ICR Utility Management Proprietary Ltd and Another v Headbush and Others (1213/2020) [2021] ZAECPEHC 31 (25 May 2021)

ICR Utility Management Proprietary Ltd and Another v Headbush and Others (1213/2020) [2021] ZAECPEHC 31 (25 May 2021)

The court found that both the applicants and the respondents could be responsible for payment of dividends tax under the applicable statutes. The applicants, as withholding agents, should have withheld the dividends tax from the payment made to the first respondent and the trust, and by failing to do so, became personally liable for the tax. However, the agreement required payment without deduction and allocated liability for taxes to each party as and when levied. The dispute regarding who must pay the dividends tax under the agreement is a matter of contractual interpretation and falls squarely within the arbitration clause. The court held that the parties are obliged to refer the...

Citation
[2021] ZAECPEHC 31
Parties
Applicant: ICR Utility Management Proprietary Limited; Applicant: Koena Estates Proprietary Limited; Respondent: Matule Patience Headbush; Respondent: Thomas Frank Lawrence N.O.; Respondent: Alexander Sello Headbush N.O.; Respondent: Matule Patience Headbush N.O.; Respondent: John Ross Thando Keena Headbush N.O.; Respondent: Lawrence Masiza Voster Inc.; Respondent: South African Revenue Services
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
25 May 2021
Case Number
1213/2020
Procedural Posture
Urgent Application / Application for Declaratory and Interdictory Relief
Outcome
Application dismissed with costs.
Judges
Govindjee
Legal Topics
Dividends Tax, Withholding Agent Liability, Contractual Interpretation, Arbitration Clause
Tax Law Commercial and Corporate Dividends Tax Withholding Agent Liability Contractual Interpretation Arbitration Clause

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Parties

ICR Utility Management Proprietary Limited

Applicant

Koena Estates Proprietary Limited

Applicant

Matule Patience Headbush

Respondent

Thomas Frank Lawrence N.O.

Respondent

Alexander Sello Headbush N.O.

Respondent

Matule Patience Headbush N.O.

Respondent

John Ross Thando Keena Headbush N.O.

Respondent

Lawrence Masiza Voster Inc.

Respondent

South African Revenue Services

Respondent

Procedural Posture

Urgent Application / Application for Declaratory and Interdictory Relief

Legal Issues

  1. 1 Whether the applicants or the respondents are liable for payment of dividends tax to SARS under the agreement and applicable tax legislation.
  2. 2 Whether the agreement between the parties alters statutory liability for dividends tax.
  3. 3 Whether the dispute regarding payment of dividends tax must be referred to arbitration in terms of the agreement.

Ratio Decidendi

The court found that both the applicants and the respondents could be responsible for payment of dividends tax under the applicable statutes. The applicants, as withholding agents, should have withheld the dividends tax from the payment made to the first respondent and the trust, and by failing to do so, became personally liable for the tax. However, the agreement required payment without deduction and allocated liability for taxes to each party as and when levied. The dispute regarding who must pay the dividends tax under the agreement is a matter of contractual interpretation and falls squarely within the arbitration clause. The court held that the parties are obliged to refer the...

Court Disposition

Application dismissed with costs.

Orders

  • The application is dismissed with costs.