IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
CASE NO.11372/19	

DELETE WHICHEVER IS NOT APPLICABLE

(1)
	
REPORTABLE: YES / NO. 

(2)
	
OF INTEREST TO OTHER JUDGES: YES / NO.	

(3)	
REVISED.

DATE		
SIGNATURE		

In the matter between:

PERESOFT SOFTWARE AND SUPPORT (PTY) LTD	APPLICANT

and

THE MINISTER OF SCIENCE AND INNOVATION		FIRST RESPONDENT
(NO)
DIRECTOR- GENERAL: SCEINCE AND 		       SECOND RESPONDENT
INNOVATION (NO)
 
					IN RE:

The main application of:

PERESOFT SOFTWARE AND SUPPORT (PTY) LTD	APPLICANT

and

THE MINISTER OF SCIENCE AND TECHNOLOGY              FIRST RESPONDENT
(NO)

THE CHAIRPERSON OF THE R & D TAX INCENTIVE         SECOND 
ADJUDICATION AND MONIITORING COMMITTEE              RESPONDENT
(NO)

DIRECTOR-GENERAL: SCIENCE AND TECHNOLOGY	THIRD RESPONDENT

___________________________________________________________________

					JUDGMENT

TLHAPI J 

INTRODUCTION

[1]	This is a review application by the applicant, which conducts business as a 
developer of specialised computer software and which seeks to review and set aside 
the refusal by the first respondent, to approve a tax incentive for a project which is 
being researched and developed by the applicant. The tax incentive was introduced 
during 2006 in terms of section 11D of the Income Tax Act 58 of 1962 (“the Act”). 

[2]	The object of the tax incentive scheme is to encourage the private sector to 
participate in research and development in science and technology so as to improve 
advancement in that field in the Republic of South Africa. In order to benefit from the 
tax incentive, an application for approval for the research and development project 
has to be made to the first respondent to enable the applicant to claim the tax benefit 
from the South African Revenue Services. The application form is available on the 
website of the Department, first respondent, and it is submitted electronically to the 
first respondent. The application form is received by a Secretariat which is charged 
with communicating the process from the first stage till the final stage of adjudication. 

[3]	The application is then referred to an expert who has the technical know -how 
to consider and evaluate and prepare a report for an evaluation by the Research and 
Development Tax Adjudication and Monitoring Committee established in terms of 
section 11D (11) of the Act. The Committee comprises of officials from National 
Treasury, the Department of Science and Innovation and the SA Revenue Services. 
The Committee considers and debates the merits and demerits of the application 
and makes recommendations to the first respondent for determination whether to 
approve or not to approve the application.  

[4]	The applicant seeks the following order:

“1.	Reviewing and setting aside of the refusal by the first respondent, on or 
about 21 August 2018 under reference number 2017/003222/01 to 
approve in terms of section 11D (9) of the Income Tax Act 58 of 1962, 
the applicant’s research and development program for the 
development of a Web enabled Cash Book to integrate with Sage 300 
ERP accounting software;
2.	Directing the first respondent to approve the said application by the 
applicant;
 3.	Directing the first respondent, to inform the Commissioner of Revenue 
in accordance with section 11D (16) of the Income Tax Act, of the 
approval of the applicant’s research and development, setting out such 
particulars as are required by the Commissioner;
4.	Directing the first respondent to pay the applicant’s costs;

5.	Further and/or alternative relief.”

[5]	The application was opposed. An order authorizing a name change of the 
respondents by substituting the names of the first and third respondents, to reflect 
what they are presently known by was granted. 

[6]	The applicant states that the issue relates to it and the first respondent, that 
even though mention is made of persons appointed by Department of Science and  
Innovation, National Treasury and South African Revenue Services, it does not seek 
to join them since none of them have an interest in the matter.

BACKGROUND

[7]	Mr Robert Morris Perel (Mr Perel), a qualified computer programmer is the 
sole director of the applicant. Since 1982 he has been involved in various aspects of  
research, programming, development and creation of computer programs and soft-
ware. In 1983 he established Peresoft Software which was followed by registration of 
a close corporation Peresoft Software and Support CC and, in 1996 it converted to 
Peresoft Software and Support (Pty) Ltd. According to Mr Perel the applicant is a  
well - known and internationally recognized developer and marketer of software, 
specializing in the maintenance of accounting and financial management programs. 
Its products are “sold and supported by more than 500 dedicated Solution Providers 
throughout Africa, Asia, Australia, Europe Canada and the USA.

