Peolwane Properties (Pty) Ltd v Commissioner for the South African Revenue Service and Another (50763/16) [2017] ZAGPPHC 372 (8 June 2017)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG DIVISION,

PRETORIA

CASE NO: 50763/16

DATE: 7.6.17

In the matter between:

PEOLWANE PROPERTIES (PTY) LTD

APPLICANT

and

THE COMMISSIONER FOR THE SOUTH AFRICAN

REVENUE SERVICE

FIRST RESPONDENT

MINISTER OF FINANCE

SECOND RESPONDENT

JUDGMENT

WRIGHT J

1. In 2011 the 1st respondent Commissioner assessed the applicant company, Peolwane to tax. The assessments raised were for Vat for various earlier years. Peolwane objected to the assessments. The objections were disallowed by the Commissione.r Peolwane appealed. That appeal is set down to commence, or recommence, on 21 August 2017 in the Tax Court. I shall refer to this appeal as the Tax Appeal. As a preliminary step in the Tax Appeal Peolwane brought an application to compel the Commissioner to di cover certain documents. I shall refer to this application as the Application to Compel. The Commissioner resisted on at least the ground that the documents are protected by privilege or confidentiality. My sister, Mali J sitting in the Tax Court dismissed the Application to Compel. She did so on 26 April 2016 .

2. Peolwane has purported to appeal the dismissal of the Application to Compel by Mali J. The appeal is set dow.n for hearing before three judges on 16 May 2018 in the Gauteng Division in Pretoria. I shall refer to this appeal as the Compelling Appeal.

3. When this case was allocated to me, Deputy Judge President Ledwaba asked me to case-manage the matter.

4. In the present application, dated 28 June 2016 and served on the respondents on 30 June 2016 Peolwane seeks the following orders:

4.1 "1 - In the event that it were to be held in the appeal currently pending before the Full Bench in case number A404/16("the Full Bench appeal”) that a Tax Court is not a "High Court" within the meaning of section 68(3)(e) of the Tax Administration Act 28 of 2011 ("the Tax Administration Act”): an order directing the first respondent in terms of section 68(3)(e) of the Tax Administration Act to disclose to the applicant the documents listed in annexure A hereto."

4.2 "2 - In the event that it were to be held by the Court in the Full Bench appeal or by this Court in relation to the relief sought in paragraph 1 above that section 68 of the Tax Administration Act does not empower a Court to order the disclosure of SARS confidential information :

2.1 Declaring section 68 of the Tax Administration Act to be inconsistent with the Constitution to the extent that it fails to make provision for a High Court and/or a Tax Court to order the disclosure of SARS confidential information when it is in the interests of justice to do so.

2.2 Declaring that section 68 of the Tax Administration Act is to be read as though the following sub-section appears after sub-section 68(3): "(4) A High Court and a Tax Court may, on application, order that SARS confidential information be disclosed when it is in the interests of justice, and subject to such conditions, if any, as it deems fit to protect the confidentiality of the information."

2.3 Directing the first respondent in terms of section 68(4) of the Tax Administration as it is deemed to read in terms of the preceding paragraph, to disclose to the applicant the documents listed in annexure A hereto."

5. In paragraph 13 of the replying affidavit the deponent, who is the moving force behind Peolwane stated that "It is therefore unnecessary for Pealwane to persist in seeking the relief in prayer 2 of the notice of motion." In a practice note dated 31 March 2017 filed by the Peolwane's counsel there is no suggestion that prayer 2 is a live issue. On 25 April 2017 Peolwane formally abandoned prayer 2. It did so by way of an email from its attorneys sent to the attorneys for the respondents and my clerk following a query by me, through my clerk pursuant to my case-management of the matter.

6. In the founding affidavit, dated 28 June 2016 the statement is made, in paragraph 16 that certain documents in a related matter "form part of the record in this application." These documents are included in 14 volumes of record in the Tax Appeal. They are said by Peolwane to be relevant to the present application. Despite this statement Peolwane did not serve copies of these volumes on the respondents when the Notice of Motion and founding affidavit were served. Only after the Commissioner filed an answering affidavit did Peolwane serve the 14 volumes on the Commissioner. Peolwane states in paragraph 16 of the founding affidavit that the 14 volumes are "already in the possession of the first respondent.” In paragraph 16 of the founding affidavit the statement is made that the 14 volumes will be served on the Minister if a request is made for the volumes and a confidentiality undertaking is given by the Minister. Pursuant to the Deputy Judge President's request I took various steps in an attempt to ready a cumbersome case for hearing. As at 19 April 2017 there had been no such request by the Minister or any undertaking. On 25 April 2017 Peolwane formally abandoned reliance on the 14 volumes. It did so in its attorney's letter of 25 April 2017 referred to above. On 22 May 2017, some two weeks before the hearing of the present application Peolwane, through its attorney formally abandoned all relief against the Minister. At the outset of the hearing it was agreed between Mr Leech SC for Peolwane and Mr Chaskalson SC for the Commissioner that the 14 volumes were in fact before me.

7. In the founding affidavit, paragraph 15 it is suggested that the present application and the Compelling Appeal be heard at the same time. Peolwane later dropped this unwieldy suggestion.

