent had not withdrawn its
decision because proceedings had been instituted but because the matter had,
in due course, progressed through the respondent's internal administrative
processes and a decision in the normal course had been taken to review and
ultimately, withdraw its decision. It was submitted that no inference could
properly be drawn from the mere fact that reconsideration occurred after litigation
had commenced.
[29] SARS further stressed the statutory environment within which it operates
requires the determination of an enormous number of objections, appeals and
requests for suspension of payment. Decisions of that nature inevitably involve
the consideration of extensive financial material, compliance histories, revenue
implications and the statutory criteria prescribed by s 164. Counsel submitted
that it would be unrealistic to expect every request for suspension of payment to
be determined with the expedition desired by taxpayers.
be determined with the expedition desired by taxpayers.
[30] The respondent also relied upon the legislative policy embodied in s 164 itself. It
was pointed out that parliament has deliberately determined that assessed tax
remains payable notwithstanding the existence of pending objection or appeal
proceedings. The default position established by the statute is therefore one of
immediate enforceability; suspension of payment constitutes an exception to that
general rule and depends upon the exercise of a statutory discretion vested
exclusively in SARS. Counsel submitted that the applicant's argument effectively
inverted that statutory scheme by treating suspension as though it were the
default position which SARS was obliged to adopt unless compelling reasons
existed to the contrary.
[31] Finally, it was submitted that there was no evidence of ma la fides, dishonesty,
abuse of process or other conduct traditionally associated with punitive costs.
The applicable legal principles
[32] The determination of costs has always fallen within the discretion of the lower
court. That discretion is a judicial one, to be exercised having regard to
considerations of fairness to both parties and the interests of justice. Whilst the
general rule is that costs follow the result, the rule is neither inflexible nor
exhaustive. The court retains a wide equitable discretion to depart from the
ordinary rule where the circumstances so require.
[33] Where litigation becomes moot because the respondent withdraws the impugned
decision in the face of litigation, the court ordinarily asks whether the institution
of proceedings was reasonable when viewed objectively at the time they were
instituted. If so, the applicant will usually be entitled to recover the costs thereby
incurred notwithstanding that the court is not ultimately called upon to decide the
substantive merits. The rationale is obvious; a litigant who has been reasonably
driven to court should not ordinarily be left out of pocket merely because the
opposing party subsequently renders the proceedings unnecessary.
[34] That principle does not, however, necessarily resolve the present dispute. The
question is whether the facts justify the Court's marked disapproval through an
order directing payment of attorney and client costs.
[35] It is to that issue that I now turn.
Punitive costs : th e applicable principles
[36] The distinction between an award of c<;:>sts on the ordinary party and party scale
and one on the attorney and client scale is well established. The former is
compensatory in nature and is intended to indemnify a successful litigant for
those costs reasonably and necessarily incurred in the conduct of the litigation,
albeit not in full. An award of attorney and client costs, by contrast, represents a
deliberate departure from the ordinary rule. It entitles the successful litigant to
recover a substantially greater proportion of the legal expenses actually incurred
and, more importantly, constitutes the Court's expression of its disapproval of the
conduct of the unsuccessful litigant.
[37] The locus c/assicus in this regard I the decision of Tindall JA in the old decision
Ne! v Waterberg Landbouwers Ko-operatieve Vereeniging, 3 where it was
observed that an order for attorney and client costs is an extraordinary one made
where, by reason of special considerations arising from the conduct of the losing
party, the Court considers it just to ensure that the successful litigant is more fully
indemnified than would be achieved by an ordinary costs order.
[38] Subsequent decisions have reiterated that punitive costs are reserved for
exceptional circumstances involving conduct that is dishonest, fraudulent,
vexatious, frivolous, reckless, abusive of the court's process or otherwise
deserving of the Court's marked censure.4 The discretion remains broad, but it
is one to be exercised sparingly.
[39] In Public Protector v South African Reserve Bank5 the Constitutional Court
reaffirmed that attorney and client costs serve not merely a compensatory
purpose but also express judicial disapproval of litigation conduct falling
markedly short of that expected of parties before the courts.i Similar observations
appear throughout our jurisprudence. The award is not intended to punish an
unsuccessful litigant simply because its legal position proves ultimately to have
unsuccessful litigant simply because its legal position proves ultimately to have
! Ne/ v _Waterberg landbouwers Ko-operatieve Vereeniging 1946 AD 597 at 607.