[8]	During 2016 the applicant began research and development work on
developing a new program which it had not as yet officially named. The name to be 
attached to the new program was in all likelihood going to be called “Cashbook” like 
the present existing Cashbook. The applicant had already created its add-on to 
operate on the Windows platform and the add-on was called RecXpress, ‘which 
meant that Cashbook and RecXpress required a Windows operating system to 
function. Cashbook and RecXpress are currently successfully marketed to 
institutions worldwide.’ It was intended that the program which was being developed 
would be a completely new one, which would ‘be a complete rewrite for a completely 
different operating platform.’ The combination of the two programs, Cashbook and 
RecXpress would enable users to operate them without necessarily using a 
Windows operating system and regardless of any operating system the users may 
have.’ The research and development involved the creation of a new program 
described as a “We-enabled Cash Book to integrate with SAGE ERP accounting 
software.” When completed it will be a program as envisaged in section 11D and 
section 1 of the Copyright Act 98 of 1978.

[9]	Mr Perel avers that during 2017 on the advice of one Mr Rogerio Manuel
Bandeira Russo (“Russo”), who had knowledge of the applicant’s business,  
decided to apply for the tax incentive. He gave directive to Russo to make the 
application on behalf of the applicant, which he did on 31 August 2017 by completing 
a form which he uplifted from the website of the Department, the first respondent. 
The application was duly completed by Russo and he had read it. Receipt was 
acknowledged by Mr William Mabogoane of the Department.

[10]	On 1 September 2017 Mr Mabogaone sent an e-mail which required answers 
to 6 questions and, except for 2 questions which were added to the 6 questions, 
these were identical to those contained in the application form initially completed by 
Russo. Mr Perel referred the email to Russo and he agreed with the answers given 
by Russo which were now written in red font. The answers were sent to the first 
respondent and on 21 August 2018 the application was declined. Mr Perel stated 
that the covering letter marked “A” and signed by the first respondent advised of the 
right to review. The applicant contended that the refusal of the application amounted 
administrative action reviewable within the meaning of the “PAJA”, the Promotion of 
Administrative Justice Act 3 of 2000, (“the PAJA’)        

A brief history to the technical background to the research and development project 
(“R & D project)

[11]	The applicant gave a brief history of the research and development project it 
was engaged in and this narration was not disputed by the respondents.

11.1	The installation of software to conventional systems of programming 
and setting up of computer systems entailed (i) the operating system 
and computer program (ii) the application program. These programs 
are interdependent for purposes of achieving real functionality.
	11.2 	Different computers can therefore only connect with each other if the 
same or compatible software has been installed.
	11.3	Operational costs are reduced in conventional systems only when the 
systems operate over server-based databases.
11.4	‘This limitation has become a serious shortcoming in conventional 
systems, particularly in the global financial management and 
accounting and financial fields”

[12]	The applicant specializes in the financial management and accounting and 
financial fields. As a result of the shortcomings in the conventional systems, a
modern system of programming is being developed which will allow for a faster, 
reliable and cost effective and a higher volume of data processing being achieved.  
Web-based programs no longer require the installation of the application software to 
be installed in every computer and, the necessity to install updates to every 
computer.  Instead a copy of the application programme is installed at a location 
somewhere in the world and access to the application is by way of a licenced 
subscription to the application software, which is regularly updated and is available 
to users at a much lower cost. Of importance is that the communicating computers 
are still required to use the same operating system, because the application software 
licence is still determined by the operating system.  The applicant as a result 
identified the need for a program which is presently being researched and 
developed.

The applicant’s research and development project.

[13]	The applicant avers that it has over the years developed a successful 
Windows based program in the market called “Cashbook”. It is a system where, with 
the consent of all interested parties there is a compilation of data that creates a 
cashbook which complies with the financial and legal requirements of the country 
where the product is being used. 