8. In my view, Peolwane has created a procedural porridge. The judgment of Mali J is not appealable. So much is clear from section 117(3) of the Tax Administration Act 28 of 2011 read with sections 129 and 133 thereof. See Wingate-Pearse v Commissioner, SARS 2017(1) SA 542 SCA. In short, while section 117(3) confers on the Tax Court jurisdiction to decide interlocutory applications and " an application in a procedural matter' such applications are not referred to in section 129(2). Section 133(1) gives the taxpayer or SARS the right to appeal a decision of a Tax Court only where such decision was given under sections 129 or 130. Section 130 relates to costs and is not applicable at present.

9. The Commissioner, in not wishing to disclose the disputed documentation pursues a substantive right. Once the documentation is disclosed pursuant to a court order the right to privilege or confidentiality is lost forever. But this does not change the fact that the dispute about the disclosure of the documents is a dispute preliminary to the main dispute, namely the merits of the Tax Appeal. The dispute about documents is ancillary to the Tax Appeal and is a precursor to it. Whether or not the order by Mali J, had it gone the other way, would have been appealable is not a question before me. Even had Mali J ordered the Commissioner to disclose the documents and even if her order had been both appealable and appealed the Tax Appeal would continue irrespective of the ultimate outcome of the status of the disputed documents

10. In Wingate Pearse the disputes in question were which party bore the onus and which party had to lead evidence first. At least the second question related to procedure as this word is commonly understood. Despite this Wallis JA in Wingate Pearse characterised the dispute as interlocutory. The Tax Appeal in the present case continues irrespective of the outcome of the skirmish about discovery along the way. An example of " an application in a procedural matter' as referred to in section 117(3) which is not interlocutory would be where final judgement is sought following upon a failure by a litigant to comply with an interlocutory order, for example an order to make discovery.

11. In Zuma v Democratic Alliance 2014 (4) All SA 35 (SCA) at paragraph 5 Navsa ADP described as interlocutory, applications by the DA to compel the Acting Deputy National Director

of Public Prosecutions to produce the documents in a review application on which a decision to discontinue a prosecution had been

based.

12. The Commissioner has made a counter-application in the present application. Orders are sought declaring the Compelling Appeal to be invalid and striking it from the roll. In heads of argument filed shortly before the hearing the Commissioner abandoned the prayer for striking off, limiting the counter­ application to a prayer for a declaration that the Compelling Appeal is invalid.

13. Peolwane, in a notice of intention to amend under rule 28 dated 30 September 2016 indicated that it sought to amend prayer 1 of its notice of motion by the addition of the words "or in the event that the first respondent's counter - application were to be upheld·" between the words "Administration Act")" and "an order directing". The amendment sought is opposed by the Commissioner. In my view, the amendment sought is fruitless. The application founders with or without the amendment.

14. If Peolwane wins the Tax Appeal without the contested documents the present application is unnecessary. If Peolwane loses the Tax Appeal it may appeal that loss. See section 133 of the Tax Administration Act. The Act does not expressly set out the powers of an appeal court under section 133. Under section 19(d) of the Superior Courts Act 10 of 2013 the SCA or the provincial division hearing an appeal may confirm, amend or set aside the decision which is the subject of the appeal and render any decision which the circumstances may require.

15. Mr Leech argued that it would be unfair that Peolwane be forced to run the Tax Appeal without the documents it seeks. Peolwane's rights are protected. See Wingate-Pearse at paragraph 8, page 545 G. At worst there may be some delay and extra cost but these consequences flow from the wording of sections 117(3)4b4b4b">, 129(2) and 133(1) of the Tax Administration Act.

17. At the commencement of the hearing I was informed that Peolwane and the Minister had settled their differences regarding costs. I made an order by agreement.

18. The proceedings launched by Peolwane after the decision of Mali J have been unnecessary and irregular. The respondents should not have been put to the trouble and expense of opposing them. A punitive costs order is warranted, at least in the counter-application. In the counter-application the Commissioner did not seek the costs of the appeal sought to be declared invalid.

ORDER

1. The application to amend is dismissed.

2. Prayer 1 of the main application is dismissed .

3. The counter-application is granted. The purported appeal by Peolwane of the decision by Mali J of 26 April 2016 is declared to be invalid.

4. Peolwane is to pay the costs of the Commissioner in the main application, the application to amend and the counter-application. Such costs are to include those of one senior counsel and one junior counsel. In the counter­ application costs are to be on the attorney and client scale.

GCWRIGHT J

JUDGE OF THE HIGH COURT,

GAUTENG DIVISION, PRETORIA

On behalf of the Applicant:

B Leech SC, with him D Watson

Instructed by:

Padayachee Attorneys

082 808 5924

kuvashen@padayachee.org

On behalf of the 1st Respondent: M Chaskalson SC, with him L Sigogo

Instructed by:

Mathopo Moshimane Mulangaphuma Inc t/a DM5 Inc

011 268 9100

feziwe@dm5.co.za

On behalf of the 2nd Respondent: P Jara

Instructed by:

State Attorney, Pretoria

012 309 1575

Date of Hearing:

5 June 2017

Date of Judgment:

8 June 2017