Stabilpave v SARS (615/12) [2013] ZASCA

The Background

The South African Revenue Service (“SARS”), owed Stabilpave a tax refund to the amount of R724 494.29. Stabilpave was issued with a tax assessment form (IB34), dated 16 October 2006, the form contained a notice to the plaintiff that payment of the refund ... “will be made by cheque which can be collected at your nearest Post Office, or if the valid information is available, the payment will be made electronically by using the information on your tax record”,.... SARS did not have the plaintiff’s banking information available and consequently drew a “not transferable” cheque in favour of the plaintiff.1
SARS sent the cheque to Securemail, a division of the South African Post Office. Securemail caused a delivery notification to be issued to the address that appeared on Stabilpave’s tax record, this was a post box at Menlyn Retail Park Post Office. Neither Stabilpave or anyone representing it received the deliver notice. The delivery notice was received by, Mbukuman Wellington Mtima (“Mtima”), and Mtima collected the envelope with the cheque from the Post Office. He presented the delivery notice as well as a falsified letter from a firm of accountants, Prinsloo & Du Plessis Inc, ostensibly authorising the collection. No such firm existed and even if it had, it had no connection with the plaintiff.2
The particulars of the directors of Stabilpave - JM Geyser, JE Raubenheimer and F Kenney - were fraudulently changed in the records kept by the Registrar of Companies to reflect one Petros Mandla Radebe as its sole director. Radebe, acting
fraudulently and without the authority of Stabilpave, opened a bank account with First National Bank, Hatfield Branch, in the name of ‘Stabilpave (Pty) Ltd’. The cheque was deposited at First National Bank, Menlyn Branch and the account opened by Radebe was credited with the amount of R728 474.74. The cheque was
1Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013) at paragraph 2.
2 Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013) at paragraph 3.
presented for payment to ABSA Bank which duly paid that sum to First National
Bank and the account of SARS was debited with the amount paid and these
proceeds were withdrawn from the account in a very short period.3
The Arguments
Counsel for Stabilpave submitted that, SARS chose to make payment of the amount
due by means of a cheque and to send the cheque to Menlyn Post Office where the
cheque ought to be collected, and, that the present case fell squarely within the
following dictum of Nienaber J [as he then was] in Mannesmann Demag (Pty) Ltd v
Romatex Ltd and Another4 expressed thus:
"When a debtor tenders payment by cheque, and the creditor accepts it, the payment
remains conditional and is only finalised once the cheque is honoured. (Eriksen Motors
(Welkom) Ltd v Protea Motors, Warrenton& Another, 1973 (3) SA 685 (A) at 693, Christie,
the Law of Contract in South Africa at 413). Until that happens a real danger exists that the
cheque may be misappropriated or misled and that someone other than the payee may, by
fraudulent means, convert it into cash or credit, for instance, by forging and endorsement or
by impoersonating the true payee. That risk is the debtor's since it is the debtors duty to
seek out his creditor.''
The argument advanced by Stabilpave found support in the case of Barclays
National Bank Ltd v Wall.5 Wherein it was held: "in law there is no payment if a
cheque is posted and lost before it reaches the creditor”.
Counsel for SARS submitted that the assessment form gave Stabilpave an election
to choose the mode of payment, and that the election could be made by means to
the postal address or alternatively, by providing the banking details. Counsel further
submitted that it was an express term that payment would be made by post if no
banking details were provided. The principle authority relied on by SARS was H K
3 Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013 at paragraph 4.
4 1988 (4) SA 383 (D) at 389.
5 1983 (1) SA 149 (A) at 156H-157C.
Outfitters (Pty) Ltd v General Assurance Society Ltd 6 where Botha J [as he then was] referred to Dadoo & Sons Ltd v Administrator, Transvaal,7 where Rumpff J [as he then was], said: "The legal position appears to be that if a creditor request a debtor to settle his debt by sending a cheque through the post he agrees to run the risk of loss in the transit. By making this request he does not appoint the post office his agent but he authorises the manner of payment. It would depend upon the facts of each case whether or not the request was actually made by the creditor."
The Judgment
The finding of the Supreme Court of Appeal (“SCA”), was foreshadowed by judgments in the North Gauteng High Court where SARS was, at first, successful, Ismail AJ [as he then was], sitting alone, held that Stabilpave made a choice as to how the cheque was to be remitted per post, and that the risk lay with Stabilpave.8
The matter was taken on appeal and heard by the Full Bench of the North Gauteng High Court. The majority decision of the Full Court - Mavundla J and Mothle J concurring - held that the only plausible inference to be made was that there was a tacit agreement that remittance of payment should be done through registered post and that Ismail AJ [as he then was], correctly found that Stabilpave, the Appellant, made a choice as to how the cheque was to be remitted per post, and that the risk lied with the appellant.
The dissenting minority view of Fabricius J is to the effect that the existence of any agreement relating to the mode of payment was not established and that the relevant notification does not contain any indication to the appellant that it was entitled to express its approval or disapproval with the intended mode of payment. The assessment read as a whole, simply and clearly indicates that because SARS did
6 1975 (1) SA 55 at 61.
7 1954 (2) SA. 442 (T) at p.455 F-G.
8 Stabilpave (Pty) Ltd v South African Revenue Services (946/2008) [2009] ZAGPPHC 159 (11 December 2009).
not have the banking details of appellant, payment would be made by cheque posted to the nearest post office.
Stabilpave appealed successfully to the SCA, and it was held by Meyer AJA (Brand JA, Lewis JA, Bosielo JA and Theron JA concurring): That a plain reading of the notice contained in the tax assessment form leads to the inevitable conclusion that it does not give a taxpayer, in this instance Stabilpave, a choice as to a mode of payment to be followed by SARS.9 There is no invitation, expressly or by implication, to the taxpayer to furnish particulars should the taxpayer wish to be paid by means of electronic transfer. If there was such invitation one would have expected the taxpayer to be informed that payment would be effected by means of an electronic transfer, if valid banking particulars were available or furnished by the taxpayer. A further and clear indication that the notice does not afford a choice as to the manner of payment is the absence of a cut-off date on or before which the taxpayer might furnish its banking particulars to SARS.10 No choice was afforded to Stabilpave. The method of payment was dictated by SARS. The mere fact that a creditor knows or expects to be paid by cheque through the post or that it does not raise an objection does not in itself give rise to an implied request or election by the creditor to be paid in such manner.11
The appeal was accordingly allowed, and SARS was ordered to pay Stabilpave to the amount of R724 494.29 and further directed to pay the costs of the suit. With respect, this judgment is a sensible and welcome application of the legal principles applicable to the situation where a cheque has been intercepted in the post and misappropriated by a thief, as set out in the judgment.12
9 Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013) at paragraph 11.
10 Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013) at paragraph 12.
11 Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013) at paragraph 13.
12 Emslie T, Davis DM, Van Dorsten J. The Taxpayer volume 62 No. 9, September 2013. Pg 177