Permanent Secretary of Finance and Another v Shelfco Fifty-one (Pty) Ltd (SA 19 of 2007) [2007] NASC 8 (27 November 2007);
REPORTABLE
CASE NO.: SA 19/2007
IN THE SUPREME COURT
OF NAMIBIA
In
the matter between:
THE |
SECOND |
And
SHELFCO | RESPONDENT |
Coram: Shivute, C.J., Strydom, A.J.A.
et Chomba,
A.J.A.
Heard on: 17/10/2007
Delivered on: 27/11/2007
APPEAL JUDGMENT
STRYDOM, A.J.A.:
[1] This matter concerns the powers of the first appellant to levy
transfer duty upon the sale of property. These powers are set out
and are circumscribed in the Transfer Duty Act, Act 14 of 1993 (the
Act). Sec. 10 (1) of the Act specifically states that the appellant
shall be responsible for the administration of the Act and subsec.
(2) provide for delegation of the duties of the appellant to any
officer acting under his control or direction.
Initially the respondent only cited
the second appellant but when objection was raised to the locus
standi of the Minister of
Finance, on the basis that it was the first appellant who was
charged with the administration of the Act, the respondent applied
for, and was allowed by the Court a
quo, to join the first
appellant to the proceedings. As the appeal lies against the
decision of the first appellant and or his delegate I will refer to
the Permanent Secretary of Finance as the appellant.
The background to the application is
set out by Mr. Kinghorn, the sole director of the respondent and the
legal adviser of a company known as Etale Fishing Co. (Pty) Ltd
(Etale), a commercial fishing company catching, processing and
marketing fish at Walvis Bay. The processing and marketing of fish
is done at a factory which was leased by Etale from Northern Fishing
Industries (Pty) Ltd (Northerns). In order to facilitate the
berthing of fishing vessels to off-load their catches, and to
bunker, a quay and jetty were previously constructed adjacent to the
factory. These structures formed part of the contract of lease
between Etale and Northerns.
When Etale’s term of
lease expired during April 2004 it entered into negotiations with
Northerns and was able to acquire the property previously leased by
it.
The property so acquired
consisted of the following erven, namely:
(a) Portion 9 of Portion B of the Farm
Walvis Bay Town and Townlands No. 1
(b) Erf No. 3690, Walvis Bay; and
(c) Erf No. 4586 (a Portion of Erf No.
4585), Walvis Bay.
The fixtures, erected on these
properties, were the fish processing factory, the administrative
offices, store rooms and other ancillary improvements.
These properties were
transferred by registration in the Deeds Registry at Windhoek on 30
September 2004 into the name of the respondent, the latter being the
nominee of Etale in terms of its agreement with Northerns.
From diagrams compiled by the
Surveyor General and attached to the Title Deeds of the erven, it
seems that erven 3690 and 4586 lie alongside the sea but, in each
instance, only extend to the high-water mark. (See annexures “HK1”
and “HK2”). The quay and jetty were constructed adjacent to
these erven and abutting the erven.
The jetty is described as a permanent
superstructure built of concrete and erected on the sea floor,
jutting out perpendicularly at right angles to the land and
extending approximately respectively 35 and 50 metres into the sea
from where it connects to the quay, where it abuts erf No. 3690. It
was further said that the jetty, for its full length, was erected
below the high water mark and therefore rested exclusively on the
sea bed.
The quay was described as a
superstructure also built of concrete but erected parallel to the
land and forming an artificial new breakwater, approximately 200
meters in length, and also built directly on the sea bed. The quay
abuts both erven 4586 and 3690 as a continuous structure. The
vertical front of the quay is interspaced with vertical openings
which act as pillars allowing the tide to ebb and flow between such
pillars. The high-water mark, it is said, lying in the direction of
the land, is still some metres inland from the vertical (sea facing)
front of the quay. Holes were drilled through the concrete surface
of the quay through which the ocean can be viewed beneath. This
showed that the quay was also built below the high water mark and
therefore stood directly on the sea bed.
Because these structures were
situated on the seabed below the high-water mark, Northerns never
claimed ownership in the structures and they, as well as Etale,
accepted that the structures attached in ownership to the land on
which they were built, by operation of the common law rule and
principle of superficies
solo cedit. It was common
cause that the sea-shore and sea-bed belonged to the State.
As a conveyancer of 25 years
practice, Kinghorn stated that only surveyed erven or portions of
land falling within a local authority’s jurisdiction, or
consisting of farm land in respect whereof an individual surveyor’s
diagram, approved by the Surveyor-General’s office or appearing
from a general plan of a township, likewise duly registered as
cadastral land under the provisions of the Deeds Registries Act, Act
47 of 1937, and for which a title deed had been issued by the
Registrar of Deeds, can be treated as private property and land
capable of being owned privately. All non-private land either
belongs to local authorities or to the Namibian State. Consequently,
it is alleged, that it is evident that neither the jetty nor the
quay, being erected on the sea bed below the high-water mark, could
be owned or become owned by private individuals or corporate
entities, such as Northerns or Etale, as no cadastral diagram
existed or was issued for the sea bed by either the
Surveyor-General’s offices or the Registrar of Deeds. It is
furthermore also clear that the Surveyor-General’s diagrams in
respect of erven 3690 and 4586 did not go beyond the high water mark
and consequently neither the jetty nor the quay formed part of the
immovable properties.
