PFC Properties (Pty) Ltd v Commissioner for the South AFrica Revenue Services and others

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Schippers JA, Mbatha JA, Hughes JA, Weiner JA and Unterhalter AJA
• Judgment Date: 21 July 2023
• Citation: 2023 JDR 2668 (SCA)
• Hearing Date: 15 May 2023
• Docket Number: 543/2021
• Court: Supreme Court of Appeal

Weiner JA (Schippers, Mbatha and Hughes JJA and Unterhalter AJA concurring):

Introduction

[1]

Two related matters came before this Court on appeal. The first (case no 543/2021) concerned an appeal against a winding-up order granted against the appellant, PFC Properties (Pty) Ltd (PFC), in favour of the first respondent, the Commissioner for the South African Revenue Services (SARS). The winding-up order was granted by the Gauteng Division of the

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High Court, Pretoria (Pretoria High Court). The appeal is with the leave of that court.

[2]

The second matter (case no 409/2022) concerned a business rescue application brought in the KwaZulu-Natal Division of the High Court, Pietermaritzburg (Pietermaritzburg High Court), after the launch of the winding-up application, by Mrs Brita De Robillard NO and Mr Clifford Edward Alexander NO, the trustees (DRFT trustees) of the De Robillard Family Trust, the sole shareholder of PFC, to place PFC into business rescue (the business rescue application). The DRFT trustees applied for a postponement of the application, which was refused. The business rescue application was thereafter dismissed. The appeal, which is with the leave of the Pietermaritzburg High Court, is against both these orders.

[3]

In opposing the winding-up application, PFC relied on s 131(6) of the Companies Act 71 of 2008 (the Act), which provides that the launch of a business rescue application automatically suspends the winding-up proceedings, until the business rescue application is adjudicated upon. [1]

Factual overview

[4]

PFC is a property and asset owning company. Mr Paul De Robillard was a director of PFC until 28 February 2011. Mrs Britta De Robillard, his

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wife, was a director from 1 March 2012 until 24 November 2020. SARS had conducted an audit on PFC for the tax periods 2007/11 and 2011/01 to 2018/12 in respect of VAT and income tax and had issued revised assessments totalling over R52 million in respect of VAT and over R5 million in respect of income tax.

[5]

In the 2010 tax year, PFC commenced with the construction of a residential home situated in the Serengeti Golf and Wildlife Estate (the Serengeti property) in Gauteng. SARS was informed that this was a property development by PFC and numerous VAT claims were submitted to SARS in respect of this development. However, Mr and Mrs De Robillard utilised this property as their matrimonial home.

[6]

In September 2012, SARS informed Mr De Robillard that it held him personally liable for customs and excise related debts incurred by a company styled Doltek Enterprises (Pty) Ltd (Doltek), in the amount of over R89 million. [2] SARS has been engaged in litigation with Mr De Robillard since 2012.

[7]

On 7 November 2012, Mr De Robillard brought an urgent application to interdict SARS from collecting these debts, pending finalisation of an action for declaratory relief (the action). This action was instituted in March 2013, but no steps were taken by Mr De Robillard to prosecute it.

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[8]

When construction of the Serengeti property was completed in 2014, PFC claimed input tax on the construction and development costs. In August 2018, SARS issued a letter of audit findings stating that the input tax claimed was of a private nature and any expenses incurred would be disallowed. In September 2019, the representatives of PFC, Mani Financial Services (MFS), requested reasons for SARS’ findings.

[9]

On 23 September 2019, SARS furnished PFC with the reasons for its audit findings. No response was received to the letter. SARS then issued letters confirming the finalisation of the VAT and income tax audits. PFC filed an objection on 14 November 2019. On the same day, SARS received a written request on behalf of PFC to suspend payment of the debts. PFC did not tender any security and the suspension was refused.

[10]

PFC submitted a supplementary request for the suspension of payment of its tax debt on 13 December 2019, and offered security to SARS. It described itself as ‘an asset holding company [which] constructs and develops properties for the reselling in the property market’. PFC undertook not to dispose of the Serengeti property, as well as two other properties in Dainfern and Douglasdale. Mr De Robillard stated that the properties were ‘immovable properties and there is no risk of dissipation of assets, pending the finalisation of the dispute resolution provided for in Chapter 9 of the TAA. [3] Furthermore, [PFC] is prepared to grant SARS the right to make an endorsement against the properties owned by [PFC] to the effect that the properties will not be sold, or

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if sold, that the [proceeds] will be kept in trust until the dispute resolution process has been finalised’.

[11]

SARS requested details of the properties and their values, which PFC provided. On 18 February 2020, MFS, acting on behalf of PFC, undertook to hold any proceeds of the sale of any of the properties in trust, pending the outcome of the objections in the tax matters. SARS granted the suspension, but, due to an oversight, did not register any endorsements against the properties.

[12]

Mr De Robillard did not proceed with the action instituted in 2013. SARS thus enrolled the matter for hearing. In July 2020, seven years after the action was instituted, Mr De Robillard withdrew it and tendered SARS’ costs. The withdrawal of the action enabled SARS to recover the outstanding amount from Mr De Robillard and in September 2020, SARS demanded payment of R148 381 928.26. Payment was not forthcoming and on 3 November 2020, SARS applied to sequestrate Mr De Robillard.

[13]

Mr De Robillard did not file an answering affidavit dealing with the merits of the sequestration application. He filed a ‘preliminary answering affidavit’ with a counter-application to stay the sequestration application until the interdict granted in 2012 (referred to in para 7) was set aside. He could not show that the interdict had been granted. Unable to prove these allegations, his counter-application was dismissed. On 3 November 2020, a provisional

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sequestration order was granted against Mr De Robillard. It was confirmed on 24 May 2021. [4]

[14]

The fourth respondent, Ms Roselyn Chantal Noel and the fifth respondent, Mr Cloete Murray, were appointed as joint trustees in the insolvent estate of Mr De Robillard [5] (the trustees). On 9 December 2020, Mr Murray visited the Serengeti property and was informed by the De Robillards, who were still residing there, that PFC was no longer the owner of the Serengeti property. It had been sold and transferred to the second respondent, Tianjin Pengbo Weiye SA (Pty) Ltd for R11,5 million in November 2020, despite being valued at R50 million. Only R1 million of the purchase price had been paid to PFC. Mr Murray reported this to SARS.

[15]

Despite having given SARS security in relation to the properties and its undertaking that if they were sold, the proceeds would be kept in trust, PFC, acting through Mr De Robillard, embarked upon a campaign to strip itself of all its assets against which a creditor could levy execution. In particular, it sold all three immoveable properties which it had undertaken not to dispose of. In addition, it disposed of a luxury yacht valued at R45 million in PFC’s 2019 financial statements. It was sold for R12 million. Another yacht valued at R13 million was sold for R570 000.

[16]

As a result of this fraudulent conduct and in the absence of any security, SARS informed Mr De Robillard, in February 2021, that it was withdrawing

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the suspension of payment of PFC’s VAT and income tax. No response was received to this letter and the suspension of payment was withdrawn. The objection to the tax assessments was also disallowed by SARS on 11 February 2021.

[17]

SARS launched the winding-up application against PFC on 26 February 2021. It was set down for hearing on 23 March 2021. On 19 March 2021, the fourth and fifth respondents in their capacity as the trustees of the insolvent...