Commissioner Of The South African Revenue Service v Yusuf (3466/2011) [2014] ZAECPEHC 29 (6 May 2014)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE – PORT ELIZABETH)

CASE NO.: 3466/2011

In the matter between:

THE COMMISSIONER OF THE SOUTH

AFRICAN REVENUE SERVICE Applicant

And

YUSUF CARLOO [ID: ………………] Respondent

JUDGMENT

BESHE J:

[1] This matter concerns attempts to recover arrear taxes owed by the respondent to the applicant. The amount involved is R664 196.63.

I propose to refer to the Commissioner of South African Revenue Services (SARS) as the applicant and Mr Yusuf Carloo as the respondent as they appear in the application wherein SARS seeks an order declaring respondent’s immovable properties

executable. Respondent is applicant in an application wherein he sought the stay of the sale in execution of his movable property,

which was launched before the application to declare his immovable property executable.

[2] It is common cause that the Registrar of this court granted judgment in applicant’s favour on 4 November 2011 in terms of Section 91 (1) (b) of the Income Tax Act number 58 of 1962, for payment of the sum of R755 084.69 – being the capital amount and interest thereon as well as costs. On the 10 of February 2012 a writ of execution was issued against the movable property of the respondent. Pursuant to the said writ of execution, on the 15 March 2012 the Sheriff attached the movable property of the respondent comprising of 15 motor vehicles and other items. The property was scheduled to be sold by public auction on the 31 May 2012.

[3] Respondent launched an urgent application and sought to secure the stay of the sale in execution of his property, comprising vehicles and other items, which as indicated above, was scheduled for the 31 May 2012. Also sought by the respondent, was the return of the vehicles that were removed from his premises on the 7 May 2012. On 30 May 2012 an order in the following terms was issued by Chetty J:

1. The sale in execution under the abovementioned case number scheduled for 31 May 2012 be stayed in terms of the provisions of High Court Rule 45 A.

2. That paragraph 1 above is of immediate, yet interim, operation.

3. The matter be and hereby postponed to 5 June 2012.

The rule nisi referred to above was confirmed on the 5 June 2012. It was ordered that the vehicles that were removed from respondent’s premises by the Sheriff be returned to him subject to a deed of surety given by one Razaana Denson in the sum of R145 350.00. The matter was postponed sine die to allow for the filling of further affidavits in the normal course of opposed motion proceedings, cost of the postponement and those of the 30 May 2012 were reserved.

[4] What then followed was an application by SARS seeking that four erven belonging to the respondent be declared executable. It is necessary to quote from the notice of motion in order to place the application for the declaration of the four erven executable in context. It was sought to have the following erven declared executable:

1. Erf No. 5395, Gelvandale (“erf 5395”)

2. Erf No. 7149, Korsten (“erf 7149”)

3. Erf No. 4343, Gelvandale (“erf 4343”)

4. Erf No. 1086, Gelvandale (“erf 1086)

Applicant sought the immediate attachment of the abovementioned properties and that they be dispose of in the following manner:

“In the event that the sale and registration of erf 5395 between the respondent and Mogamat G Jappie is not finalised on or before 31 August 2012 the Sheriff is authorised to sell the said erf. The proceeds of the sale shall be utilised to settle the reasonable costs incurred by the Sheriff in executing the order; the remaining funds, if any, are to be paid to the respondent.

In the event of the proceeds generated by the sale of erf 5395 not being sufficient to settle the respondent’s indebtedness to the applicant the Sheriff is ordered to sell the next property of the applicant as set out above until properties have generated sufficient proceeds to settle respondent’s indebtedness to the applicant.”

[5] According to the applicant, it agreed to the release of respondent’s movable property as well as an interim order in the same terms based on the following:

On the understanding that the respondent was making a tender to it erf 5395 which had recently been sold for R950 000.00 once it was registered in the name of the new owner, he would utilize the proceeds thereof to settle his indebtedness to the applicant;

That the respondent was willing to cede erf 7149 to the applicant;

Respondent’s wife stood surety for the attached vehicles to the value of R145 350.00;

Respondent made two payments totalling R110 000.00 after his property was attached.

[6] The order sought for the declaration of respondent’s property executable, is sought on the basis that –

As at the time of making the application, respondent had not advised the applicant on the progress of the transaction in respect of erf 5395;

Has not communicated any effort to cede erf 7194to the applicant;

The respondent does not reside in any of the properties concerned;

That there is therefore no other possible way of settling the judgment granted on 4 November 2011 than by a sale in execution of the immovable property as proposed in above.

[7] Respondent’s basis for opposing the application can be summed up as follows:

He applied for a compromise in terms of Section 91 of the Income Tax Act 58 of 1962 – Subsequent to the launching of his urgent application, (stay of sale in execution and for the return of his movables) there was a change in his circumstances;

The offer to buy erf 5395 was withdrawn by the prospective buyer;

A loan that his wife had applied for was not approved by Nedbank.

