CASE LAW UPDATE

Facts: Before colonialism, communities in Limpopo paid tributes to their traditional leaders, often in the form of goods or labour. With the advent of colonialism and apartheid, these practices were corrupted as traditional leaders were co-opted to act as servants of the State, and to collect taxes both for themselves and for the colonialists. The practice of traditional leaders imposing taxes rather than receiving voluntary tributes has survived to this day. Across Limpopo, communities are forced to pay levies to traditional leaders. Communities are required to pay a wide range of levies imposed, and collected by, traditional authorities. The most common is the annual levy.

Application: For confirmation of an order of constitutional invalidity granted by the High Court in terms of section 172(2)(a) of the Constitution. The High Court declared section 25 of the Limpopo Traditional Leadership and Institutions Act 6 of 2005 (the Limpopo Act) unconstitutional. Section 25 provides for traditional councils to “levy a traditional council rate upon every taxpayer of the traditional area concerned”. That rate must be approved by the Premier and gazetted in the Provincial Gazette, and if the rate is not paid, a taxpayer can be “dealt with in accordance with the customary laws of the traditional community concerned”.

Discussion: Levies are imposed to raise money for a specific purpose, including in one instance for a new car for a chief. Some levies are imposed in order to access a common resource. These include levies to allocate a stand, allow the running of a business or bury a family member. Levies are imposed for an act that should be free of charge, like providing a proof of address letter. Fines are often imposed for the non-payment of levies. The levies are not discussed or adopted by communities. They are adopted by chiefs, or traditional authorities, and then announced to villagers who are given no choice but to pay them. The levies are enforced by denying access to services or resources until outstanding levies have been paid. The evidence reveals that another common method of extracting payment is refusing to provide a proof of address letter, or other letters required by the State. These are important for members of traditional communities to access government services – such as social grants – and basic commercial services such as bank accounts. Refusal to pay levies has real consequences for community members.

Findings: A charge is still a tax if it is imposed on a section of the population. The Limpopo Act authorises the imposition of a charge on all the residents in a traditional authority’s area of jurisdiction. Under the Constitution, traditional leaders are not democratically elected legislative bodies, and therefore cannot impose taxes in terms of legislation. Neither can they impose taxes under customary law. The Provincial Legislature cannot delegate its power to impose taxes to either traditional leaders or the Premier. The rates and levies share all the characteristics of traditional taxes – they are compulsory charges, uniformly imposed, paid into a general fund, for the public good or the provision of services. The High Court was correct to conclude that section 25 of the Limpopo Act is unconstitutional and invalid and the order of invalidity of that Court must be confirmed.

* See from para [51] for the discussion on how briefing four counsel for the purposes of opposing a costs order was not justified.

Order: The High Court’s order of invalidity is confirmed. Section 25 of the Limpopo Traditional Leadership and Institutions Act 6 of 2005 is declared inconsistent with the Constitution and invalid.

THERON J (unanimous)

Issue: The judge was considering an application for leave to appeal when one of the cases cited could not be found in the Juta or LexisNexis reports, nor on SAFLII. The judge requested the two law researchers employed at the Pietermaritzburg High Court to peruse the supplementary notice of appeal and to provide all the cited cases. Of the nine cases referred to and cited, only two could be found to exist, albeit that the citation of one was incorrect. The judge had serious concerns and wanted to afford counsel an opportunity to provide the authorities she relied on. Counsel contended that the case references were provided to her by the “article clerk” at the attorney firm and that she had not had sight of the cases as she was “overbooked” and working under a lot of pressure.

Response: The candidate attorney appeared before the judge and denied having used an artificial intelligence application such as ChatGPT to assist with her research. The proprietor of the firm appeared in court and indicated that it was not possible to obtain copies of the cases the judge required as the librarian wanted him to pay for the copies, which he was not willing to do. He indicated that they needed time to provide the court with the relevant copies of the cases cited. The judge indicated to him that it would be difficult to do so, as the cases did not exist.

Discussion: The proprietor unfortunately had no understanding of how serious the actions of counsel and the candidate attorney were, and that it simply could not be brushed aside as an oversight or mistake, especially when there had been no full disclosure of the source of the cases cited and where there had been an apparent failure of supervision of the candidate attorney’s work. A court should also be able to assume and rely on counsel’s tacit representation that the authorities cited and relied upon do actually exist. Counsel blindly relied on authorities provided to her by the candidate attorney, without checking the references when addressing the judge at the initial hearing. The attorney firm issued the supplementary notice of appeal, drafted by a candidate legal practitioner, without anyone, or at least her principal, checking if it was properly done and if the authorities cited were indeed correct, or did in fact exist.

Findings: In this age of instant gratification, this incident serves as a timely reminder to, at least, the lawyers involved in this matter, that when it comes to legal research, the efficiency of modem technology still needs to be infused with a dose of good old-fashioned independent reading. Courts expect lawyers to bring a legally-independent and questioning mind to bear on, especially, novel legal matters, and certainly not to merely repeat in parrot-fashion, the unverified research of a chatbot. In this judge’s view, relying on AI technologies when doing legal research is irresponsible and downright unprofessional.

Order: The applicant’s application for leave to appeal is dismissed with costs, such costs to be on scale C. The costs incurred in respect of the additional appearances due to the case citations are to be paid by Surendra Singh and Associates (de bonis propriis) on scale A. The registrar is requested to send a copy of the judgment to the Legal Practice Council.