Kinghorn further pointed out that
during the period when Etale leased the property from Northerns,
Northerns, in terms of the lease contract, stated that it acquired
the necessary approval to construct the jetty and quay and warranted
to Etale that it has unrestricted sole and exclusive use and
enjoyment, to the exclusion of all other entities, parties (and
including the owner of the seabed on which the constructions stood),
for an indefinite period which would, at least, endure for the
duration of the lease. A similar warranty was again given by
Northerns in terms of the contract of sale concluded by the parties
on 7 May 2004. (See annexure “HK4”).
In terms of the agreement of sale the
property was bought for an amount of N$23,000,000-00. This amount
was compiled as follows:
(i) the 3 immovable properties with
fixtures
and the jetty and
quay N$18,000,000-00
(ii) movables of fish factory N$
5,000,000-00
Total N$23,000,000-00
In regard to the sale of the
properties, as well as the movables of the fish factory, private
valuations were previously obtained. In regard to the movables the
open market value was determined as N$6,033,000-00. This figure was
reduced by agreement between the parties to N$5,000,000-00.
The three immovable properties
together with fixtures, and including the quay and jetty, were
valued by one de Wit, a sworn appraiser, at N$30,707,400-00.
De Wit was then requested to prepare
an addendum to his valuation in order to adapt his valuation to the
lower purchase price of N$18,000,000-00 paid and to distinguish
between the immovable properties and the jetty and the quay in order
to determine the price for which transfer duty would be payable.
In order to come up with a value of
the various items to adapt to the reduced purchase price of
N$18,000,000-00, de Wit first of all determined what percentage of
his valuation of N$30,707,400-00 represented each of the items, i.e.
the immovable property, the fixtures and the quay and jetty. Once
this was accomplished he proportioned the N$18,000,000-00 according
to these percentages. This resulted in the following values in
regard to each of these items, namely:
(i) The land, comprising the 3
erven N$ 4,998,574-00
(ii) The
Buildings on the land N$ 7,095,684-00
(iii) The
quay and jetty N$ 5,905,743-00
Total N$18,000,001-00
All the parties involved
in the sale agreement were satisfied with the methodology applied
above in adapting the original valuation to fall into line with the
purchase price paid.
Accordingly the valuations set out in
subparagraphs (i) and (ii) were added together as comprising the
value of the land with fixtures which totalled N$12,094,258—00.
Declarations by the seller and purchaser were then prepared in which
a total amount of N$12,094,258-00 was declared as the value of the
land and fixtures and in regard of which the respondent alleged that
it became liable to pay transfer duty and stamp duty upon.
Notwithstanding that numerous
queries, by the office of the appellant, were answered, and
explanations given by Kinghorn, the respondent was informed by
letter dated 15th
September 2004 that the appellant had assessed the payment of
transfer duty on the amount of N$18,000,000-00 instead of the
declared value of N$12,094,528-00. In order to acquire transfer of
the properties in the name of the respondent the assessment made by
the appellant, and stamp duties, were paid under protest.
The basis on which the
respondent was required to pay transfer duty on the amount of
N$18,000,000-00 was set out in a letter dated 15 September 2004,
annexure “HK15”, which emanated from the head office of the
Ministry of Finance and was signed by the Acting Deputy Commissioner
of Inland Revenue, Mr. J.J. Viljoen, of which the relevant part
reads as follows:
“I
herewith confirm that transfer duty should be calculated on the value
of the property as defined in the agreement of sale, which will inter
alia include the value of
the Jetty and Quay. This confirmation is based on the following,
namely:
The purchase price of
the property, as stipulated in the agreement of sale, is in
connection with the erven, improvements and the Jetty and Quay;
The agreement of sale makes a
differentiation between the purchase price for the property and
equipment but there is no differentiation of the purchase price
between the erven, improvements and the Jetty and Quay. The
differentiation was only made after conclusion of the agreement of
sale by a sworn valuator;
Transfer duty is normally calculated
on the purchase price of the property as stipulated in the agreement
of sale. In other words, if the purchase price is in respect of
immovable property and movable property and there is no split of the
purchase price between the immovable and movable property, the
transfer duty will be calculated on the full purchase price;
The definition of the Jetty and Quay,
as stipulated in the agreement of sale, also provides clearance
regarding the ownership and treatment of the two properties. It is
clear that it forms an integral part of the immovable property. It
is stated that the Quay shall irrebuttably be deemed to be forming
part of the land, notwithstanding any possible survey-general’s
(sic) or deeds office’s data to the contrary. The Jetty on the
other hand, is attached to the Quay and was constructed by the
Seller at its own and sole cost. The seller possesses the
unrestricted, sole and exclusive use and enjoyment, to the exclusion
of all other entities, parties (including the owner of the seabed on
which it stands), for an indefinite period; and
The definition of property in the
Transfer Duty Act refers to the land
and any fixtures there on.
