Maize Board v Epol (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Tshabalala JP
• Judgment Date: 18 December 2008
• Citation: 2009 (3) SA 110 (D)
• Docket Number: 9874/2007
• Hearing Date: 04 November 2008
• Counsel: BW Burman SC (with him ND Hollis SC) for the plaintiff. MJD Wallis SC (with him A Stokes SC and MDC Smithers) for the defendant.
• Court: Durban and Coast Local Division

Tshabalala JP:

Introduction

[1] The Maize Board (the plaintiff) seeks to recover levies from Epol C (Pty) Ltd (the defendant) in the amount of R1 532 531,55 for the year 1995. The levies in question are a general levy referred to in s 41 of the now repealed Marketing Act 59 of 1968 (the Act) and s 23 of the Maize Marketing Scheme (the scheme), and a special levy in terms of s 44 of the Act and s 24 of the scheme. The plaintiff is a control board contemplated in s 25 of the Marketing Act charged with the responsibility D of administering the scheme.

[2] It is common cause that summons was issued by the plaintiff more than three years after its claim arose but less than 30 years. The defendant raised a special plea of prescription to the claim and alleged that a three-year prescription period in terms of s 11(d) of the Prescription E Act 68 of 1969 was applicable in this matter, resulting in the plaintiff's claim having prescribed. The plaintiff, on the other hand, argued that the levy and special levy constituted 'a debt in respect of any taxation imposed or levied' within the meaning of s 11(a)(iii) of the Prescription Act and that a 30-year prescription period accordingly F applied.

[3] In terms of rule 33(4) of the Uniform Rules of Court the parties requested this court to separate the issues and that the issue of prescription be dealt with first. The court acceded to the request. Although defendant bore the onus in the case, the court held that it had G established a prima facie case and that the plaintiff ought to be heard first.

Issue

[4] The issue to be decided is whether the levies in question constitute 'taxation' for the purposes of s 11(a)(iii) of the Prescription Act. The H parties have agreed that if this court finds that the levies are a tax and a 30-year prescription period applies, then it should dismiss the defendant's special plea with costs, including the costs occasioned by the employment of two counsel. However, if the levies are found not to be a tax then a three-year prescription period would apply and the plaintiff's I claim would have prescribed and ought to be dismissed with costs, including the costs occasioned by the employment of two counsel.

Relevant legislative provisions

[5] I set out hereinbelow the applicable legislative provisions of the Prescription Act: J

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[5.1]

A Section 10

Extinction of debts by prescription

(1) Subject to the provisions of this Chapter and of Chapter IV, a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription B of such debt.

[5.2]

Section 11

Periods of prescription of debts

The periods of prescription of debts shall be the following:

(a)

thirty years in respect of -

(i)

C any debt secured by mortgage bond;

(ii)

any judgment debt;

(iii)

any debt in respect of any taxation imposed or levied by or under any law;

(iv)

any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances;

(b)

D fifteen years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of paragraph (a);

(c)

six years in respect of a debt arising from a bill of exchange or E other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph (a) or (b);

(d)

save where an Act of Parliament provides otherwise, three years in respect of any other debt.

Plaintiff's case F

[6] Counsel for the plaintiff argued that the ordinary meaning of the word 'tax' must first be ascertained in the context of the Act and the scheme. Reference can also be had to dictionary meanings. Counsel referred to a number of cases, including The Master v IL Back & Co Ltd and Others 1983 (1) SA 986 (A); Commissioner of Customs and Excise v Tayob and Others 2002 (6) SA 86 (T); and City Treasurer and Rates Collector, Newcastle Town Council v Shaikjee G and Others 1983 (1) SA 506 (N). I do not consider it necessary to focus on all the case law that was referred to. Counsel for the plaintiff argued that the meaning to be ascribed to the word 'tax' should be 'a pecuniary charge imposed by the H legislator or other public authority on a person or property for a public purpose'. [1]

[7] During argument counsel submitted that it was unnecessary to consider foreign case law since there were sufficient South African cases that could assist in the interpretation process. Reference was made to Ex I parte Speaker of the KwaZulu-Natal Provincial Legislature: In re KwaZulu-Natal Amakhosi and Iziphakanyiswa Amendment Bill of 1995; Ex parte Speaker of the KwaZulu-Natal Provincial Legislature: In re Payment of Salaries, Allowances and Other Privileges to the

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Ingonyama Bill of 1995 1996 (4) SA 653 (CC) (1996 (7) BCLR 903) where the court, per A Chaskalson P, decided to focus on the Act and what it was saying, and counsel used this to argue that it was unnecessary to look beyond South Africa for guidance.

[8] It was submitted that the levies imposed were for public purposes. Some of the factors that would assist one in reaching this conclusion B were: [2]

[8.1]

The structure of the Act is to control and regulate the production and sale of agricultural products throughout the Republic for the purpose of benefiting the public by stabilising the production and prices of agricultural products with a view to C ensuring stability in the marketplace.

[8.2]

The failure to pay the levies results in a criminal sanction. Offences of this type are enacted to give effect to some government policy that is thought to be in the public interest or to advance public welfare or some favoured economic, social or D political programme.

[8.3]

The Act has wide-ranging implications for the public since maize is the staple diet of our country's population.

[8.4]

The implementation of the Act falls under the control of the E Minister of Agriculture who acts on behalf of the government, which is only able to act in the public interest.

[8.5]

On discontinuance of the scheme all assets of the board shall be handed to the Minister to be utilised by the Minister at his discretion for the advancement of the maize industry. F

[8.6]

The objects of the board display a public character and are for public purposes.

[8.7]

The board is entitled, with the approval of the Minister, to assist financially with various public objectives. G

[8.8]

The Act and scheme apply throughout the Republic.

[8.9]

The accounts of the board are audited by the Auditor-General, which emphasises the public character of the Act.

[9] The plaintiff submitted that the decision in Maize Board v Tiger Oats [3] H (Tiger Oats) was firstly wrong, and secondly distinguishable from the matter at hand. [4] The distinguishing factor between the two cases is that there is a difference in the type of scheme applicable to each case. In 1995 there was a drastic amendment to the scheme which resulted in a change from a controlled marketing scheme to a 'free market scheme' I which applied in the Tiger Oats case. Thus what follows is that the test to

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A be employed in this case will be different as compared to the one adopted in Tiger Oats. It was further argued that the Tiger Oats decision was wrong for the following reasons:

[9.1]

The court incorrectly applied the requirements of a tax as set out in Nyambirai v National Social Security Authority and Another B 1996 (1) SA 636 (ZS) (1995 (9) BCLR 1221). The third and fourth requirements in that test are in dispute.

[9.2]

There is no requirement in the definition of 'tax' that it be imposed on the public or a substantial sector of the public. However, the sellers and buyers of maize could be said to C constitute the public in the requisite sense, as the question of who the public is must be viewed in context. Spoelstra J was wrong in stating that only a few farmers were affected by the levy. Furthermore, it is for the benefit of the public at large to have an orderly market system.

[9.3]

The revenue obtained was to be utilised for public purposes. D There is a difference between 'public purposes' and 'in the public benefit and to provide a service in the public interest', as found to be a requirement in Nyambirai. The fact that part of the levy could be used to enable the plaintiff to perform its functions does not mean that the levy does not qualify as revenue utilised E for public purposes. The levies were to fund the system established for public purposes.

[10] Finally counsel for the plaintiff submitted that each case must be determined in accordance with its facts. When one looks at the facts of this case and the purpose...