[14]	Over the years Cashbook and RecXpress have been marketed by SAGE 
which also markets its own product known as SAGE 300 ERP, ‘which is a software 
application program consisting of 8 modules and, which is used as a comprehensive 
package for accounting and financial management in small and medium businesses’.
However, Cashbook and RecXpress are only available as an optional extra to users 
of SAGE 300 ERP who have a windows operating system. This has been found to  
restrict functionality between users who have a Windows operating system.

[15]	In 2016 the applicant realized a need to move away from the limitations and 
disadvantages encountered in a conventional system. It had to develop a new 
program to ensure its standing as one of the world’s leading software developers in 
the field of financial management and, to also to avail Cashbook and RecXpress to 
all users of SAGE300 ERP, not limiting use to only those using Windows operating 
systems. A new program with the following characteristics was required:  

	15.1	The new program had to be web-based
	15.2	It had to make functionality available to all SAGE 300 ERP users
	15.3	The SAGE guidelines were used to research and develop the new 
project;
	15.4	To date no program exists anywhere in the world which can make 
Cashbook and RecXpress available to all users of the SAGE 300 ERP 
available to users regardless of their operating systems. The project 
was and still is new and the problems and uncertainties encountered 
require further extensive research.

[16]	The first respondent denies that what is envisaged by the applicant relates to 
something new. It is contended that the software program the applicants seeks to 
develop is aimed at resolving a technical problem which enhances the functionality 
of SAGE 300 ERP accounting software program, in order to make it accessible on 
different platforms and interfaces. There is already an existing Cashbook program. 
What is envisaged is to improve the efficacy of an already existing program and it 
does not qualify as a research and development program for purposes of benefitting 
from the incentive in section 11D of the Act.

Difficulties and uncertainties encountered

[17]	In order to gain access to the use of the application of software of his choice, 
a user has to make use of a browser and the existing different operating systems  
have a browser, which browser with its software is a computer program on its own. 
Since the browsers use specific operating systems they cannot integrate with other 
software designed for different operating systems. This causes uncertainties and 
problems which call for investigation and experiments for possible solutions. 
Presently there is no browser program in existence to avail Cashbook and Rec- 
Xpress to users of SAGE 300 ERP and there is need to research and develop a 
new program and a website having the envisaged capacity.

[18]	Another uncertainty presents itself in each programming language since each 
has its own syntax to create commands. The new program must be enabled to cross 
the various barriers created by the different browsers to integrate with the SAGE 300 
ERP software to capacitate functionality in Cashbook and RecXpress regardless of 
the different operating systems. ‘The main difficulty lies in programming languages, 
commands and operating systems acting as an integrated system to form a new 
program. The applicant contends that the programming algorithms which originate 
from these uncertainties take weeks or months to research and to develop into a 
successful algorithm. The applicant contends that the first respondent failed to have 
regard and consider any of the uncertainties and failed to apply its own definition of 
uncertainties to the facts.

[19]	The first respondent denied that the applicant’s envisaged program would 
resolve any uncertainties. There was existing functionality in the market identified by 
the applicant as the SAGE 300 ERP software, which has a functionality of Cashbook 
and RecXpress which is accessible in certain platforms. What the applicant wants to 
do is to increase accessibility on the Web. It was contended that there was no 
evidence tendered that there were uncertainties encountered by the program. The 
applicant had failed to demonstrate ‘any systematic investigative or systematic 
experimental activities or testing of any software to resolve any uncertainty 
suggested.

The application form and the replies to the questions posed by Mr Mabogoane

[20]	The applicant dealt with the questions in the application form and those 
forwarded by Mr Mabogoane and commented that the first respondent did not in its 
reasons criticise the answers given in the reasons for the refusal of the application. 

	20.1	What is the scientific or technological objective (end goal) of the 
project?

The applicant contended that the responses given on both occasions 
related to the same thing which was that it was intended to develop a 
web-based platform using a browser which could process accounting 
process across the internet as opposed to the limitations of the use of 
operating systems in conventional systems.