BEZUIDENHOUT J

Facts: Ms Wild has been a practicing advocate for 42 years, and is currently a member of the third respondent, the Bisho Society of Advocates (BSA). In 2017, the Eastern Cape Society of Advocates (ECSA) issued an application in the High Court seeking an order that the name of Ms Wild be struck from the roll of advocates. The application was brought in terms of section 7(4) of the Admission of Advocates Act 74 of 1964 (the AAA) and common-law. The Legal Practice Act 28 of 2014 (the LPA) came into effect in 2018 and in 2019 the chairperson of the Legal Practice Council (LPC) issued an “advisory note” to all advocates regarding transitional arrangements.

Appeal: The appellant appeals against a decision of the High Court which dismissed her application to review and set aside the decision by the LPC to issue an advisory note to all advocates regarding disciplinary proceedings involving advocates. Alternatively, she sought a declaration that the LPC did not take any decision recorded in the advisory note. Counsel for the appellant submitted that the proper interpretation of section 116(2) of the LPA is that the LPC takes over from the ECSA in the striking-off application against Ms Wild.

The advisory note: It is the provisions of section 116 of the LPA that changed the status quo and brought in a new dispensation, not the advisory note. The advisory note was merely restating and explaining how the transition to the new dispensation was to be carried out. In effect, its purpose was to preserve the status quo as regards striking-off applications already instituted by bodies like the ECSA and the GCB. There are no new procedures initiated in the advisory note. The advisory note did not change any law or procedure contained in the LPA. Ms Wild is already facing a striking-off application. It is that application that has the capacity to affect her rights, not the advisory note. Ms Wild failed to demonstrate that the advisory note adversely affects her rights and that it has a direct, external legal effect. Accordingly, it does not constitute administrative action and is not reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA).

Section 116(2): The LPA does not detract from the position of Advocates’ Societies, who are still custodes morum over the profession of advocates, neither does the LPA intend to afford exclusive jurisdiction to the LPC in this regard. The restructuring brought about by the LPA did not change the common-law as far as inherent powers of the courts over legal practitioners are concerned. Had there been an intention to bring about such a change, such would have been expressly stated. There is no provision in the LPA that clearly and unequivocally indicates an intention to alter the common-law standing of Advocates’ Societies, arising from the inherent jurisdiction of the courts to consider striking-off applications. Instead, section 44(2) of the LPA confirms and affords rights to any person who has locus standi to apply to the high court “for appropriate relief in connection with any complaint or charge of misconduct against a legal practitioner.” The long-standing recognition by courts of the locus standi under the common-law to apply for the striking-off of advocates is not ousted by the LPA. On the contrary, it is preserved.

Order: The appeal is dismissed with costs including the costs of two counsel.

MOKGOHLOA JA (KEIGHTLEY JA, BAARTMAN AJA, COPPIN AJA and DOLAMO AJA concurring)

Facts: Ms Steenkamp was employed as an accountant by Medtronic Africa. Although employed by Medtronic Africa, she performed functions for Medtronic International as well. Her duties entailed all VAT-related work, and the management of audits from tax authorities. During that period Ms Steenkamp embezzled just over R537 million from the Medtronic Group. She did this by exploiting SARS and the Group’s weak accounting systems. She was later arrested and imprisoned. Medtronic Africa and Medtronic International each applied to SARS’ voluntary disclosure unit for relief in terms of the Voluntary Disclosure Programme (VDP). This they did in terms of sections 225 to 230 of the Tax Administration Act 28 of 2011 (TAA). Their voluntary disclosures related to the VAT underpayments. During the negotiations under the VDP, Medtronic Africa and Medtronic International made separate requests to SARS for the waiver of interest arising from the VAT underpayment.

Appeal: Two voluntary disclosure agreements (VDAs) were concluded, one in respect of each company. After conclusion of the VDA, Medtronic International submitted a request for remission of interest in terms of section 39(7) of the Value Added Tax Act 89 of 1991. SARS refused to consider this request. The High Court remitted the matter to the Commissioner to consider Medtronic International’s request. In this appeal against a judgment of the Supreme Court of Appeal (SCA) the issue is whether a taxpayer, who – in terms of section 230 of the TAA – has concluded a VDA with SARS can seek remission of interest in terms of section 39(7) of the VAT Act where that taxpayer has agreed to pay the interest in terms of the VDA. The majority in the Supreme Court of Appeal did not give a categorical answer to this question.

Discussion: The TAA’s silence on remission of interest in terms of section 39(7) of the VAT Act does not of necessity lead to a conclusion that it permits remission post conclusion of a VDA. A taxpayer concludes a VDA with the section 39(1)(a)(ii) provision on interest with her or his eyes wide open. There can be only one conclusion, and that is that the taxpayer accepts this provision and considers her- or himself bound by it. That being the case, Medtronic International’s contention that – in the event of interest being remitted in terms of section 39 of the VAT Act – it is open to it to walk away from part of this unequivocal covenant is glaringly absurd. It is so that the same section 39 also provides for remission of interest. However, there is simply an illogicality, if not contradiction, for a taxpayer to think that – although the VDP, which culminates in a VDA, requires her or him to commit categorically to pay a specified rate and amount of interest – there is still room to walk away from that categorical commitment.

Findings: It simply leads to a glaring absurdity to permit a taxpayer to conclude a VDA which makes provision for interest and, at the same time, to allow the taxpayer subsequently to deal with issues relevant to interest separately. This destabilises the VDP framework. Finality of VDAs will be up in the air. Regard should be had to these words from Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13: “(a)n interpretation will not be given that leads to impractical, unbusinesslike or oppressive consequences or that will stultify the broader operation of the legislation . . . under consideration”. Medtronic International’s interpretation is at variance with this salutary principle and must fail.

Order: The appeal is upheld and the order of the SCA replaced with an order upholding the appeal and replacing the order of the High Court with an order dismissing the application.

Madlanga ADCJ (unanimous)