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REPORTABLE
Case No: 118/99
In the matter between:
THE CHAIRMAN OF THE BOARD ON
TARIFFS AND
TRADE Appellant
and
VOLKSWAGEN OF SOUTH
AFRICA (PTY) LIMITED 1st Respondent
DIRECTOR-GENERAL:
TRADE AND INDUSTRY 2nd Respondent
Coram: SMALBERGER, NIENABER, HARMS JJA and
MPATI AND MTHIYANE AJJA
Heard: 10 NOVEMBER 2000
Delivered: 30 NOVEMBER 2000
JUDGMENT
HARMS JA/
HARMS JA:
[1] The appeal should in my judgment succeed and the reasons
that follow should be read against the backdrop of Nienaber JA's judgment.
Some
repetition is unfortunately unavoidable.
[2] A useful starting point is
the object of the applicant (“VW”): it wishes to cede certain
foreign currency earnings
to Mercedes Benz SA (Pty) Ltd (“MB”) for
consideration; MB can apply the ceded earnings in reducing its own foreign
currency
usage; a reduction in foreign currency usage leads to an increase in
foreign currency earnings; the larger the foreign currency earnings,
the greater
the excise duty rebate.
[3] The right to cede was contained in note 5
(vi)(a)(ii) of rebate item 609.17 in Schedule 6 of the Customs and Excise Act 91
of
1964 which was in these terms:
“a customs and excise manufacturing
warehouse [VW] may cede any specific amount of foreign currency earnings in
respect of motor
vehicles exported by such warehouse, as specified in a
certificate issued by the Director-General: Trade and Industries, on
recommendation
of the Board on Tariffs and Trade, to other customs and excise
manufacturing warehouses [MB].”
[4] The application to the Board on
Tariffs and Trade (“the Board”) for a recommendation was made by VW
after the repeal
of the note.
[5] The Commissioner of Customs and Excise is
the functionary charged with the administration of the Act and is in that regard
subject
to the control of the Minister of Finance (s 2(1)). The Act imposes
further duties and confers obligations upon the Director-General:
Trade and
Industry (“the Director-General”) and these are to be performed by
him personally or under his delegation,
control or direction (s 3A(1)). An
independent body, the appellant Board, established under Act 107 of 1986, not
only advises the
Minister of Trade and Industry under that Act but also has
certain assigned duties in terms of, at least, Schedule 6. Further advisory
functions in terms thereof have been entrusted to another board, that of Trade
and Industry. Since export incentive schemes and
industrial development
programs are primarily the concern of the Department of Trade and Industry, it
is understandable - as is apparent
from a reading of Schedule 6 - that its
functionaries and advisory bodies should have an important role to play in
relation to rebates
and refunds connected with these programs.
[6] The
Commissioner does not (or, at least, did not in this case) assess customs duty.
According to the evidence, the payment of
duty was based upon an honour system
and motor manufacturers such as VW paid duty on the basis of their own
assessment of their liability.
The views of the Commissioner relating to the
interpretation of the Schedule and, more particularly, in relation to foreign
currency
usage (where the problem arose in this case) and the right to cede
them, are legally irrelevant. Notes 4 (iii) and 5 (vi), for instance,
make it
clear that the responsibility relating to the method and basis of calculation
and verification of foreign currency usage
is that of the Director-General.
When the Commissioner purported to grant conditional “permission” to
VW to cede the
foreign currency earnings in contention, he was acting beyond his
competence.
[7] In order to cede, VW required three things: (a) the
necessary foreign currency earnings, (b) a recommendation of the Board and
(c) a
certificate issued by the Director-General. During the period May 1991 to 31
August 1995 VW was from time to time possessed
of “surplus” foreign
currency earnings. On three occasions it applied for the necessary Board
recommendation in respect
of specified amounts and specific cessionaries, and
these applications were successful. On 15 April 1997, nearly eighteen months
after the repeal of the cession provision, VW applied to the Board for its
recommendation in relation to the amounts and periods
in contention. Because of
the repeal, the Board held the view that it did not have the necessary
competence to deal with the matter.