	20.2	Explain the scientific or technological uncertainty that the project aims 
to resolve?

The applicant contended that the two answers went hand in hand
because it was obvious that there would be uncertainty, because this 
type of project had never been successfully attempted before, no 
software existed from which solutions could be learnt. It was contended 
that it should have been a matter of logic to the Committee appointed 
to adjudicate the matter and, to give recommendations to the first 
respondent in that where no example existed the whole project would 
be clouded in uncertainty

	20.3	Explain the scientific or technological advance the project aims to 
achieve?	

		The applicant contended that the two answers go hand in hand, the 
second expanding on the first which was to make SAGE 300 ERP 
available to users and to shorten the time in which reconciliations were 
performed.

	20.4	Describe the computer program or software you intend to create or 
develop?

The applicant contended that the answers given go hand in hand and 
they related to developing a compatible SAGE 300 ERP to operate 
across the internet regardless of operating system; that it took years to 
develop various developmental language, it was unique and protected 
by copy right.

20.5	Explain the innovative nature of the computer program or software 
Product. How is the software product newly introduced on the basis of 
its scientific or technological characteristics?  

The applicant contended that the answers given go hand in hand in 
that the innovative nature in the new program was clearly stated.

	20.6	Describe how the computer program or software you intend to create 
could not be developed using the existing technology?

The applicant contended that the answers go hand in hand. The new 
program required a web-based program with special characteristics 
that are not available to SAGE 300 ERP users anywhere and it will 
take a long time develop. 

[21]	The first respondent contended that in the responses to the questions the 
“applicant failed to show that it was involved in the research and development of a 
computer program that was geared to resolve technological uncertainty ..”

Reasons given by the First Respondent

[22]	 The applicant addressed the covering letter and the annexure “A” which 
communicated the response to its failed application. It takes issue with the 
covering letter which does not clearly indicate which requirements in section 11D 
they failed to comply with. The applicant contended that under the heading 
“Application of the Law” the first respondent while ascribing certain meanings, there 
is no indication as to which part of the response falls short of any other meaning 
ascribed to the words. Under the heading “Reasons for Non-approval” the applicant 
contended that the response met every requirement in the reasons for disapproval  
and as far as they viewed the entire document only one reason had been given in 
contemplation of section 11 D(2) of the Act which appear in the words “failed to 
demonstrate that the results of the proposed activities are a resolution of scientific or 
technological uncertainty to meet the requirements of 11D(1)”.

[23]	The applicant proceeded to deal with section 11D(1)(b)(iii) of the Act. The 
applicant contended that it had been stated that the element, innovativeness was 
expressed, in that the project was to create a program which will be the first ever 
program of its kind. This complied with the research envisaged in 11D(1) of the Act. 
The uncertainty in the results was the key feature of the research, that the applicant 
was working towards the development or creation of a program, where every key- 
stroke tried out and eventually used in the research process, was systematically 
investigative or systematically experimental in nature or activity. He contended that 
the applicant had therefore met the requirements of section 11D(1)(b)(iii).

[24]	The first respondent contended that the applicant had misconstrued the 
requirements of 11D(1)(b)(iii) in that it was not the uncertainty in the desired 
outcome of the project that the applicant had to address, but it was for the applicant 
to demonstrate that the research and development embarked upon was geared 
towards resolving a scientific or technological uncertainty.       

Grounds of Review

[25]	The applicant contended that the nature of the form that was downloaded was 
such that in parts it required a yes or no answer and, in certain parts certain answers 
were not taken into account when evaluating his application. Incorrect interpretation 
of and misconstruing of sections 11D(1) and 11D(1)(b)(iii) of the Act amounted to an 
unfair administrative action as contemplated in section 3 of the Promotion of 
Administrative Justice Act 3 of 2000 (“the PAJA), that such refusal adversely affected 
his rights and should not have been refused without giving the applicant opportunity 
to present or dispute information or arguments which they were not invited to 
explain.

[26]	The first respondent contended that it was not necessary for the applicant to 
be afforded a third opportunity to make formal or oral representations and that it was 
in the discretion of the first respondent to call for oral representation before the final 
decision.