(Underlined for emphasis).”
As provided for in sec. 18(1) of the
Act the respondent then appealed, by Notice of Motion, to the High
Court of Namibia and also claimed repayment of the amounts it
alleged it overpaid. The Notice of Motion which, at the time, only
cited the second appellant, the Minister, provides as follows:
“1. That
the Respondent, acting through its Permanent Secretary or other
subordinate official erred in assessing the value for transfer duty
purposes of the following immovable property to be N$18,000,000-00
instead of N$12,094,528-00 to wit:
Erf No. 3690, Walvis
Bay, measuring 9326 square metres, (previously held by Government
Grant No. T10127/1994);
Erf 4586 (a Portion of
Erf No 4585), Walvis Bay, measuring 1,3313 hectares, (previously
held by Deed of Transfer No. T5535/2000).
Portion 9 of Portion B
of the Farm Walvis Bay Town and Townlands No. 1, measuring 1,9998
hectares, (previously held by Deed of Transfer No. 1104/1957).
2. That the Respondent acting through
the Permanent Secretary or any subordinate official erred in
determining that the sum of the transfer duties payable in respect of
the aforementioned immovable properties is N$1,440,000-00
(N$314,960-00 plus N$1,125,040-00), instead of N$967,562-24.
BE PLEASED TO TAKE NOTICE
FURTHER that the Applicant will simultaneously with the
aforementioned appeal apply for an order in the following terms:
Declaring that the stamp
duties paid by the Applicant in terms of the Stamp Duties Act, Act
15 of 1993, in the amount of N$59,054-72 were not payable by the
Applicant to the Respondent;
That the Respondent be
ordered to pay the Applicant the amount of N$59.042-72;
That the Respondent be ordered to pay
interest on the amount of N$59,054-72 at the prescribed rate of 20%
per annum from the 20th
of September 2004 to date of repayment, both dates included;
That the Respondent be
ordered to pay the Applicant the amount of N$472,437-80;
That the Respondent be ordered to pay
interest on the amount of N$472,437-80 at the prescribed rate of 20%
per annum from the 20th
of September to date of repayment , both dates included;
That the Respondent be
ordered to pay the costs of this appeal/application.”
(The amount of N$59,054-72 represents
the stamp duty paid on the difference between the amounts of
N$18,000,000-00 and N$12,094,528-00).
The appellant filed a short
answering affidavit which consisted of 8 paragraphs and which did
not deal with the allegations of the respondent ad
seriatem. As
a result it followed that most, if not all, of the respondent's
factual allegations were not disputed and should consequently be
accepted. (See Erasmus: Superior
Court Practice, B1-44;
Moosa v Knox, 1949
(3) SA 327 (N) at 331; Room
Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd, 1949
(3) SA 1155 (TPD) at 1163 and Tsenoli
v State President of the Republic of South Africa, 1992
(3) SA 37 (D & CLD) at 41 E – F).
The nub of the allegations by the
appellant is contained in paragraphs 4 to 7 of the answering
affidavit. In paragraph 4 it is stated that all the assets and
rights which previously vested in the State in relation to the
Walvis Bay Port were transferred to the Namibian Ports Authority on
1st
March 1994 by virtue of the provisions of the Namibian Ports
Authority Act, Act 2 of 1994.
Paragraph 5 claimed that regardless
of whom the owner of the quay or jetty might be, the right
exercised in regard thereof was a real right. This is further
explained on the basis that a written agreement of lease existed
between the Government of South Africa and Northerns in terms
whereof Northerns leased the area over which the quay and jetty
were erected. As proof thereof a letter by the South African
Department of Public Works, addressed to a firm of engineers, was
attached wherein it was mentioned that a lease of the area was
approved under certain conditions. It was then alleged that on the
re-integration of Walvis Bay into Namibia the Namibian Government
or Namport, being the successor in title, ought to be in the
position of a lessor vis-à-vis
Northerns.
However, in paragraph 6 the deponent
stated that he was given to understand that there was no lease
agreement in existence between the Government or Namport, on the
one side, and Northerns, on the other side. According to the
appellant this was so because it was accepted by the parties that
the quay and jetty were attached to the area and the right
exercised in respect thereof was a real right regardless of whether
there was an agreement of lease or not.
In paragraph 7 it was claimed that,
in any event, the consideration paid for the quay and jetty was
subject to transfer duty in terms of the Act.
The appeal was heard by Muller, J,
who allowed the appeal and granted the various orders. As a result
thereof the appellant, in turn, launched an appeal to this Court
against the judgment and orders made by the learned Judge.
Mr. Coleman, who appeared on behalf
of the appellant, firstly submitted that an appeal in terms of sec.