See, tor examp le, Johannesbw g C iry Co unc il v Te levis ion & E lectrical D is tri butors (Pty) Ltd 1997 ( I ) SA 157
(A); Plastic Converters Association of South Africa on behalf of Members v National Union of Metalworkers of
South Afri ca 20 16 (3) SA 250 (LAC) paras 46-48.
5
Public Protector v South African Reserve Bank 20 19 (6) SA 253 (CC) paras 8-1 0, 223-225.
been unsustainable. It is directed instead at conduct which the Court considers
sufficiently egregious to justify its condemnation.
[40] (38] Equally important is the principle that costs remain a matter of judicial
discretion. As was observed by the Constitutional Court in Ferreira v Levin NO,
6
an appellate court will ordinarily interfere with a costs order only where that
discretion has not been judicially exercised. Ths requires the Court to evaluate
the conduct of the parties throughout the litigation, the nature of the dispute, the
public interests implicated and the overall interests of justice.
[41] The applicant's argument, properly analysed, is that the respondent's conduct
falls within that exceptional category because it failed to respond favourably to
the applicant's request before proceedings were instituted and only withdrew the
impugned decision after the urgent application had been served.
[42] It is therefore necessary to examine whether the chronology alone is capable of
supporting the inference sought to be drawn by the applicant.
The effect of the withdrawal of the impugned decision
[43] It cannot seriously be disputed that justified the applicant the seeking the relief
sought in Part A of its notice of motion on an urgent basis. Had the respondent
maintained its original decision, this Court would have been required to
determine the lawfulness of the exercise of the discretion conferred by s 164 of
the T AA. By withdrawing that decision, SARS rendered such adjudication
unnecessary.
[44] It does not follow, however, that every administrative decision withdrawn after
litigation has commenced should be regarded as an implicit concession that the
decision ought never to have been made or that the institution of proceedings
was the sole reason for the change in position. Administrative decision-making
is not static. Public authorities routinely reconsider decisions in light of additional
information, internal review, legal advice or further reflection. Section 9 of the
information, internal review, legal advice or further reflection. Section 9 of the
TAA itself recognises that SARS may withdraw or correct decisions in
appropriate circumstances. The statutory conferral of such a power necessarily
6 Ferreira v Levin NO 1996 (2) SA 62 1 (CC) para s 3-5.
contemplates that decisions may legitimately be revisited without judicial
intervention.
[45] Indeed, constitutional principles point in the same direction. Section 195 of the
Constitution requires public administration to be accountable, responsive and
governed by the values of good administr~tion. Those obligations are not served
by encouraging organs of state to persist in defending decisions which, upon
reconsideration , they no longer consider appropriate. To the contrary, the
constitutional imperative of lawful administration is ordinarily advanced where an
administrator is prepared to revisit and correct an earlier decision without
requiring the Court formally to pronounce upon its validity.
[46] Were courts routinely to ir,rer culpability merely because an administrative
decision was withdrawn after proceedings had been instituted, public authorities
could become reluctant to reconsider decisions once litigation had commenced
for fear that any alteration of their position would automatically expose them to
allegations of misconduct and claims for punitive costs. Such an approach would
discourage rather than encourage responsible administrative decision-making; it
would reward institutional obstinacy instead of administrative self-correction.
[47] None of this is to suggest that the timing of the withdrawal of the respondent's
decision is irrelevant; far from it: The chronology plainly remains an important
consideration in determining liability for costs. A respondent who renders
litigation unnecessary after proceedings have properly been instituted will
ordinarily bear the costs. That principle, however, does not automatically justify
a punitive order as to costs.
The statutory context
[48] The statutory context is of central importance. Parliament has deliberately
adopted a revenue collection system in which the obligation to pay assessed tax
is not suspended merely because the-taxpayer disputes liability. Section 164(1)
is not suspended merely because the-taxpayer disputes liability. Section 164(1)
of the TPA provides, in clear terms, that the obligation to pay tax and the right of
SARS to receive and recover tax are not suspended by an objection or appeal
unless a senior SARS official directs otherwise in terms of the section.
[49] That policy reflects what has long been described as the "pay now, argue later"
principle. Although the expression predates the enactment of the Tax
Administration Act, the principle has repeatedly been recognised by our courts
as one of the indispensable features of an effective system of tax administration.
In Metcash , Court explained that the uninterrupted collection of revenue
constitutes a matter of compelling public importance as government depends
upon th~ continuous receipt of revenue to discharge its constitutional and
statutory obligations; were taxpayers generally entitled to suspend payment
simply by noting objections or appeals, the efficient collection of revenue would
be seriously compromised and the fiscus exposed to obvious prejudice. It was
thus found that Parliament was entitled to strike the balance by requiring payment
to be made whilst simultaneously preserving comprehensive procedures through
which taxpayers may challenge assessments and, where appropriate, seek relief
from the obligation to pay immediately.