The Supplementary Affidavit in terms of Rule 53 (4) On the Uniform Rules of Court

[27]	Having received the record the applicant did not file an amended notice of 
Motion to incorporate additional relief, however it was indicated when responding to 
the answering affidavit in reply, that reliance would also be had to section 6 of PAJA. 
The latter ground was expanded in counsel’s heads of argument. The record of 
proceedings filed consisted among them documents they had not seen before, being 
the evaluation report of Mr Mensah and the minutes. What was not included were the 
initial application form completed by Russo and his response to the email questions of 
Mr Mabogaone These were annexed and dealt with in the founding affidavit. Mr 
Mensah’s report makes no mention of his response to the emailed questions neither 
did the first respondent mention that regard was had to them. It is therefore inferred 
that first respondent, Mr Mensah and the R&D Tax Incentive Adjudication and 
Monitoring Committee failed to consider the content of applicant’s responses properly. 

[28]	The applicant questions the authority, competency and qualification of Mr 
Mensah to express expert opinion on programming and existing software in the 
market, since no mention is made of his expertise in the report. It is contended 
that he erred in crucial aspects which destroy the legitimacy of his report:

(i)	First, was his reasoning that ‘a body of knowledge exists to the 

taxpayer to successfully execute the proposed activity’ when the 

applicant stated as at paragraph 22 – 27 of the founding affidavit that 

there was no existing software anywhere in the world to make the 

product researched and developed ‘as a web-based product to users of 

SAGE 300 ERP software’ and that the product will be a completely new 

product. Mr Mensah had not mentioned the name of any software or 

creators of other software applications which he said were available to 

the applicant, to prove his claim.

(ii)	Second, was the conclusion that the applicant’s activity was a ‘deemed 

product enhancement and would not render the resolution of a 

scientific or technological’ uncertainty. This stems from the erroneous 

statement that there was a body of knowledge available to the applicant. 

The applicant contends that the uncertainties have been dealt with in 

paragraphs 28 to 34 of the founding affidavit. 

(iii)	Third, the applicant contended that Mr Mensah had misconstrued the 

interpretation of 11D(1) of the Act, where he introduced certainty or 

success in the research and development of the product, in order to 

qualify it for the tax incentive.

[29]	The applicant indicated what he accidentally failed to mention was that SAGE 
was developing a new web-based version of the ERP 300 software and that while the 
application was aimed at the present users of SAGE 300 ERP, it was also aimed for 
the future users of the software who will be using the web-based version of SAGE 300 
ERP. The applicant also stated that it was constantly in touch with SAGE to ensure 
that applicant’s development will integrate with the SAGE 300 ERP software.

THE ISSUES

[30]	The main issue raised in the founding affidavit was that it was contended that 
the first respondent incorrectly interpreted section 11D(1)(b)(iii) of the Act in the 
reasons for refusing the applicant’s application. It was contended that the first 
respondent had disregarded the element of uncertainty in the analysis of the answers 
in the application form and those given to Mr Mabogoane. It was also contended in the 
supplementary affidavit that Mr Mensah had misconstrued the interpretation of section 
11(D)(1) and in finding that the section introduced and element of certainty. Another 
issue related to how to deal with new reasons which did not form part of the first 
respondent’s reasons as communicated to the applicant.

THE LAW

[31]	Section 11D(1) provides:

(1)	For the purposes of this section ‘research and development’ means

systematic investigative or systematic experimental activities of which the 

result is uncertain for the purpose of-

(a)	…………….

(b)	creating or developing –

(i)………….

(ii)………..

(iii)a computer program as defined in section 1 of the Copyright Act 
     which is of an innovative nature;”

(iv)…………

Section 1 of the Copyright Act 98 of 1978 defines the term computer program 
as:
	“a set of instructions fixed or stored in any manner and which when used 
directly or indirectly in a computer directs its operation to bring about a result”.

[32]	It is my view that the issues to be determined herein are to be considered in the 
light of the information that was before the adjudicating committee, having regard to 
the application form, the answers by one Mr Russo on behalf of the applicant and, 
also those subsequently given in response to Mr Mabogoane, also given by Mr Russo. 
The decisions sought to be reviewed are contained in the letter and annexure 
communicated to the applicant by the first respondent. 

