IN THE NORTH GAUTENG HIGH COURT,
PRETORIA [REPUBLIC OF SOUTH AFRICA]

Case No: 30966/2018

In the matter between:

SHANKA INVESTEMENTS (PTY) LTD 				APPLICANT

And

SOUTH AFRICAN REVENUE SERVICES 			FIRST RESPONDENT
AUCTION ALL (PTY) LTD						SECOND RESPONDENT

JUDGMENT
MAVUNDLA, J.
[1]	This matter revolves around the undisputed following facts:
1.1	the purchase by the applicant of LOT 9 in an auction sale held by the respondent on 26 March 2018 and which Lot is more fully described as: "UG22/17 Grindrod N/P 1 20ft lntermedial Liquid Dielectric Transformer XASP3180020 LOCAL";
1.2	present at the auction , were representatives of SARS , and they authorised and confirmed the sale of Lot 9 to the applicant, as the bid of R95 000. 00;
1.3	which sale the first respondent (hereinafter referred to interchangeably as SARS / Commissioner) contends that it was erroneously made and accordingly contrary to the provisions of section 43(3) of the Customs and Excise Act 91 of 1964; and
1.4	in respect of which SARS still retained the purchase amount.
[2]	The crisp issue to be decided herein is whether:
2.1	the applicant is entitled to ownership of the Transformer arising from the sale and therefore entitled to delivery thereof;
2.2	alternatively whether the applicant is entitled to an alternative relief, namely refund of the purchase price together with interest, based on the defence raised by the first respondent that the decision to sell was erroneously taken and therefore in conflict with the provisions of section 43(3) of Customs and Exercise Act.

COMMON CAUSE/ UNDISPUTED FACTS.
[3]	The following are common cause facts:
3.1	Aggreko Energy Rental South Africa (Pty) Ltd (“Aggreko SA") imported the subject matter, "the transformer from Aggreko
) ;

 Argentina SRL ("Aggreko Argentina0
3.2	based on the Customs documents presented, the transformer was supposed to land in South Africa on 11 October 2017. This was viewed as an estimated time of arrival;
3.3	the transformer landed on 16 October 2017,  after the estimated time of arrival;
3.4	the goods were supposed to be cleared within 28 days from the date of arrival;
3.5	the transformer was then due for clearance within 28 days from the date of landing;
3.6	the transformer was not cleared within the 28 days as prescribed by the Act.;
3.7	As the goods remained un-cleared, they are therefore subject to the provisions of section 43(3) of the Act which requires that after expiry of 28 days, they are then subject for as removal to the state warehouse and sale after 60 days have expired from the date of entry at the state warehouse;
3.8	the key principle for sale in terms of section 43(3) of the Act is that the goods must "remain un-cleared";
3.9	it should be noted that the transformer is a containerized cargo imported and having landed at Grindrod lntermodal cargo imported and having landed at Grindrod Inter intermodal, a container depot;
3.10	After expiry of 28 days required for clearance, the transformer was entered in the state warehouse form SC 37 as un-cleared goods;
3.11	On 5 December 2017, the commissioner appointed Grindrod lntermodal as virtual state warehouse in terms of section 43(2) of the Act deeming Grindrod as a state warehouse for purposes of the un-entered I un-cleared transformer.
3.12		The same notice appointed and notified Grindrod lntermodal as importer's representative of the goods;
3.13	The expiry of sixty days as prescribed by section 43(3) expired on 4 February 2018;
3.14.	On 22 February 2018, the importer, Aggreko South Africa through a clearing agent Pro Africa cleared the goods in terms of SAD500 and paid duties and VAT for the transformer in an amount of R192 133. 70.
3.15		On 16 March 2018, the transformer was advertised by the first respondent, state warehouse division for sale to be concluded on 26 March 2018;
3.16		On 26 March 2018 the transformer was auctioned and sold to the applicant as the highest bidder;
3.17	Despite the release notice to the imported and Grindrod lntermodal through an EDI system, the state warehouse was not informed of the cleared/ entered goods and release notice thereof;
3.18	The state warehouse became aware of the clearance / entry after the auction! when the importer approached the state warehouse with a request for a DA68 to clear the transformer from Grindrod lntermodal Virtual Warehouse.

[4]	The tabulation of the chronology extrapolated from the opposing affidavit is for easy reference and ex abudande cautela chronicled herein below:

DATE	DESCRIPTION	REFERENCE	
14/9/17	Bill of Lading for the
import of the generator	AA, p36, para13	
	Arrival Notice estimated
arrival on 11 October 2017	AA, p36, para14	
16/ 10/ 17	Transformer
CountryRSA	lands	in	the	AA, p37, para16	
	s43(1)(a) requires entry within 28
days from date of landing of the goods	AA, p37, para16	
	Entry was required by 12
November 2017	AA, p37, para17	
	S43(3) provides for goods to be removed to state warehouse if they do not make entry within
28 days of landing	AA, p38 para18	
	Goods may be sold after a further period of 60 days calculated from the date of
removal to the warehouse		AA, p38 para18	
6 /12/17	Grindrof advised SARS that the	 goods remain un entered despite the date of entry expiring on 12 November 2017	AA, p39 para20

