Van Der Merwe and Others v UTI South Africa Proprietary Limited and Others (11033/2014) [2014] ZAKZDHC 61 (17 December 2014)

Van Der Merwe and Others v UTI South Africa Proprietary Limited and Others (11033/2014) [2014] ZAKZDHC 61 (17 December 2014)

The court held that the Customs Act and VAT Act, properly interpreted, do not create an embargo preventing the release of goods to liquidators prior to payment of duty and VAT. The statutory lien in favour of SARS serves only as security and does not bar the liquidators from taking possession of the equipment. The insolvency regime requires that assets be realised for the benefit of all creditors, and interpreting the Customs Act as creating an embargo would lead to injustice and absurdity, undermining the purpose of insolvency proceedings. The relevant statutory provisions, when read together, do not entitle SARS or the other respondents to retain possession of the equipment until duty...

Citation
[2014] ZAKZDHC 61
Parties
Applicant: Dawid Ryk N.O.; Applicant: Monyela Kgashane Christopher N.O.; Applicant: Jacobs, Welcome Norman N.O.; Applicant: Lukhele Motswana Grace N.O.; Applicant: Mahanyele Johanna Nini N.O.; Applicant: Pela Plant Proprietary Limited (in liquidation); Respondent: UTI South Africa Proprietary Limited; Respondent: Trans-Med Shipping CC; Respondent: Commissioner South African Revenue Service; Respondent: ABSA Bank Limited; Respondent: Firstrand Bank Limited; Respondent: Bidvest Bank Limited
Court
Kwazulu-Natal High Court, Durban
Jurisdiction
South Africa
Judgment Date
17 December 2014
Case Number
11033/2014
Procedural Posture
Urgent Application / First Instance Judgment
Outcome
Application granted. The liquidators are entitled to possession of the equipment and the respondents are ordered to release it.
Judges
Annanbale
Legal Topics
Customs and Excise Liens, Statutory Preference, Liquidation Distribution, Release of Assets, Ranking of Creditors
Civil Procedure Banking and Finance Customs and Excise Liens Statutory Preference Liquidation Distribution Release of Assets Ranking of Creditors

Case Brief

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Parties

Dawid Ryk N.O.

Applicant

Monyela Kgashane Christopher N.O.

Applicant

Jacobs, Welcome Norman N.O.

Applicant

Lukhele Motswana Grace N.O.

Applicant

Mahanyele Johanna Nini N.O.

Applicant

Pela Plant Proprietary Limited (in liquidation)

Applicant

UTI South Africa Proprietary Limited

Respondent

Trans-Med Shipping CC

Respondent

Commissioner South African Revenue Service

Respondent

ABSA Bank Limited

Respondent

Firstrand Bank Limited

Respondent

Bidvest Bank Limited

Respondent

Procedural Posture

Urgent Application / First Instance Judgment

Legal Issues

  1. 1 Whether SARS enjoys a super preference for unpaid duty and VAT on liquidation of a company.
  2. 2 Whether respondents are entitled or obliged by legislation to retain possession of imported equipment until duty and VAT are paid.
  3. 3 Whether liquidators can claim possession of equipment before the second meeting of creditors under section 83 of the Insolvency Act.

Ratio Decidendi

The court held that the Customs Act and VAT Act, properly interpreted, do not create an embargo preventing the release of goods to liquidators prior to payment of duty and VAT. The statutory lien in favour of SARS serves only as security and does not bar the liquidators from taking possession of the equipment. The insolvency regime requires that assets be realised for the benefit of all creditors, and interpreting the Customs Act as creating an embargo would lead to injustice and absurdity, undermining the purpose of insolvency proceedings. The relevant statutory provisions, when read together, do not entitle SARS or the other respondents to retain possession of the equipment until duty...

Court Disposition

Application granted. The liquidators are entitled to possession of the equipment and the respondents are ordered to release it.

Orders

  • The respondents are ordered to release the equipment to the joint provisional liquidators of Pela Plant Proprietary Limited (in liquidation).
  • SARS' claim for duty and VAT is to be dealt with in accordance with the Insolvency Act's ranking of creditors.