Respondent alleges that these factors were disclosed to the applicant in his application for a compromise in terms of Section 91. The application is also resisted on the basis that pending the ruling by the applicant on respondent’s application for a compromise, this application is premature. Respondent also alleges that applicant’s failure to file answering affidavit in respect of the urgent application he launched is an indication that merits of the said urgent application are conceded as well as his entitlement to launch the compromise application.

[8] In response, SARS alleges that, in regard to its failure to file a reply to respondent’s urgent application, it was felt that to do so would be an academic exercise since respondent’s movable property had been returned to him. Most importantly however, SARS alleges that respondent’s compromise application was turned down. This in my view resolves the matter to a large extent. In that there is no longer an application for a compromise that still requires consideration. It can no longer be argued that the application to declare respondent’s immovable property executable is premature.

[9] Respondent does not deny that he is liable to applicant for arrear taxes in excess of R600 000.00.

[10] In addition to the defences that were raised by the respondent, it was submitted that his movables have not yet been excused. Yet in his prior application for the release of his movables, he cites a number of reasons why the selling of his movables will cause him irreparable harm. It was ordered that his movable property be returned to him. It would seem in any event that according to the Sheriff’s return dated 4 September 2012 the respondent’s movables at his home are not enough to satisfy the judgment debt. At the stage when the matter was argued before me, the respondent, rightly so in my view was no longer insistent on the defence that the application to declare his immovable property executable was premature. This in light of the fact that his application for a compromise had since been turned down. It was argued on respondent’s behalf that the order sought by the applicant was disproportionate to the value of the debt sought to be recovered. In view of the fact that the sale of erf 5895 alone might yield sufficient proceeds to satisfy the debt owed to the applicant. And further that the granting of the order as sought by the applicant, may allow for the sale of further properties without regard being had to other ways of obtaining satisfaction of the debt. I cannot find any merit in this submission. I do not understand how if the debt is satisfied through the sale of the first property in the list, further sale in execution in respect of other properties can be embarked upon. It is clear from the notice of motion that it is only in the event of proceeds generated by the sale of the first listed property being insufficient to settle respondent’s indebtedness to the applicant that recourse will be had to the next property on the list. In my view the applicant has made out a case for the order that it seeks.

[11] Also sought by the applicant is an order for costs on a scale as between attorney and client because according to applicant, the respondent’s opposition is frivolous and vexatious. That the application in question is one of attempts to compel a recalcitrant

tax avoider to pay his taxes. Further that the respondent is attempting to avoid paying his taxes.

[12] Whilst it is true that at the end of the day the costs of litigation undertaken by SARS with a view to recover amounts due to it from tax payers is borne out other tax payers. I however do not propose to mulct the respondent with such a cost order. It will be sufficient in my view, if I do not award the respondent the costs of the urgent application that he launched for the stay of the sale in execution of his movable and the return thereof. The agreement to the stay of sale in execution of respondent’s movables was as a result of undertakings that were made by the respondent. In my view the filing of answering papers would not have served any purpose other than to accumulate costs.

[13] Accordingly the following order will issue:

1. The following immovable properties be and is hereby declared executable, subject to the terms in paragraph two and subparagraphs:

1.1 Erf No. 5395, Gelvandale Port Elizabeth

1.2 Erf No. 7149, Korsten Port Elizabeth

1.3 Erf No. 4343, Gelvandale Port Elizabeth and

1.4 Erf No. 1086, Gelvandale Port Elizabeth

2. Notwithstanding paragraph 1. above, the Sheriff is ordered to immediately attach the properties set out in 1.4 to 1.4 above and to dispose of same in the following manner:

To immediately, by means of a public auction sell Erf 5395. The proceeds of the sale shall be utilized as follows:

2.1.1 Settle reasonable costs incurred by the Sheriff in order to execute the order.

2.1.2 Settle the applicant’s indebtedness to the respondent at date of such settlement.

2.1.3 The remaining funds, if any, shall be paid to the respondent.

2.2 In the event of proceeds generated by the sale of Erf 5395 being insufficient to settle respondent’s indebtedness to the applicant, the Sheriff is authorised and ordered to sell by means of a public auction the next immovable property of the respondent as set out in paragraph 1.1 to 1.4 above, until such time as the immovable properties have generated sufficient proceeds to settle the respondent’s indebtedness to the applicant.

Respondent is ordered to pay the costs of this application.

_______________

N G BESHE

JUDGE OF THE HIGH COURT

APPEARANCES

For the Applicant : ADV: F Pietersen

Instructed by : STATE ATTORNEY

29 Western Road

Central

PORT ELIZABETH

Tel.: 041 – 585 7921

Ref.: L HART / 242 / 2012 / LVD

For the Respondent : ADV: C Van Rooyen

Instructed by : MSA ATTORNEYS

36 North Road

North End

Tel.: 041 – 484 7865

Ref.: M S Ahmed

Date Delivered : 6 May 2014