Arena Holdings (Pty) Limited and others v South African Revenue Service and others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Baqwa AJ, Kollapen J, Madlanga J, Majiedt J, Mathopo J, Mbatha AJ, Mhlantla J, Rogers J and Tshiqi J |
| Judgment Date | 30 May 2023 |
| Citation | 2023 JDR 1814 (CC) |
| Hearing Date | 23 August 2022 |
| Docket Number | CCT 365/21 |
| Court | Constitutional Court |
Mhlantla J (Madlanga J, Mbatha AJ and Tshiqi J concurring):
Introduction
This matter is about the balance to be struck between competing rights. That is, on the one hand, the right to privacy and, on the other, the rights of access to information and freedom of expression. The matter concerns the constitutionality of sections 67 and 69 of the Tax Administration Act [1] (TAA) and sections 35 and 46 of the Promotion of Access to Information Act [2] (PAIA). It is primarily centred on the question whether the order granted by the High Court of South Africa, Gauteng Division, Pretoria [3] (High Court), declaring section 35 [4] and section 46 [5] of PAIA unconstitutional and invalid, to the extent that they preclude access to tax records by a person other than the taxpayer (a requester) even in circumstances where the requirements set out in subsections 46(a) and (b) of PAIA are met, should be confirmed.
As these are confirmation proceedings, this Court's jurisdiction is engaged. In terms of section 167(5) of the Constitution, this Court makes the final decision whether an Act of Parliament is constitutional and must confirm any order of invalidity made by the Supreme Court of Appeal and High Court before that order has any force. Of course, this Court must conduct its own evaluation and satisfy itself that the impugned provisions do not pass constitutional muster before confirming the order of invalidity. [6]
Parties
The first applicant is Arena Holdings (Pty) Ltd (Arena), formerly known as Tiso Blackstar Group (Pty) Ltd, a private company that owns various media houses, including the Sunday Times, the Sowetan, the Herald, the Daily Dispatch, the Business Day and the Financial Mail. The second applicant is AmaBhungane Centre for Investigative Journalism NPC (AmaBhungane), a non-profit company engaged in public interest investigative journalism. The third applicant is Mr Warren Thompson, a financial journalist, who was employed by Arena at the time of the High Court application.
The first respondent is the South African Revenue Service (SARS), South Africa's tax-collection authority. The second respondent is Mr Jacob Gedleyihlekisa Zuma (Mr Zuma), the former President of the Republic of South Africa. The third and fourth respondents are the Minister of Justice and Correctional Services (Minister of Justice) and the Minister of Finance, respectively. The fifth respondent is the Information Regulator (Regulator), the authority tasked with the monitoring and enforcement of PAIA.
2023 JDR 1814 p6
Mhlantla J (Madlanga J, Mbatha AJ and Tshiqi J concurring)
The respondents – except for the fifth respondent – oppose this application and have each filed an application for leave to appeal [7] against the order of the High Court. The fifth respondent has filed an explanatory affidavit and a notice to abide. Due to the number of applications before this Court, the applicants in the confirmation proceedings will collectively be referred to as the applicants. The respondents will be referred to individually.
Background facts
Early in 2019, the third applicant made an application to SARS, in terms of PAIA, to gain access to Mr Zuma's tax records. The application was premised on allegations that were made by Mr Jacques Pauw in his book titled The President's Keepers [8] and subsequently by several other persons. It was averred that there was "credible evidence" that, while he was President, Mr Zuma was not tax compliant.
On 19 March 2019, SARS refused the third applicant's application on the basis that Mr Zuma was entitled to confidentiality under sections 34(1) and 35(1) of PAIA as well as section 69(1) of the TAA. The third applicant launched an internal appeal against SARS' refusal. On 30 March 2019, SARS dismissed the appeal on the same grounds. Following SARS' refusal, the applicants launched an application in the High Court.
Litigation history
High Court
On 25 November 2019, the applicants launched a constitutional challenge in the High Court requesting it to determine whether tax information held by the state receives
2023 JDR 1814 p7
Mhlantla J (Madlanga J, Mbatha AJ and Tshiqi J concurring)
absolute protection from disclosure under PAIA. In their application, the applicants challenged the constitutional validity of the statutory prohibition of the disclosure of a taxpayer's tax information held by SARS, in circumstances where such disclosure would reveal evidence of a substantial contravention of the law and would be in the public interest.
