MCG Express (Pty) Ltd v Owenair (Pty) Ltd (2023/069178) [2024] ZAGPJHC 580 (19 June 2024)

MCG Express (Pty) Ltd v Owenair (Pty) Ltd (2023/069178) [2024] ZAGPJHC 580 (19 June 2024)

The court found that the respondent was aware, or ought to have been aware, that the applicant was a VAT vendor, as evidenced by the contract and pre-contractual correspondence. The contract, drafted by the respondent, provided for the issuance of tax invoices, which under South African law must include VAT. The respondent's defence that VAT was not payable was rejected as an afterthought, unsupported by the facts and contradicted by its own undertakings to pay the full amount. The court held that a tacit term existed that VAT was for the respondent's account, and the applicant had complied with section 65(ii) of the VAT Act by displaying the required notice. The attempt to avoid VAT by...

Citation
[2024] ZAGPJHC 580
Parties
Applicant: MCG Express (Pty) Ltd; Respondent: Owenair (Pty) Ltd
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
19 June 2024
Case Number
2023/069178
Procedural Posture
Civil Application / Judgment on Application for Specific Performance
Outcome
Judgment granted for the applicant for payment of the sum claimed, inclusive of VAT, with interest and costs.
Judges
N.S. Krüger
Legal Topics
Specific Performance, Value Added Tax, Contractual Terms, Tacit Terms, Vat Act Compliance
Commercial and Corporate Tax Law Specific Performance Value Added Tax Contractual Terms Tacit Terms Vat Act Compliance

Case Brief

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Parties

MCG Express (Pty) Ltd

Applicant

Owenair (Pty) Ltd

Respondent

Procedural Posture

Civil Application / Judgment on Application for Specific Performance

Legal Issues

  1. 1 Whether the respondent is liable to pay VAT on the aircraft lease agreement.
  2. 2 Whether the contract terms regarding VAT were sufficiently clear and compliant with the VAT Act.
  3. 3 Whether a tacit term existed that VAT was for the respondent's account.

Ratio Decidendi

The court found that the respondent was aware, or ought to have been aware, that the applicant was a VAT vendor, as evidenced by the contract and pre-contractual correspondence. The contract, drafted by the respondent, provided for the issuance of tax invoices, which under South African law must include VAT. The respondent's defence that VAT was not payable was rejected as an afterthought, unsupported by the facts and contradicted by its own undertakings to pay the full amount. The court held that a tacit term existed that VAT was for the respondent's account, and the applicant had complied with section 65(ii) of the VAT Act by displaying the required notice. The attempt to avoid VAT by...

Court Disposition

Judgment granted for the applicant for payment of the sum claimed, inclusive of VAT, with interest and costs.

Orders

  • The respondent must pay the applicant R 4 939 985.31, inclusive of VAT in the amount of R 644 345.91.
  • The respondent must pay interest on R 4 295 639.40 at the prime rate of ABSA Bank Limited plus two percent, calculated and compounded monthly in arrears from 27 April 2023 to date of payment.