18 is limited to the exercise of very specific powers by the
permanent secretary, namely only where, in terms of sec. 5(7) a
decision for the determination of a fair value, a consideration or
a declared value was determined by him for purposes of payment of
transfer duty; or in the case of a determination by him in terms of
sec. 5(8), which allows for a revision of fair value as determined
in terms of sec. 5(7); or where a determination in terms of section
8 was made which allows for other considerations to be taken into
account. Counsel submitted that if the appeal is not covered by
one of the above sections the matter could not be entertained by
the Courts, at least not in terms of sec. 18 of the Act. Counsel
submitted that any other complaint a respondent may have in respect
of a discretion, exercised by the appellant, or any other official,
will have to be taken by review proceedings.
For the above submission Counsel
relied on the case of Holden’s
Estate v Commissioner for Inland Revenue, 1960
(3) SA 497 (A) where the following was stated at 502C – 503B,
namely:
“However,
it does not follow that the executor had a right of appeal in this
case. I agree with Mr. Bliss, for the Commissioner, that the
position is governed by the principle stated in Irvin
& Johnson (S.A.) Ltd. V Commissioner for Inland Revenue, 1946
AD 483, in which Schreiner, J.A. giving the judgment of the Court on
the point there relevant, said at pp. 492 – 3 :
‘There
is no doubt that even where in terms of a statute a general right of
appeal is given from the decisions of a public officer, the language
of any particular provision of the statute may, nevertheless, show
that the Legislature intended that his decision on the subject-matter
of the provision should be final and not subject to appeal. It is
usual, in such cases, to speak of the official’s having an
executive or, to use another term, an administrative discretion…..Now
the Legislature may use any one of a variety of expressions in
granting an official an administrative discretion.’
To sum up: The executor sought to
challenge on appeal the Commissioner's opinion that the sale of the
property was ‘in the course of the liquidation of the estate of the
deceased’. I hold that the Commissioner’s opinion involved the
exercise of an administrative discretion and was not appealable under
sec. 24(1).”
Simply as a statement of the law,
Counsel’s submission was no doubt correct. However, it remains to
be seen whether that is so in terms of the relevant provisions of
this Act.
The right of appeal to the High
Court, and from that Court to this Court, is governed by sec. 18 of
the Act. This section provides as follows:
“18. Appeals
against decisions of Permanent Secretary
Any person who considers himself or
herself aggrieved by a decision of the Permanent Secretary under
section 5(7) or (8) or section 8 may, within thirty days after the
decision became known to him or her, appeal against that decision
by way of application on notice of motion to the High Court on
giving security to the satisfaction of the registrar of that court
for any costs that may be incurred by the Permanent Secretary in
connection with the appeal.
The High Court shall
inquire into and consider the matter and shall confirm, vary or
set aside the decision of the Permanent Secretary or give such
other decision as in its opinion the Permanent Secretary ought to
have given, and may make such order as to costs as it may deem
fit.
Any judgment given or order made by
the High Court in terms of subsection (2) shall be subject to
appeal to the Supreme Court of Namibia in the same manner and on
the same conditions as a judgment given or order made in any civil
proceedings in the High Court.
Any decision by the High Court in
terms of subsection (2) or the Supreme Court of Namibia in terms
of subsection (3) relating to the fair value of any property or to
the value of any consideration payable in respect of the
acquisition of any property, shall for the purposes of this Act,
be deemed to be the decision of the Permanent Secretary.”
The submission by Mr. Coleman
necessitates consideration of sec. 5 of the Act. However, it was
common cause that the provisions of sec 5(8) and 8 do not apply to
this appeal and need not be considered. The relevant parts of the
section then provide as follows:
“5.
Value of property on which duty is payable.
The value on which the duty shall be
payable shall, subject to the provisions of this section-
where consideration is
payable by the person who has acquired the property, be the amount
of that consideration; and
where no consideration
is payable, be the declared value of the property.
(2)…
(3)…
(4)…
(5)…
(6)…
(7) If the Permanent Secretary is of
the opinion that the consideration payable or the declared value is
less than the fair value of the property in question he or she may,
subject to subsection (8), determine the fair value of that property,
and thereupon the duty payable in respect of the acquisition of that
property shall be calculated in accordance with the fair value so
determined or the consideration payable or the declared value,
whichever is the greatest.
(8)…
(9) In determining the fair value in
terms of subsection (7) or (8), the Permanent Secretary shall have
regard, according to the circumstances of the case, inter
alia to-
the nature of the real
right in land and the period for which it has been acquired or,
where it has been acquired for an indefinite period or for the
natural life of any person, the period for which it is likely to be
enjoyed;
in the case of land
situated in the area of a local authority council, the valuation of
such land, including any fixtures thereon, as contained in the main
valuation roll of the local authority council concerned which is in
force in terms of section 72(2) of the Local Authorities Act, 1992
(Act 23 of 1992).
Any sworn valuation of
the property concerned furnished by or on behalf of the person
liable to pay the duty;
Any valuation made by
any other competent and disinterested person appointed by the
Permanent Secretary.
(10)…
(11)…”
Reverting to the submission made by
Mr. Coleman based on the Holden’s
Estate – case, supra,
I am of the opinion that
that case is distinguishable from the present case.