[33]	It is also important to have regard to the purpose for which 11D was enacted 
being, the grant of a 150% tax incentive for research and development, in section 
11D(1) where it is provided, “research and development” means, systematic 
investigative or systematic experimental activities of which the result is 
uncertain………” and creating and developing in 11D(1)(b)(iii) “a computer program 
which of an innovative nature”…… ……(my emphasis) 

[34]	Counsel for the applicant contends that the reasons given by the first 
respondent should be understood to carry the same meaning as that emphasized in 
the underlined wording in the Act. Since no definition of the words is available in the 
Act, the applicable principles of interpretation should be followed, which require that 
the ordinary meaning be given to words. Counsel for the first respondent contended 
that in the first respondents reasoning, Annexure A which was attached to the covering 
letter communicating the outcome, under title “Application of the Law,” the meaning 
and interpretation of the words in section 11D are explained. He states that section 
11D should be interpreted to mean that there must be an indication that the program 
is resolving a scientific or a technological uncertainty. This calls for an examination of 
the first respondent’s reasons which were recorded in two paragraphs, in the following
manner:

	“Further for the proposed activities to be classified as R&D in the Act, its 
completion must be dependent on the resolution of a scientific and or 
technological uncertainty”

“…… the applicant failed to demonstrate that the results of the proposed 
activities are a resolution of scientific or technological  uncertainty to meet the 
requirements of section 11D(1) of the Act”.

It is argued for the applicant that the qualifying reason is contained in the 
second paragraph. In my view and having regard to the definition in section 11D,
the applicant when presenting the application for the incentive should still be engaged 
in a ‘systematic investigative activity’ or a ‘systematic experimental activity’, the result 
of which is still uncertain, where no resolution has as yet been achieved and where 
the activity is ongoing. There should be no room for certainty as yet when the 
application is launched and when the application is adjudicated on behalf of the first 
applicant because the program was still being researched and developed. It is only 
the applicant who can give indication when it has found an solution to its research and 
development, in which event the purpose for the incentive would not be available.  
 
[35]	In this regard I would avoid using words not used in the legislation enacted like 
the word ‘resolution’ as used in the first respondent’s reasons, for the mere reason 
that it brings a different meaning to what is intended in the enactment and this is 
evident in the response in paragraph [11] of the answering affidavit for example, where 
the first respondent gives another meaning, an additional meaning to ‘systematic  
investigative or systematic experimental activity as described in 11D, to mean what 
the applicant must satisfy as described in the guidelines as the “ Hypothesis to 
experimentation and Observation and evaluation to logical conclusions.” At paragraph 
[58] of the answering affidavit the deponent states: “The applicant has failed to show 
that it is involved in the research and development of computer programs that is 
geared to resolve technological uncertainty …..unless the applicant can demonstrate 
that the project will resolve a technological uncertainty which is already existing, the 
applicant’s project does not meet the requirements.” Another example is the meaning 
and interpretation to be ascribed to the words “of an innovative nature” as used in 
section 11D(1)(b) (iii) as opposed to the use of the single word “innovative” in sections 
11D(1) (b)(ii) (bb) and (c). 

[36]	Counsel for the applicant correctly points out that meaning to be ascribed to the 
words are the ordinary meaning as dealt with in his heads of argument for example at  
paragraph 7.4 and 7.5, when dealing with the ordinary meaning that should be 
ascribed to the word “Uncertain” (taken from the Shorter Oxford Dictionary (1968) and 
the South African Pocket Dictionary). Furthermore, it was contended that in as far as 
it concerned the interpretation of the words “ innovative” and “of an innovative nature,”
the first respondent had as at paragraph 97 of the answering affidavit introduced 
a qualitative comparison between the applicant’s intended product and that of other 
similar products, thereby rendering an incompatible interpretation of the two. The Act 
does not define these two expressions and there had been no judicial interpretation 
existing. It was contended that the rigid interpretation of the words was indicative of 
the first respondent’s reliance on some guideline and did not allow an interpretation 
according to the principles laid down by law. 

[37]	It is my view that if the first respondent wished to elicit information as described, 
being a reference to the “Guideline” and requiring the applicant to expand on its 
presentation, it could have drawn the applicant’s attention to the guideline. Mr 
Mabogaone posed almost similar questions as asked in the application form, without 
indicating that a more comprehensive exposition was being asked for and to give 
guidance as to what was required to be explained.  As I see it, it was assumed by the 
first respondent that Mr Mabogoane’s additional questions would have elicited 
additional comprehensive information, thereby taking the view that the applicant was 
given a second chance to explain itself. Counsel for the first respondent conceded in 
argument that some of the questions were similar to those in the application form. It is 
my view that it is possible that the questions as formulated in the application form could 
be viewed as being too simple and restrictive, in as far it they were designed to give 
answers to what I believe are complex issues, especially where a tax incentive of a 
150% is being applied for.  