[8] VW, well aware of the Board's view,
launched the present proceedings. In order to succeed, it had to make out a
case that, in
the terms of s 12 (2)(c) of the Interpretation Act 33 of 1957, it
had at the time of repeal an “accrued” or “acquired”
right. The founding affidavit is devoid of any attempt to allege or prove the
existence of such a right and the judgment of Van
Dijkhorst J (whose reasoning
VW's counsel did not adopt) also does not deal with the issue. The reason for
the failure on behalf
of VW is to be found in its approach to the matter namely
that “legislation can only be applied as it existed at the time of
payment
of the account”, presumably for excise duty. In argument before us the
submission was different, namely that VW had
taken steps to avail itself of the
right to cede by earning foreign currency or alternatively that the relevant
provision of the
Interpretation Act does not apply to tax matters (something the
present case is not).
[9] Turning to the cause of its failure, VW stated
that it “erroneously” included certain excluded royalty
payments in its returns of foreign currency usage. In the application
to the
Board it had already stated that the amendment had not been brought to the
attention of motor manufacturers and that the Commissioner
erroneously collected
duty where royalty payments had been included (by VW) in the accounts. Had
they been correctly omitted,
VW would have ceded the excess. In the answering
affidavit the Chairman of the Board stated that he did not know whether the
inclusion
had been in error; the response thereto does not take the matter
further.
[10] What makes the case unique or unparalleled in the judgment of
Nienaber JA, is the erroneous view held by the Commissioner about
the
calculation of royalties in determining the foreign currency usage. I have
already come to the conclusion that it is an irrelevant
consideration, but in
any event, my assessment of the facts differs from his. Admittedly, in the
founding affidavit the deponent
did state that the Commissioner specifically
notified manufacturers that all their royalty payments had to be included in
their accounts.
This was, however, done on the last day of the life of the
provision by letter of 31 August 1995 and then only in relation to the
last
quarter (1 June to 31 August 1995). It needs to be mentioned that the excise
returns and payments are done on a quarterly
basis and that the amount VW wishes
to cede in respect of this quarter is but R312 934,00. In reply, VW pertinently
stated that
it acted on this specific letter in the calculation of the
net foreign currency usage. There is no evidence of any previous ruling by the
Commissioner
and, since the manufacturers were unaware of the provision until an
unknown date, there could not have been any ruling before such
a date. It was
in this context that the Board alleged that VW had paid duty on its own
assessment of its own liability, an allegation
that has to be accepted for
purposes of the case. Further, in reply, VW repeated the allegation baldly
made in the founding affidavit
that it had taken all reasonable steps to
ascertain the correct legal position. In response to a specific allegation in
the answering
affidavit that VW did not state what steps it took at the time and
whether they were reasonable, VW vaguely referred to discussions
which
culminated in a letter of 12 June 1996 and representations as evidenced in the
letter of 31 August 1995 which has already been
dealt with. No dates or
particulars are given. Having failed to respond to a direct invitation to
provide the facts, VW can hardly
rely on a benevolent interpretation of its
affidavits. Furthermore, since it is not alleged that an application to the
Board was
dependent upon a ruling or certificate from the Commissioner, there is
no reason why WV upon becoming aware of the 1991 amendment,
was prevented from
applying. Litigation was not required. The Commissioner, faced with a cession
based upon a certificate from
the Director-General, has to grant the
rebate.
[11] In my judgment, these facts are not unique. Even if unique,
that fact could at best be relevant in the context of a determination
of whether
the provisions of the Interpretation Act do not apply because an intention
contrary to s 12 (2)(c) appears from the repealing
law. That is not VW's
case.
[12] It is next necessary to determine on which “right” VW
relies. During argument counsel for VW expressly disavowed
any reliance upon the
right to cede. In other words, he accepted that the right to cede in terms of
the note was not acquired and
did not accrue to VW before the repeal. The
concession was rightly made if regard is had to the tests formulated by Nienaber
JA
in par 13. Since the whole object of the present exercise is to cede the
foreign earnings, this disavowal ought to be the end of
VW's case.