In the Holden’s
Estate–case, the Court
was called upon to interpret sec. 5(1)(a) of the Estate Duty Act,
Act 45 of 1955, whereby the Commissioner for Inland Revenue could,
in regard to property which was disposed of and which in his opinion
represented a bona fide
purchase and sale ‘in the course of the liquidation of the estate
of the deceased’, determine, for estate duty purposes, the price
realised by the sale. No specific right of appeal was granted in
regard of the exercise of the discretion by the Commissioner. The
only right of appeal was a general right in terms of sec 24(1) of
the relevant legislation.
In that case the value of a property
inherited by two sons was, for estate duty purposes, declared to be
£25,000-00. This value was based on a sworn valuation.
However, before the property was transferred to the heirs they again
sold it for £50,000-00. Estate duty was thereupon assessed by
the Commissioner on the amount of £50,000-00. Objection was
then raised to such assessment and by agreement the appeal was
brought directly before the Appellate Division.
Holmes, A.J.A., who wrote the
judgment of the Court, stated that where words such as “in the
opinion of the Commissioner” or “if the Commissioner is
satisfied” are used in a statute it is generally regarded that
they confer an administrative discretion on the person so designated
which would then exclude a right of appeal in the absence of other
contrary indications in the statute. No contrary indications were
found by the Judge and he concluded that the decision of the
Commissioner was an administrative decision which was not subject to
appeal. In contrast to that the learned Judge referred to other
provisions in the same Act (e.g. Sec 54 dec
(6)) where more or less
similar words were used but where the statute granted a specific
right of objection and appeal against the exercise of the discretion
of the Commissioner. In those instances the discretion of the
Commissioner was subject to appeal.
Although sec. 5(7) starts with the
words “If the Permanent Secretary is of the opinion…” it seems
to me clear that a right of appeal is granted in terms of sec. 18(1)
to persons aggrieved by a decision of the Permanent Secretary under
section 5(7). In terms of this section the appellant was of the
opinion that the declared value of N$12,094,258-00 was less than the
consideration paid for the property and he determined the value to
be N$18,000,000-00. The appellant therefore considered the
consideration paid for the property, including the quay and the
jetty, as fair market value on which transfer duty was to be paid.
This was done by the appellant in terms of the provisions of sec.
5(7). There is no other section in terms of which he could discard
the declared value and determine a value in excess thereof. His
decision was therefore in terms of sec. 5(7) and the respondent,
being aggrieved thereby, was entitled to launch an appeal. Contrary
to the situation in the Holden’s
Estate-case,
supra, a specific right of
appeal is granted to aggrieved parties where the appellant exercised
a discretion in terms of sec. 5(7) of the Act.
I therefore agree with Mr. Smuts,
assisted by Mr. Dicks, for the respondent, that the decision of the
appellant was taken in terms of sec 5(7) of the Act and that the
respondent was correct to appeal the decision of the appellant in
terms of sec 18(1) of the Act.
Turning to the merits of the appeal,
Mr. Coleman, with reference to the agreement of sale between Etale
and Northerns, pointed out that the description of the property
bought included the quay and the jetty. Furthermore one composite
price was paid namely N$18,000,000-00 which likewise included the
quay and the jetty. The definition or description of the quay was
that it “irrebutably be deemed to be forming part of the land”
which showed that it was attached to the property and that it formed
an integral part of the factory to which it was fixed for an
indefinite period of time. All this, so Counsel submitted, showed
that the quay and jetty formed part of the land and complied with
the definition of property in the Act. The appellant was therefore
correct by including the value of the quay and jetty in his
determination of the amount on which transfer duty was payable.
This part of Counsel’s argument was, so I understood it, based on
the letter “HK15”, written by the Acting Deputy Commissioner of
Inland Revenue, Mr. Viljoen.
Mr. Smuts contended that the Act
circumscribes the powers of the appellant to levy transfer duty and
that those powers cannot be extended by what the parties may have
agreed. It was common cause that the quay and jetty were built on
the seabed and between the low- and high-water marks and as such
were the property of the Namibian Government and incapable of
private ownership. As a general proposition the quay and jetty did
therefore not form part of the property acquired and was not liable
to attrack transfer duty.
I agree that the power of the
appellant to levy transfer duty is set out in the Act. He therefore
derives his power from the Act and not from the parties to a
transaction. The “charging” section, as it was called in South
African case law, where similar legislation was considered, is sec 2
of the Act, as amended, and of which the relevant part reads as
follows:
“Imposition of transfer duty
2(1) Subject to the provisions of
section 9, there shall be levied for the benefit of the State Revenue
Fund a transfer duty on the value of any property acquired by any
person on or after the date of commencement of this Act by way of a
transaction or in any other manner, or on the amount by which the
value of any property is enhanced by the renunciation, on or after
the said date, of an interest in or a restriction upon the use of
that property, at the rate of-…“
(Section 9 deals with
exemptions to pay transfer duty and is not relevant to the issues
which must be decided in this instance).