[38]	Those persons involved in the interpretation of a statutory provision should not  
engage in a complex process or introduce into the provision that which is not intended 
by the legislature. The principle applied in Natal Joint Municipal Pension Fund v 
Endumeni Municipality 2012 (4) SA 593 (SCA) at 603 – 604 should be followed, where 
it was stated:

“[18]	The present state of the law can be expressed as follows: Interpretation 
is a process of attributing meaning to words used in a document, be it 
legislation, some other statutory instrument or contract having regard to the 
context provided by reading the particular provision or provision in light of the 
document as a whole and the circumstances attended upon its coming into 
existence. Whatever the nature of the document, consideration must be given 
to the language used in the light of the ordinary rules of grammar and syntax; 
the context in which the provision appears; the apparent purpose for which it is 
directed and the material known to those responsible for its production. Where 
more than one meaning is possible each possibility must be weighed in the light 
of these factors. The process is objective not subjective. A Sensible meaning 
is to be preferred to one that leads to insensible or unbusinesslike results or 
undermines the apparent purpose of the document. Judges must be alert to, 
and guard against the temptation to substitute what they regard as reasonable, 
sensible or businesslike for the words actually used. To do so in regard to a 
statute or statutory enactment is to cross the divide between interpretation and 
legislation in a contractual context, it is to make a contract for the parties other 
than the one they in fact made. The inevitable point of departure is the language 
of the provision itself, read in context and having regard to the purpose of the 
provision and the background to the preparation and production of the 
documents.”  

[39]	Counsel for the first respondent contended that in the preceding paragraphs to 
the reasons in “Annexure A” the minister dealt with the meaning of section 11D(1). It 
is my view that the meanings ascribed to ‘systematic; investigative; experimental; 
hypothesis” are not definitions in the Act, however, it could be that they were obtained 
from a guideline not forming part of the certified record of proceedings and not availed 
to the applicant before adjudication. Interpretation of the words should follow the trite 
principles already mentioned.   

[40]	It was contended by the applicant that the first respondent could not furnish 
new reasons not initially communicated to the applicant as it sought to introduce the 
guideline and in my view certain portions of the report by Mr Mensah. In the replying 
affidavit certain issues are raised about Mr Mensah’s qualifications and the fact that 
he failed to file an affidavit relating to his expertise. Counsel for the first respondent 
dealt with Mr Mensah’s evaluation by drawing comparisons to what was alluded to in 
the founding affidavit. As I see it, most of the allegations in the founding affidavit were 
an explanation of what the application was about, which comprehensive narrative was 
not similar to that given in the application form and the follow up answers to the query
of Mr Mabogoane. My concern is that nowhere in the reasons of the first respondent 
especially those as dealt with in “Annexure A”, does the first respondent refer to Mr 
Mensah’s reasons as being one of the reasons and recommendations relied upon 
when deciding not to grant the application. Well, except for paragraph 2 of the reasons 
of the first respondent, where the first respondent echoes the conclusion in Mr 
Mensah’s report. 
I have already indicated that in those reasons it is assumed that it was the 
guidelines which were being referred to as seen from the answering affidavit and 
which guidelines do not form part of the record.

[41]	In Jicama 17 (Pty) Ltd v West Coast District Municipality 2006 (1) SA 116 (C)
at paragraphs [11] and [12] emphasised the importance of conveying reasons to a 
party adversely affected thereby, so as not to allow reasons which come out for the 
first time in an answering affidavit to supplement reasons already given. In National 
Lotteries Board and Others v South African Education and Environment Project 2012 
(4) SA 504 (SCA) at paragraphs [22] –[27] the following is stated:

	“[24]	………the high court relied on the decision of Cleaver J in Jicama (Pty)
 	Ltd v West Coast District Municipality, which has an impressive English 
Pedigree.”