-	

6 /12/17	SARS issues a goods received Into the state warehouse certificate and the 60-day period
begins running	AA, p39 para22	
6/12/17	Importers representative	AA, p39 para24	
	(Grindrod) notified that the
goods will be sold after 60days		
	SARS would be allowed to sell the goods after 4 February 1B(being (60days) if the goods
remained un-entered	AA, p40 para25	
		
I	
22/ 2/18	The goods are entered in that
payment of the duties was made	AA, p41para28/9	
26 / 3 18	Auction sale of the transformer	AA, p36para12	

[5]	Section 43(3) of the Custom and Excise Act makes provision for the sale of goods after the expiration of 60 days from date of removal to the State warehouse or other place indicated by the Controller. The expiry date was the 4 February 2018.
[6]	On the 22 February 2018, the importer Aggreko South Africa through a clearing agent Pro Africa cleared the goods in terms of SAD500 and paid duties and Vat for the transformer in an amount of R192 133. 70. It is clear that this payment by Aggreko South Africa was already outside the 60 days' period referred to herein above.
[7]	On 16 March 2018, the transformer was advertised by the first respondent, state warehouse division for the sale to be conducted on 26 March 2018.
[8]	On 26 March 2018 the transformer was auctioned and sold to the applicant as the highest bidder. This auctioned was conducted by the second respondent at, the behest and authorisation of first respondent's functionaries, stationed at the warehouse. It stands to reason that the applicant was a bona fide purchaser, this as much is conceded by the first respondent.
[9]	The first respondent contended that at the time when this auction took place, the goods had already been cleared on 22 February 2018 when the importer Aggreko South Africa through agent Pro Africa cleared same in terms of the SAD500 and paid duties and VAT for the transformer in an amount of R192 133. 70. It further contended that ownership by the time the auction took place had already vested with Aggreko South Africa.
[10]	It was further submitted that the aforesaid clearance only came to the attention of the state warehouse after the auction when the importer approached the state house with a request for a DA68 to clear the transformer from Grindrod lntermodal Virtual Warehouse.
[11]	It was submitted that the auction sale was erroneously sold as a result of miscommunication between the state warehouse functionaries who were not aware of the DA68 request to clear the transformer, because the clearance section which is another department had not communicated this fact of clearance to the former. These allegations have not been disputed by the applicant and accordingly are accepted.
[12]	As indicated herein above, ownership of the transformer, by virtue of the goods having already been cleared on 22 February 2018, when the importer Aggreko South Africa through agent Pro Africa, cleared same in terms of the SAD500 and paid duties and VAT for the transformer, in an amount of R192 133. 70, therefore vested with the importer and accordingly could not be transferred to the applicant.
[13]	In the result, I find that on the 26 March 2018 when the auction was purportedly concluded, ownership could in those circumstances not pass to the applicant.
[14]	The applicant contended that there was an administrative decision by the functionaries of the first applicant in authorising the auction., and that notwithstanding the fact that there was an error on the part of the functionaries in authorising the auction, same stands and is binding, unless set aside, in this regard relying on the well-known authority of Oudekraal and subsequent decisions MEG for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Laser Institute; Manok Family Trust v Blue Horison Investments 10 (Pty) Ltd and Others; South African Local Authorities .Pension Fund v Msunduzi Municipality, that until set aside, an administrative decision improperly taken, remains binding.
[15]	The respondent contended that the Act through section 3(2)(1) to (iii) makes provision for the withdrawal of the authorisation for the auction. It is further contended that this provision would be an appropriate and expeditious vehicle than a costly process of approaching the court to set aside the sale.
[16]	It is common cause that the first respondent made a tender in the amount of R108300 Inclusive of VAT paid in respect of the transformer. However same was rejected, I assume, that is because there was no undertaking to pay interest as well. West Rand Estate Ltd v New Zealand Insurance Co Ltd 1926 AD 173; Iframed (Pty) Ltd (in liq.) v Standard Bank [2008]
[17]	The auction was on the 26 March 2018. The applicant is entitled to a refund of the amount paid inclusive VAT as well as interest as from 27 March 2018.
[18]	In as much as I do not intend to grant the order sought by the applicant, it cannot however be said that he is unsuccessful and should be mulcted with costs. He remains a successful party, under the further and or alternative, as I indicated in the preceding paragraph. In the exercise of my discretion I will not award a punitive costs order.
[19]	In the result the following order is issued:
1.	That the auction sale and purchase of Lot 9 in respect of "UG22/17 Grindrod N/P 1 20ft lntermodal Liquid Dielectric Transformer XASP3180020 LOCAL on 26 March 2018 is hereby set aside;
2.	That the first respondent is ordered to refund the plaintiff the amount of R108 300. 00 inclusive VAT;
3.	That the first respondent is ordered to pay interest at the rate of 9 % from 27 March 2018 to date of payment;
4.	The first respondent is ordered to pay costs of the application on party and party High Court scale.

N M MAVUNDLA
JUDGE OF THE HIGH COURT

DATE OF HEARING	: 28 / 01 / 2020
DATE OF JUDGMENT	: 7/05/2020
APPLICANT'S ADV		: ADV ZKHAN
INSTRUCTED BY		: AMNGERA & ASSOCIATES
1st RESPONDENT'S ATT	: ADV WN MOTHIBE
INSTRUCTED BY		: KLAGSBRUIN EDELSTEIN BOSMAN
DE VRIES INC