From the wording of the
section it is clear that a transfer duty can only be levied against
the value of property acquired.
The meaning of the word
property is defined in sec. 1 of the Act as follows:
“property” means land
and any fixtures thereon, and includes –
any real right in land, but not any
right under a mortgage bond or a lease of property other than a
lease referred to in paragraph (b);
any right to mine for
minerals and a lease or sub-lease of such right;”
The word ‘acquire’ is not
defined in the Act, however, a specific meaning was ascribed to it
by the Courts in South Africa where they were called upon to
interpret a similar provision such as our sec. 2. This section,
also sec. 2, is contained in Act 40 of 1949, as amended, and the
Act also contained a definition of property which was very similar
to the definition set out in sec. 1 of the Namibian Act.
In the case of Commissioner
for Inland Revenue v Viljoen and Others, 1995
(4) SA 476, Melunsky, J, said the following at p 479 E-F in regard
to the meaning of the word ’acquired’ in Sec. 2(1) of Act 40 of
1949, namely:
“It
is necessary to view these arguments in the light of the
interpretation of the word ‘acquired’ in s. 2(1) in the context
in which it is used in the Act. The word is not defined in the Act,
but it has been construed to mean the acquisition of a right to
acquire the ownership of property. (See Commissioner
for Inland Revenue v Freddies Consolidated Mines Ltd, 1957
(1) SA 306 (A) at 311B-C and Secretary
for Inland Revenue v Hartzenburg, 1966
(1) SA 405 (A) at 409A-B)
See further De
Leef Family Trust and Others v Commissioner for Inland Revenue, 1993
(3) SA 345 at 356B and Commissioner
for Inland Revenue v Collins, 1992
(3) SA 698 (AD) at 707 F – I.
Bearing in mind that the relevant
provisions in Act 40 of 1949 are very similar to that in our Act, I
agree with the construction, given to the word ‘acquired’, and
I find that the word ‘acquired’, used in sec. 2(1) of the Act,
bears a similar meaning to that found by the South African Courts.
In his affidavit the
appellant stated that transfer duty on the amount of
N$18,000,000-00 was payable because the consideration paid in
respect of the quay and the jetty was subject to transfer duty in
terms of the Act.
Leaving aside, for the moment, the
issue of the existence, or not, of a real right , it seems to me
that sec. 2, read with the definition of property in sec. 1 of the
Act, empowers the appellant to levy a transfer duty on the right
acquired by a person, in terms of a transaction, or otherwise
acquired ownership in land and in regard to the fixtures on that
land.
In regard to the value of such
property the appellant is empowered to accept the consideration
paid or the value declared and, if he is not satisfied, to
determine a fair value with reference to the issues set out in sec.
5(9). However, these powers must be exercised in terms of the
provisions of sec. 2 which prescribes that the levy of transfer
duty is based on the value of the property acquired.
No right to acquire the ownership in
the quay and the jetty was acquired by Etale or the respondent.
That much was conceded by Mr. Coleman. The quay and the jetty can
therefore not be said to be fixtures to the land which they abut,
that is erven 3690 and 4586, because then it would become the
property of the landowner, in this instance the respondent. It is
also common cause that that did not happen and that these
structures remained the property of the State. In this regard I
agree with what was stated by the learned Judge a
quo as to the nature of
these rights and that the structures adhering to the seabed and the
area between the low- and high -water marks are res
extra commercium or res
publicae or a combination
thereof.
It can also not be said that the
definition of the word ‘transaction’ widened or amplified the
powers of the appellant as was contended for by Mr. Coleman.
Although of wide import, and including almost any possibility
whereby property can be acquired, it remains subject to the
provisions of sec 2(1) of the Act and is limited to the property
acquired in the sense as set out herein before.
The property acquired by the
respondent, which became liable for transfer duty, therefore
consisted of the three erven and all or any fixtures to those
erven. It did not include the quay and the jetty because that was
not part of the property which was acquired. This was also found
by the learned Judge in the Court a
quo.
It follows therefore that, except
for the possibility of a real right, with which I will deal herein
after, there is no provision in the Act which would allow the
appellant to levy transfer duty on the value of the quay and jetty
and no matter how the parties described, for purposes of their
contract, these structures, they could not confer powers on the
appellant which he did not have in terms of the Act.
In regard to the reliance of the
appellant on the existence of a real right I must point out that in
the letter of 15 September 2004, which letter informed the
respondent that transfer duty was levied on the amount of
N$18,000,000-00, it was set out that the power was exercised on the
basis that the quay and jetty formed an integral part of the
factory and transfer duty was payable because it became a fixture
to the land. However as this is an appeal in the wide sense which
amounts to a re-hearing of the issues, I will accept that the
appellant could amplify its stance and include grounds which
originally did not play a role. (See Connan
v Sekretaris van Binnelandse Inkomste,
1973 (4) SA 197 at 201F – 202D.)
Although reliance is now placed on a
real right that the respondent allegedly has over the quay and
jetty, the precise content and nature of such right is uncertain.