[13] Another conceivable accrued right is the “ancillary right to
approach the Board for its recommendation” to the Director-General,
a
right not persisted in during argument but the cornerstone of the judgment of
Nienaber JA. In this context regard should be had
to par (e) of s 12 (2) of the
Interpretation Act, a provision complementary to par (c). For the sake of
convenience, both are quoted:
“(2) Where a law repeals any other law,
then unless the contrary intention appears, the repeal shall not -
(a) . .
.
(b) . . .
(c) affect any right, privilege, obligation or liability
acquired, accrued or incurred under any law so repealed; or
(d) . .
.
(e) affect any investigation, legal proceeding or remedy in respect of
any such right, privilege, obligation, liability, forfeiture
or punishment as is
in this subsection mentioned,
and any such investigation, legal proceeding or
remedy may be instituted, continued or enforced . . . as if the repealing law
had
not been passed.”
Steyn CJ, in dealing with the relationship
between the two paragraphs, said:
“It is apparent that sec. 12 (2) does
not purport to preserve any claim to an investigation, legal proceeding or
remedy as an
independent right or privilege, but only in relation to another
right or privilege acquired or accrued, or to an obligation or liability
incurred under the law repealed, and merely as ancillary to and as a means of
establishing and enforcing such a right, privilege,
obligation or liability. The
primary enquiry in the present case is not, therefore, as to the accrual of a
right of action or other
legal remedy, but as to the accrual of a right which
the creditors became entitled to pursue, through the liquidators, by the
institution
of legal proceedings.”
(Gunn and Another NNO v Barclays
Bank DCO 1962 (3) SA 678 (A) 684B-D.) To my mind the right to approach the
Board amounts to a “right” to an investigation leading
to a
recommendation. It does not differ in kind from the right to institute
proceedings in a particular forum, the subject of Minister of Public Works v
Haffejee NO 1996 (3) SA 745 (A).
[14] From another angle, the right to
approach the Board may be regarded as “the power to take advantage of an
enactment”,
something which, according to the classical exposition in
Abbott v The Minister for Lands [1895] AC 425 (PC) 431 adopted in
Mahomed v Union Government 1911 AD 5 at 10 in fine, cannot
properly be deemed a “right accrued”.
[15] In conclusion, it is
necessary to consider whether VW had “acquired” a conditional right,
a matter dealt with in
par 20 of Nienaber JA's judgment. In this regard my
evaluation of the factual premise of the judgment is different. I have already
dealt with the supposition that “VW had to establish the factual
foundation for a right to cede i e a foreign currency earnings
excess”,
that it “was the area of concern of the Commissioner” and that the
certification from the Director-General
“would presumably follow as a
matter of course”. The finding, perhaps tentative, that VW “had
applied to the
Board for its appraisal” before the repeal overstates the
evidence as I understand it. VW, in the present instance, made its
application
in respect of seven out of sixteen excise quarters over the period 1 September
1991 to 31 August 1995. There is documentation
which indicates that in
relation to three of the seven quarters VW had made applications to the Board,
but nothing further. One
of these did not concern MB and the other two included
proposed cessions to other motor manufacturers. VW's application can therefore
in a very limited respect be regarded as an application to correct or adjust a
calculation. In any event, I find it difficult to
envisage how conditional
rights can be regarded as vested rights. The mere fact that they are
conditional ought to disqualify them
from having been acquired. In
Rustenburg Platinum Mines Ltd v Motletlegi NO and Another 1954 (2) SA 597
(T) the mine had an option to purchase certain mineral rights which it had not
exercised when the repealing provision
became effective. As a result of the
repeal, the mine was prohibited from purchasing these rights. The option, which
in a sense
gave rise to a conditional right, was not enough. Cf Browne v
Incorporated Law Society of Natal 1968 (3) SA 535 (N) 540D-H. The judgment
in Director of Public Works and Another v Ho Po Sang and Others [1961] AC
901 (PC) is to a similar effect and, on my reading, in conformity with the test
laid down by Nienaber JA in par 13. See
also Wiechers Administratiefreg
2nd ed p 65-68. If the result appears to be inequitable, it is
because only acquired or accrued rights are protected upon repeal of
a statute
and not lesser expectations and hopes.
___________________
L T C HARMS
JUDGE OF APPEAL
AGREE:
MPATI
AJA
SAFLII:
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