[26]	….The question here is not whether there were other reasons in the 
record that justified the board’s decision, but whether it could give reasons 
other than those it gave initially for refusing the application”

[27]	The duty to give reasons for an administrative decision is a central 
element of the constitutional duty to act fairly. And the failure to give reasons
which include proper or adequate reasons should ordinarily render the 
disputed decision reviewable.” 	

[42]	On what grounds is this decision reviewable?  Although in the founding affidavit 
the applicant based its grounds on a fair procedure that was not followed, in that it 
was not called upon to explain its case, before the matter was adjudicated or before 
reasons were given, it is indicative in the answering affidavit that the first respondent 
relied on additional grounds which were not discovered. In that regard I find that the 
procedure was unfair in that the first respondent also relied on a standard not set out 
in the act or any regulation enacted but on guidelines to adjudicate the application. 
The applicant was not made aware of the importance of structuring it’s responses 
according to the standard in the guidelines. In the replying affidavit at paragraph [15] 
the applicant addresses the qualifying criteria introduced by the first respondent as an 
ultra vires action reviewable under several of the grounds in section 6 of the PAJA and 
in conclusion the applicant states that it is incorrect, arbitrary and not rationally related 
to the facts.

[43]	I have already indicated that the applicant did not amend its notice of motion to 
insert the additional grounds it relies on in terms of section 6 of PAJA 

(i)	 6 (2) (d) where the decision was influenced by an error of law; 

(ii)	 6(2)(e)(iii) irrelevant considerations were taken into account or relevant 

considerations were not considered’; 

(iii)	6(2)(f)(ii) where the action is not rationally connected to the purpose for 

which it was taken; and

(iv)	6(2)(c) the action was procedurally unfair. 

These were stated in counsel’s heads of argument. My view is that if such 
grounds can be determined from the facts then in the interests of justice the decision 
is reviewable on those grounds so established. 

[44]	I also find that the decision is reviewable in terms of section 6 (2)(d) in that the
decision was influenced by the incorrect interpretation of the provisions of sections 
11D(1) and 11D(1)(b)(iii). I am of the view that this is not a matter where a court of law 
is competent to substitute the decision of the first respondent. It is a complex matter  
which should be left to the first respondent to adjudicate, as it has available to it a 
process of evaluation by experts in the field the applicant is engaged in, of the research 
and development of a scientific and or technological computer program. The Act also
makes provision for oversight processes to be engaged by the first respondent in 

conjunction with Treasury and the Receiver of Revenue, since this incentive has the 
potential to also impact on the fiscus. I find that the applicant should be referred
back to the first respondent for the adjudication of its application as set out in the order 
below.

[45]	In the result the following order is granted:

[1]	The refusal of the applicant’s application by the first respondent on 21
August 2018 under reference 2017/003222/01 is hereby reviewed and 
set aside in terms of sections 6(2)(c) and 6(2)(d) of the PAJA.

	[2]	The matter is referred back to the first respondent for adjudication in 
terms of the Act.

	[3]	The first respondent is directed, within 45 days of the service of this 
order, through Mr Mabogoane (Deputy Director) and or any competent 
official in his place, to review the questions in the query in the email dated
1 September 2017, in such a manner setting out additional requirements 
and answers required for purposes of adjudicating the application for an 
incentive by the applicant in terms of the Act. The official is directed to
make available to the applicant any material it has relied upon in the past 
and which it shall rely upon in setting out what is required from the 
applicant and the standards applicable in the adjudication of the 
application.

	[4]	The applicant is directed to supplement its answers in the application as 
directed in [3] as required in the Act and in any manner it deems fit. The 
applicant is directed to serve the first respondent with its answers within 
30 days of its receipt of the question in [3] above;  

	[5]	The first respondent is ordered to pay the costs of the applicant 
including those of two counsel where engaged.

___________
TLHAPI V V 
(JUDGE OF THE HIGH COURT)

MATTER HEARD ON				:	12 FEBRUARY 2020
JUDGMENT RESERVED ON			: 	12 FEBRUARY 2020
ATTORNEYS FOR THE APPLICANTS		:	PIERRE RETIEF INC.
ATTORNEYS FOR THE  RESPONDENTS	:	THE STATE ATTORNEYS