The appellant suggested that the State ought to stand in the
position of a lessor because it was the successor in title to the
Government of South Africa. However on the allegations of the
appellant there is no lease agreement either with the Government of
South Africa or the Government of Namibia. No further reliance was
placed on this point. This is not surprising as the definition of
‘property’ excludes a lease agreement, other than a lease to
mine for minerals and a lease or sub-lease for that purpose. (See
in this regard Bozzone and
Others v Secretary for Inland Revenue, 1975
(4) SA 579 (AD) at 587 B-D). Nothing also turns on the provisions
of the Ports Authority Act, Act 2 of 1994, as the Act does not deal
with the ownership in the sea-bed and sea-shore.
With reference to the warranty given
by Northerns to the respondent in terms of the agreement of sale,
Mr. Coleman submitted that there is in existence between the
parties a real right which almost amounted to ownership.
Mr. Smuts argued that the warranty
was no more than a contractual or personal warranty given by the
seller to the purchaser against eviction from the quay and jetty.
No real right came into existence.
The quay and jetty was built by
Northerns, the predecessor-in-title of the respondent, during 1993
when, in terms of the then constitutional dispensation, Walvis Bay
was administered by the Republic of South Africa. The legislation
applicable concerning the sea, and rights in connection therewith,
was the South African Sea-Shore Act, Act 21 of 1935.
Sec. 2(3) thereof
provides:
“The
seashore and the sea of which the State President is declared by this
section to be the owner, shall not be capable of being alienated or
let except as provided by this Act or by any other law, and shall not
be capable of being acquired by prescription.”
In its definition clause the “sea”
is defined as the water and the bed of the sea below the low-water
mark and “sea-shore” as being the water and the land between
the low-water mark and the high-water mark.
Section 3 of Act 21 of 1935 further
required that before any portion of the sea-shore or sea can be let
to anyone, or before any permit could be granted in connection
therewith, the Minister was obliged to follow certain procedures.
(See sub-sec. (4), (5) and (6)). These subsections provide that
where any portion was let, or where a permit was granted in respect
thereof, and such portion adjoined a local authority, the Minister
was obliged to consult that local authority. Thereafter a notice
was to be placed in the Gazette as well as a newspaper circulating
in the area containing certain specific information and such notice
was required to specify where and for what period objections to the
proposed lease or permit could be lodged. People could object to
such letting or the granting of permits, and where objections were
raised, they had to be considered by the Minister.
Mr. Smuts submitted that there was
no indication that any of these steps were ever undertaken by the
relevant Minister which, Counsel submitted, further proves that no
lease agreement was entered into at the time with Northerns by the
South African Government. Counsel further submitted that apart
from any other alienation or letting or permission with regard to
the sea-shore or the sea which was authorised elsewhere in Act 21
of 1935, or by any other law, approval therefor could only take
place by resolution of the South African National Assembly. There
is also no indication that this has happened. (See sec. 6(1)).
There is no allegation, nor was it
argued, that any permit granted, or contract of lease entered into,
occurred in regard to the quay and the jetty and I find that there
is not in existence any such rights granted. I agree with Counsel
for the respondent that the rights of the State, as owner of the
seabed on which the quay and jetty are fixtures, could not be
restricted, except by following the procedures laid down in Act 21
of 1935.
Mr. Coleman also pointed out that
the Sea-shore Ordinance, Ordinance 37 of 1958, an Ordinance of the
then South West Africa administration, makes it clear that the sea
bed and the sea-shore can be the subject of real rights. I agree
that that is so but again nothing specific in regard to the quay
and jetty came to light.
Of importance in this regard are the
provisions of the Deeds Registries Act, Act 47 of 1937 (the Deeds
Act). According to sec. 16 ownership in land, unless otherwise
provided for by the Deeds Act or any other law, can only be
conveyed from one person to another by deed of transfer. Real
rights in land may also only be conveyed by a deed of cession and
registration. (See in this regard Barclays
Western Bank Ltd v Comfy Hotels Ltd, 1980
(4) SA174 (ECD) at 177E and LAWSA: Vol 14 first re-issue, par 16).
Bearing in mind these provisions in
the Deeds Act a further hurdle in the way of the appellant’s
contention that a real right existed in regard to the quay and
jetty is sec. 18(5) of the Deeds Act. This sub-sec. provides:
“No deed (other than a
deed of grant conveying ownership) purporting to create or deal with
or dispose of any real right in any piece of unalienated state land
shall be capable of registration until a certificate of registered
state land has been executed in respect of that piece of land.”
No such certificate of
registered State title has been executed in regard to the quay and
jetty, in the absence of which, it would be impossible for any of
the parties, to register a real right.