[50] The Supreme Court of Appeal has consistently reaffirmed that legislative policy
in Commissioner for the South African Revenue Service v H.awker Air Services
(Pty) Ltd,7 the Court recognised that the purpose of the statutory regime is to
protect the fiscus by ensuring that tax remains recoverable notwithstanding
pending disputes, whilst permitting SARS, in appropriate circumstances, to
suspend payment where fairness and the statutory criteria justify such relief.
[51] Likewise, in Commissioner for the South African Revenue Service v Capstone
556 (Pty) Ltd ,8 the Court emphasised that the discretion conferred by s 164 is
an exceptional one, to be exercised judicially upon consideration of the factors
identified by the legislature rather than as a matter of entitlement on the part of
the taxpayer.
(52] The significance of these authorities illustrates the statutory environment within
(52] The significance of these authorities illustrates the statutory environment within
which SARS operates. In refusing suspension, SARS was exercising a discretion
expressly conferred upon it by Parliament within a legislative scheme in which
payment rather than suspension is the default position. It cannot therefore be
: Commissioner fo r the South African Revenue Service v Hmvker Air Services (Pty) ltd 2006 (4) SA 292 (SCA) .
Comm1ss1oner fo r the South Afn can Revenue Service v Capstone 556 (Pty) ltd 20 16 (4) SA 68 (SCA)
said that SARS acted malafide merely because it initially declined to suspend
payment.
[53] The applicant's submission that SARS ought simply to have agreed to suspend
payment before the institution of proceedings became necessary proceeds from
a premise that is inconsistent with the statutory scheme itself. Section 164 does
not confer upon taxpayers a presumptive entitlement to suspension pending
objection or appeal; rather, it entrusts the decision to a senior SARS official who
must weigh the competing interests identified by Parliament. The fact that SARS,
upon reconsideration, subsequently withdrew its decision not to suspend
payment, does not demonstrate that it was under a legal obligation to have done
so at an earlier stage; nor does the subsequent withdrawal of the decision
establish that the original refusal was so manifestly indefensible as to justify the
Court's censure through an award of attorney and client costs.
[54] On the contrary, s 9 of the TAA empowers SARS to withdraw or correct
administrative decisions in prescribed circumstances. The existence of that
power reflects a legislative recognition that administrative decision-making is not
immutable; tax administrators are entitled, and indeed expected, to revisit
decisions where further consideration demonstrates that this is appropriate. The
statutory scheme therefore contemplates responsible administrative self
correction as part of good governance.
[55] There is no suggestion on the papers that SARS deliberately persisted in
defending an indefensible decision. At its highest, the applicant's complaint is
that SARS acted too slowly in reconsidering its position. Delay, even if open to
criticism, does not without more amount to the sort of reprehensible conduct
which our courts have consistently held to justify an award of attorney and client
costs.
Conclusion
[56] Two questions ultimately served before me: The first was whether the applicant
[56] Two questions ultimately served before me: The first was whether the applicant
acted reasonably in instituting urgent proceedings; the second was whether the
SARS's conduct was so unreasonable as to warrant the Court's censure through
an award of attorney and client costs. The fact that the first question must be
answered in the applicant's favour does not inexorably determine the second.
[57] The applicant cannot fairly be criticised for approaching the Court on an urgent
basis. At the time the application was launched, SARS had refused the request
to suspend payment, the applicant remained exposed . t? the immediate
enforcement of a substantial tax liability, and no indication had been given that
the impugned decision would shortly be revisited. The applicant had sought to
persuade SARS to reconsider its decision before resorting to litigation, but
without success. Objectively viewed, the institution of urgent proceedings was
therefore a reasonable and proportionate response to the position confronting
the applicant.
[58] It follows that, had SARS persisted in defending its refusal, this Court would have
been required to determine the lawfulness of that administrative decision.
Instead, SARS withdrew the decision before the matter was argued. That
withdrawal substantially afforded the applicant the practical relief sought in Part
A of the notice of motion and rendered the principal dispute academic. In those
circumstances , fairness dictates that the applicant should not be left out of pocket
for having instituted proceedings which were objectively justified when
commenced.
