Commissioner for Customs and Excise v Standard General Insurance Co Ltd

• Jurisdiction: South Africa
• Judgment Date: 29 September 2000
• Citation: 2001 (1) SA 978 (SCA)

Commissioner for Customs and Excise v Standard General Insurance Co Ltd
2001 (1) SA 978 (SCA)

2001 (1) SA p978

Citation	2001 (1) SA 978 (SCA)
Case No	507/98
Court	Supreme Court of Appeal
Judge	F H Grosskopf JA, Howie JA, Plewman JA, Farlam AJA and Mpati AJA
Heard	September 5, 2000; September 20, 2000
Judgment	September 29, 2000
Counsel	R Meyer SC for the appellant.; M van Eeden for the respondent.

Flynote : Sleutelwoorde B

Revenue — Customs and excise — Prescription — Whether provisions of s 99(5) of Customs and Excise Act 91 of 1964 inconsistent with Prescription Act 68 of 1969 — Provision in s 16(1) of Prescription Act providing that general provisions of that Act applicable to 'any C debt' arising after its enactment applying only if provisions of that Act not inconsistent with those of any other relevant Act — In present case s 99(5) inconsistent with application of provisions of chap III of Prescription Act — Inconsistency demonstrated by treatment of delaying provisions in respective Acts — Section 99(5) an expiry term and not period of prescription — Principle debtor's liability and D accessory obligation in casu having ceased due to operation of s 99(5).

Practice — Trial — Adjudication upon points of law in terms of Rule 33 of Uniform Rules of Court — Resort to procedures of Rule 33 calling for great care in formulation of statement of agreed facts — Provisions of s 21A of Supreme Court Act 59 of 1959 underlining fact that Rule E cannot be invoked to enlist Court's assistance for adjudication of questions not disposing of actual dispute or controversy between parties — Facts to be stated accurately and questions for adjudication correctly formulated.

Headnote : Kopnota

Resort to the procedures of Rule 33 of the Uniform Rules of Court calls for great care in the formulation of the statement of agreed F facts. The provisions of s 21A of the Supreme Court Act 59 of 1959 underline the fact that Rule 33 cannot be invoked to enlist the Court's assistance for the adjudication of questions which do not dispose of an actual dispute or controversy between the parties. The facts must be stated accurately and the questions for adjudication must be correctly formulated. (Paragraph [4] at 983C - D/E.) G

The respondent was an insurance company which had secured the payment of duties by a licensed clearing agent who had cleared certain dutiable goods on behalf of an importer. In terms of the Customs and Excise Act 91 of 1964 (the Act), duty on imported goods was due at the time of importation. The proviso to s 39(1)(b) of the Act, however, permitted the Commissioner to allow registered agents a H deferment of such payments on conditions which he may determine. A company, Gem Shipping, licensed in terms of s 64B of the Act, had applied to the Commissioner in August 1989 for deferment of payment of duties on goods cleared by it. The Commissioner had acceded to its I application subject to the provision of security. Two agreements were then concluded between the Commissioner and the respondent in terms whereof the latter was to provide security for payment of duties by Gem Shipping. The agreements bound the respondent as surety and co-principal debtor for payment of Gem Shipping's obligations. The Commissioner had addressed a demand to Gem Shipping claiming payments due on 22 March 1993 for the total amount of R376 003,31 and terminating the deferment agreement on the grounds of Gem Shipping's non-fulfilment of its obligations thereunder. A demand was thereafter J

2001 (1) SA p979

addressed to the respondent claiming payment in terms of the two A suretyships. The amounts claimed from Gem Shipping became due and payable on 14 February 1993, at which date prescription commenced to run, and Gem Shipping was provisionally liquidated on 6 May 1993, which order was subsequently confirmed. Litigation was instituted by the Commissioner by issue of summons but, after the close of pleadings, the parties had stated a case in terms of Rule 33 of the Uniform Rules of Court for adjudication by the Court a quo. B