I will accept for purposes hereof,
and as was submitted by Mr. Coleman, that there may be real rights
which are not registered but if it is a real right over immovable
property then at least that right, although not registered, should
be capable of registration. Counsel referred the Court to the case
of Cape Explosive Works
Ltd and Another v Denel (Pty) Ltd and Others,
2001 (3) SA 569 (SCA) which, in my opinion supports what has been
set out herein before. At p 580 B-E the following was stated:
“Dealing,
at 23H – 24E, with the distinction between real rights and
contractual rights, in that case unregistered servitudes, Ogilvie
Thompson JA referred to Willoughby’s
Consolidated Co Ltd v Copthall Stores Ltd, 1918
AD 1, where Innes CJ said at 16:
‘Now
a servitude, like any other real right, may be acquired by agreement.
Such an agreement, however, though binding on the contracting
parties, does not by itself vest the legal title to the servitude in
the beneficiary, any more that a contract of sale of land passes the
dominium to the buyer. The right of the beneficiary is to claim
performance of the contract by delivery of the servitude, which must
be effected coram
legi loci by an entry made
in the register and endorsed upon the title deeds of the servient
property.’
The Grant case is
therefore no authority for a proposition that a registered real right
is no longer maintainable against the whole world when it is
erroneously omitted from a subsequent title deed,”
If I understand this excerpt
correctly until a real right is registered it remains a contractual
right where the one party to the contract may claim performance by
the other but until it is registered it would not be maintainable
against bona fide third
parties. What is also clear is that once the right is registered,
it will still be maintainable against the world at large even
though it was erroneously omitted from a subsequent title deed. At
p 580 B Streicher JA, who wrote the judgment of the Court, stated
that an agreement to grant a servitude gives rise to a real right
only when it has been registered.
In the present instance no real
right was registered over the quay and the jetty this, so it seems,
was common cause. However, with reference to the warranty, given
by Northerns, to the respondent Mr. Coleman argued that this is
almost akin to ownership and is therefore a real right.
This argument of Counsel is
fallacious. It is in my opinion impossible for two parties to
create a real right over the property of another without the
consent and knowledge of that third party. The warranty given by
Northerns is, in the circumstances of this case, no more than a
personal undertaking by it to indemnify the respondent from
eviction from the quay and jetty. The warranty is not registerable
(See sec. 63 of the Deeds Act) nor would Northerns be able to make
good its warranty against legitimate interference by the State, the
owner of the sea bed and sea shore. However, the warranty given by
Northerns, although of wide import, would certainly not have caused
it much anxiety as they could accept that it was hardly possible
that anyone could challenge the State’s claim to the seabed and
sea-shore so that the only possible challenge could come from the
State, which, having granted permission to erect the structures,
was also highly unlikely.
I am therefore of the
opinion that the contention of the appellant that a real right
exists in regard to the quay and jetty must also fail.
Lastly Mr. Coleman submitted that if
the Court should come to the conclusion that the appellant
erroneously included the quay and jetty in his determination of the
transfer duty payable then this Court should determine transfer duty
on the basis of a fair value. This submission was made on the
grounds that we are dealing with an appeal in the wide sense which
really means that there shall be a re-hearing of the whole matter
and that the Court should substitute its own decision for that of
the appellant. In doing so Counsel urged us to have regard to the
sworn valuation of de Wit who valued the land with fixtures at
N$20,632,400.00 Mr. Coleman also criticised the Court
a quo for not substituting
its own decision for that of the appellant.
Generally speaking the submission by
Counsel, as a legal proposition, is correct. (See Rand
Ropes (Pty) Ltd v Commissioner for Inland Revenue, 1944
AD142 at 150 and the Conman
– case, supra.)
(See also sec 18(4) of the Act.)
However, in the present instance the
appellant did not dispute the computations made by the respondent in
arriving at the various values. Not only did the appellant not
dispute such computations but he accepted them and accepted the
methodology whereby these values were determined. If the appellant
had disputed these values the respondent would have been able to put
further, and proper, evidence before the Court such as, e.g. the
municipal value of the three erven with fixtures.
In determining that transfer duty was
payable on the amount of N$ 18,000,000-00 the appellant accepted the
respondent’s computation which included the amount declared by the
purchaser and seller, namely the total of N$ 12,094,258-00 in order
to arrive at the amount of N$ 18,000,000-00. The appellant’s
acceptance of the amount of N$ 18,000,000-00 as the consideration
paid for the property acquired, was erroneous, as I have tried to
show, and he should have excluded the value placed on the quay and
jetty. Once the error is corrected the value of the property
acquired is the amount of N$12,094,258-00 as was accepted by the
appellant in determining the value of N$18,000,000-00.
Under the circumstances
we must decline the invitation by Mr. Coleman to determine afresh
what we think should be a fair value whereas the declared value was
not disputed by the appellant, and in fact accepted by him when he
erroneously included the value of the quay and jetty in his
computation.
This is in my opinion a matter which
would justify the employment of two instructed Counsel. Mr. Coleman
also did not submit otherwise.
In the result the
following order is made:
The appeal is dismissed
with costs, such costs to include the costs of two instructed
Counsel.
________________________
STRYDOM, A.J.A.
I agree.
________________________
SHIVUTE, C.J.
I
agree.
________________________
CHOMBA, A.J.A.
Instructed COUNSEL Instructed |
The MR. Asst. Engling, |