[59] The respondent should therefore bear the ordinary costs occasioned by the
urgent application. It was the respondent's subsequent conduct which rendered
the litigation unnecessary. Had the impugned decision been withdrawn before
proceedings were instituted, or had SARS indicated that reconsideration was
already under way and that enforcement would be held in abeyance pending that
reconsideration , the institution of urgent proceedings may well have been
avoided. No such accommodation was afforded. The ordinary consequence is
that the respondent should indemnify the applicant for the reasonable costs
thereby incurred.
that the respondent should indemnify the applicant for the reasonable costs
thereby incurred.
[60] The position is materially different, however, when one consdiers the applicant's
claim for attorney and client costs .
[61] The applicant's counsel submitted that because SARS withdrew its decision only
after service of the application, the Court should infer that the proceedings
themselves compelled the respondent to abandon an indefensible position. I am
unable to accept that such an inference necessarily follows from the facts before
me.
[62] Administrative decisions are frequently reconsidered after litigation has
commenced. Sometimes that reconsideration is prompted by the proceedings
themselves; sometimes it results from internal review, further investigation,
additional legal advice or the completion of administrative processes already
under way. The mere fact that a decision is withdrawn after proceedings have
commenced does not establish that' it was maintained in bad faith until that
moment, nor does it necessarily demonstrate that the institution of proceedings
alone produced the change in position.
[63] In the present matter, SARS has consistently ~aintained that the withdrawal
occurred through its ordinary administrative processes. Whether that explanation
is ultimately correct is not something which this Court is required to determine.
The substantive merits have not been argued, the review has not been
adjudicated and the respondent has not conceded that its original decision was
unlawful or wrong. The withdrawal of the decision cannot therefore be treated as
an admission that the refusal to suspend payment was legally indefensible.
[64] Nor, in my view, should this Court readily infer mala fides merely because SARS
did not act with the expedition desired by the applicant. SARS administers a
complex statutory scheme affecting millions of taxpayers and involving the
collection of the revenue upon which the functioning of the State depends. It has
to process an innumerate number of requests for suspension of payment. In
considering these requests, Sars is required to consider numerous statutory
factors, including the protection of the fiscus, the taxpayer's compliance history,
factors, including the protection of the fiscus, the taxpayer's compliance history,
the possibility of irreparable prejudice and the risk that assets may be dissipated;
decisions cannot invariably be taken immediately upon receipt of a request.
[65] In my view, the applicant has not demonstrated the exceptional circumstances
required for me to make a punitive order for costs against SARS; on the contrary,
although the applicant was justified in bringing the application, I cannot see why,
when SARS exercised its discretion without any evidence that this discretion was
exercised improperly, it should be mulcted with costs at all. There is no evidence
of abuse of process or wilful disregard of the applicant's rights before me; quite
the opposite, SARS was perfectly within its rights to enforce the "pay now, argue
later" principle recognised by the Courts. Nor can it be said that the respondent
persisted in defending an indefensible case to the bitter end; it did not and instead
exercised its statutory power to withdraw its decision, thereby rendering the
substantive litigation unnecessary.
[66] The Constitution demands accountable, responsive and lawful public
administration. Those values are promoted, rather than undermined, where an
administrator voluntarily revisits a decision. If every withdrawal of an
administrative decision after the commencement of litigation were routinely to
attract punitive costs, organs of state might be encouraged to persist in defending
doubtful decisions merely because the forensic consequences of changing
course had become more onerous than continuing the litigation. Such an
approach would serve neither litigants nor the administration of justice.
[67] Whilst I accept that the applicant was justified in launching the application and
should recover the costs thereby occasioned, I am not persuaded that the
respondent's conduct exhibits the degree of opprobrium contemplated by the
authorities to which I have referred. The interests of justice are sufficiently served
by an award of costs on the ordinary party and party scale.
[68] In the result, the applicant succeeds in obtaining its costs of the application, but
not on the punitive scale sought.
Order
[69] In the result, the following order is made:
(1 ). The respondent is ordered to pay the applicant's costs of the urgent application.
(2) . Such costs shall be taxed on the party and party scale B.
(2) . Such costs shall be taxed on the party and party scale B.
(3). The applicant's claim for costs on the attorney and client scale is refused.
Date of the hearing:
Date of the judgment:
For the applicant:
For the respondent:
4 June 2026
30 July 2026
Wndzd UW.p M't!
S.M. WENTZEL-THOMPSON J
JUDGE OF THE HIGH COURT
JOHANNESBURG
Adv. BP Casey & Adv. K Senyatsi instructed by ST
Attorneys .
Adv. ST Seshoka Instructed by Madiba Motsai
Masitenyane and Githiri Attorneys inc.(MMMG)