Before the High Court, the applicants contended that there was credible evidence that Mr Zuma: (a) had evaded tax while he was President; (b) had failed to disclose other sources of income he received; and (c) did not pay tax on the fringe benefits he received. The applicants relied on allegations contained in Mr Pauw's book. They submitted that there is credible evidence in that book that Mr Zuma was not tax compliant. [9] Thus, they argued that all the evidence they tendered could only be verified by the tax information SARS refused the applicants to access.
The applicants argued that the prohibition to access information of a taxpayer rendered by sections 35(1) and 46 of PAIA and Chapter 6 of the TAA is unconstitutional in so far as such access is in the interest of the public. In addition, that this prohibition is an unjustifiable limitation of their constitutional right to freedom of expression and right of access to information. Consequently, they sought the following relief: (a) a declaration that PAIA and the TAA are unconstitutional to the extent that they do not permit access to a taxpayer's tax information under PAIA by a requester other than the taxpayer concerned, even if it is clearly in the public interest that this information should be disclosed; (b) reading-in relief that would extend the limited public interest exception in PAIA; and (c) an order granting access to Mr Zuma's tax records.
2023 JDR 1814 p8
Mhlantla J (Madlanga J, Mbatha AJ and Tshiqi J concurring)
Mr Zuma did not participate in the High Court proceedings. SARS, the Minister of Justice, and the Minister of Finance opposed the application. The Regulator filed a notice to abide the order of court.
The High Court held that the notion proffered by SARS and the Ministers that voluntary disclosure and taxpayer compliance is inextricably linked to, or dependent on the taxpayer secrecy regime is not a universal truth. [10] The Court said that there are various foreign jurisdictions with less restrictive and secretive regimes and their tax administration is neither hampered nor prevented thereby. The High Court further said that research shows that voluntary tax compliance will increase if government spends tax wisely and that taxpayers will pay their tax honestly if they get valuable public services in return. [11] Thus, the Court was doubtful about SARS' assertion that tax compliance is heavily reliant on the secrecy of taxpayer information.
The Court stated that there was a need to decide whether the premise relied upon by SARS was sacrosanct enough to support the limitation it contends is constitutionally justifiable. The Court then held:
"The 'compact' relied on by the Commissioner, namely that truthful and accurate disclosure is made in exchange for secrecy, is open to some doubt . . . [T]he non-disclosure provisions are not linked to the provisions obliging taxpayers to make truthful and accurate submissions to SARS. On the contrary, the failure to make truthful and accurate submissions are indeed linked to the penalty and criminal sanction . . . To put it bluntly, there is no direct or factual evidence that taxpayers in South Africa rather make disclosure of their affairs because of the secrecy provisions as opposed to the coercion of the penalties and sanctions which follow upon non-disclosure." [12]
2023 JDR 1814 p9
Mhlantla J (Madlanga J, Mbatha AJ and Tshiqi J concurring)
The High Court held that the assertion of the right to privacy and secrecy relied on by SARS and the Ministers did not fulfil the limitation test as set out in section 36 of the Constitution. Therefore, the limitations on the access to information are not justified. The High Court found that the argument that public interest overrides the limitation of taxpayer confidentiality was justified. The Court held that the blanket prohibitions of disclosure of taxpayer information contained in section 35 of PAIA and section 69 of the TAA unjustifiably limit the right of access to information provided for in section 32 of the Constitution. It concluded that a "reading-in" of the "public–interest override" provisions contained in section 46 of PAIA was justified and competent.
The High Court thus declared the impugned provisions invalid and unconstitutional. It ordered an interim reading-in. After making the declaration of invalidity, the Court granted the application for the release of Mr Zuma's tax records.
In this Court
The applicants now approach this Court to confirm the declaration of invalidity made by the High Court (confirmation application).
Applicants' submissions
Constitutionality of the impugned provisions
The applicants submit that there is an absolute prohibition on disclosure of tax information of a taxpayer held by SARS to a PAIA requester other than the taxpayer concerned. They submit that a "public-interest override" which permits disclosure of information listed in Chapter 4 of Part 2 of PAIA does not apply to section 35 of PAIA. The applicants submit that, although section 69 of the TAA is subject to some exceptions, these exceptions do not include a PAIA request. Additionally, section 67 of the TAA prohibits the disclosure to a third party and prohibits the further disclosure of...
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