On 9 September 1994 the Commissioner had filed a claim against the estate of Gem Shipping including the amounts claimed from the respondent. However, the final liquidation and distribution account had not yet been confirmed by the date of the issue of summons in June 1995. The question for adjudication arose because of a special plea of prescription raised by the respondent based on s 99(5) of the Act, C which provided that any liability in terms of ss (1), (2) or (4)(a) would cease after the expiration of a period of two years from the date on which it was incurred. What had to be considered by the Court was whether and to what extent such provision of the Act was to be reconciled with the Prescription Act 68 of 1969 and whether the provisions governing the suspension of the running of prescription D or delay in the completion thereof could be invoked. To do this a determination of the intention of the Legislature in enacting the particular limitation was required. In an appeal and cross-appeal,

Held, that the suretyship agreement was a performance guarantee and only gave rise to an obligation of an accessory nature. The principal obligation had arisen in terms of the deferment agreement. It was obvious that there must have been an earlier E deferment agreement and that it was only by some process of novation or substitution that the parties could have arrived at the situation where the respondent's obligation as surety secured the payment of duties under the deferment agreement. (Paragraph [4] at 983A - B/C.)

Held, further, that there could be little doubt in the present case that s 99(5) of the Act was inconsistent with the application of the provisions of chap III of the Prescription Act to F the debt. The provision in s 16(1) that the general provisions of the Prescription Act were to apply to 'any debt' arising after its enactment only held true if the provisions of the Prescription Act were consistent with those of the other Act concerned. (Paragraphs [12] and [13] at 985B/C - C and 985D/E.)

Held, further, that nothing could demonstrate the inconsistency of the delaying provisions of the Prescription Act with G s 99(5) of the Act more clearly than the words 'liability . . . shall cease' in s 99(5). With prescription in terms of the Prescription Act, liability could extend beyond the period laid down in s 11 of that Act, whereas with the Act extension was impossible. Section 16 of the Prescription Act therefore provided no reason for reading s 99(5) otherwise than literally. The words 'liability . . . shall cease' in s 99(5) could be contrasted with the H phraseology of s 96, where the words 'the period of prescription' were used in relation to actions against the Commissioner: what was seen was then a deliberate change of wording which led to the conclusion that s 99(5) was intended to give effect as an expiry term (and not as a period of prescription). (Paragraphs [14] and [15] at 985H - I/J and 986A - B.) I

Held, accordingly, that, if the principal debtor's liability had ceased, the accessory obligation of the respondent had also ceased. (At 986C/D - D.) Appeal dismissed and cross-appeal allowed.

Decision of the Witwatersrand Local Division in Commissioner for Customs and Excise v Standard General Insurance Co Ltd [1998] 4 B All SA 46 (W) reversed in part. J

2001 (1) SA p980

Cases Considered

Annotations A

Reported cases

Commissioner for Customs and Excise v Standard General Insurance Co Ltd [1998] 4 B All SA 46 (W): reversed in part on appeal

Hartman v Minister van Polisie 1983 (2) SA 489 (A): considered

President Insurance Co Ltd v Yu Kwam 1963 (3) SA 766 (A): considered B

Road Accident Fund v Smith NO 1999 (1) SA 92 (A): referred to

Standard General Insurance Co Ltd v Verdun Estates (Pty) Ltd and Another 1990 (2) SA 693 (A): referred to.

Statutes Considered

Statutes

The Customs and Excise Act 91 of 1964, ss 39(1)(b), 64B, 99: see Juta's Statutes of South Africa 1999 vol 3 at 2-25, 2-40 - 2-41, 2-57 - 2-58 C

The Prescription Act 68 of 1969, ss 11, 16(1): see Juta's Statutes of South Africa 1999 vol 1 at 1-667 - 1-668

The Supreme Court Act 59 of 1959, s 21A: see Juta's Statutes of South Africa 1999 vol 1 at 1-89; Barrow...