Arena Holdings (Pty) Ltd v SARS (Jacob Zuma)

High court dealt with a dispute concerning disclosing taxpayer information and ordered SARS to disclose the tax returns of the former president for the 2010 to 2018 tax years after considering inter alia the test of whether the limitation claimed by SARS met the normative test of section 36 of the Constitution.

“The parties relying on such a limitation (SARS and the Minister), bear the onus to prove that the limitation passes Constitutional muster. Put differently in the context of this case, have the state respondents satisfied the onus that rests on them to show that the limitations on rights of access to information and freedom of speech imposed by taxpayer secrecy provisions are justified in an open and democratic society based on human dignity, equality and freedom’?”

Essence

Disclosing taxpayer information considered by high court and ordered compliance with a request and made important constitutional declaratory orders. 

Decision

(case: 88359/2019) High Court, Gauteng Division, Pretoria (16 November 2021)

Order:

Granted application – see below under excerpts from judgment

Judges

Norman Davis J

Heard: /
Delivered:  16 November 2021

Related books

Darcy du Toit et al Labour Relations Law: A Comprehensive Guide 6ed 925 pages (LexisNexis 2015) at

Darcy du Toit et al Labour Law Through The Cases – loose-leaf service updated 6 monthly (LexisNexis 2021) 

Reasons

“8.8 The “public interest override” already provided for in section 46 of PAIA as referred to in paragraph 4.16 above, applies to a range of “extraneously sensitive” or otherwise confidential information, such as trade secrets, national security secrets, the details of active police investigations, privileged documents and even information that may threaten the life of an individual. These are all examples of where a limitation of rights to privacy have been limited. Such a limitation would, as already pointed out, only be constitutionally valid if justified in terms of section 36 of the Constitution.

In comparison, these types of information at first blush appear to be of a weightier nature and/or affecting or possibly affecting the rights or interests of more people than the rights of a private or individual taxpayer. Therefore, so the applicants contend, there should not be an objection against a similar limitation of the privacy rights in respect of taxpayer information.”

Quotations from judgment

Note: Footnotes omitted and emphasis added

[1] Introduction

This is the judgment in an application brought by a media house and others, challenging the constitutional validity of the statutory prohibition of the disclosure of a taxpayer’s tax information held by the South African Revenue Services (SARS), in circumstances where such disclosure would reveal evidence of a “substantial contravention of the law” and would be in the public interest.

. . . . 

[3] Issues to be determined

In addition to issues of locus standi, misjoinder and the appropriateness of the constitutional challenge at this stage, all issues which were raised by the Minster of Justice but not pursued with much vigour, the parties have, in their joint practice note, identified the following substantial issues which require adjudication:

3.1 Whether the impugned prohibition of disclosure limits the rights of access to information provided for in section 32 of the Constitution and /or the right to freedom of expression provided for in section 16(1) of the Constitution.

3.2 If the prohibition Iimits either or both of the aforesaid rights whether such limitation is justifiable in terms of section 36 of the Constitution.

3.3 Should the limitation(s) not be justifiable, whether the relief sought by the applicants for a “reading-in” into the Tax Administration Act 28 of 2011 (the TAA) of an additional sub-section (6A) into section 69(2) which provides that “where access has been granted for the disclosure of the information in terms of the Promotion of Access to Information Act (PAIA)” and the “reading-in” of a corresponding exception into section 34( I ) of the Promotion of Access to Information Act, 2 of 2000 (PAIA), are competent.

3.4 Whether SARS’ contention that the provisions of the TAA strike a lawful balance between the right to privacy and the rights to access to information and freedom of speech claimed by the media, is correct.

3.5 Lastly, the Minister of Finance claims that the applicants have not made out a case for the substitution of this Court’s decision for that of SARS.

. . . .

8.8 The “public interest override” already provided for in section 46 of PAIA as referred to in paragraph 4.16 above, applies to a range of “extraneously sensitive” or otherwise confidential information, such as trade secrets, national security secrets, the details of active police investigations, privileged documents and even information that may threaten the life of an individual. These are all examples of where a limitation of rights to privacy have been limited. Such a limitation would, as already pointed out, only be constitutionally valid if justified in terms of section 36 of the Constitution.

In comparison, these types of information at first blush appear to be of a weightier nature and/or affecting or possibly affecting the rights or interests of more people than the rights of a private or individual taxpayer. Therefore, so the applicants contend, there should not be an objection against a similar limitation of the privacy rights in respect of taxpayer information.

8.9 The test of whether the limitation claimed by SARS meets the test of section 36 of the Constitution, is a normative one. The parties relying on such a limitation (SARS and the Minister), bear the onus to prove that the limitation passes Constitutional muster. Put differently in the context of this case, have the state respondents satisfied the onus that rests on them to show that the limitations on rights of access to information and freedom of speech imposed by taxpayer secrecy provisions are justified in an open and democratic society based on human dignity, equality and freedom’?

. . . . 

[10[ Summary of findings

To sum up then, with reference to the questions this court was called upon to decide, as set out in paragraph 3 above, the findings are as follows:

10.1 Ad para 3.1 above

The blanket prohibitions of disclosure of taxpayer information contained in section 35 of PAIA and section 69 of the TAA limit the rights to access to information provided for in section 32 of the Constitution.

10.2 Ad para 3.2 above

The above limitation is not justifiable in terms of section 36 of the Constitution.

10.3 Ad para 3.3 above

A “reading-in” of the “public interest override” provisions otherwise contained in section 46 of PAIA is both justified and competent.

10.4 Ad para 3.4 above

SARS’ contention that the other limited disclosures of taxpayer information contained in the TAA strike the “necessary balance”, is too limited and incorrect.

10.5 Ad para 3.5 above

Having regard to the nature of the case and the legal and constitutional questions involved, I am of the view that this is an appropriate case where a substitution of the decision of SARS to refuse access to information should be made. SARS was bound by the statutory prohibitions and, once those had been found to be unconstitutional, the remainder of the elements of the public override provisions have been demonstrated with such sufficient particularity, that the case and the novelty thereof constitutes an “exceptional case” as contemplated in Section 8(1)(c)(ii)(aa) of PAJA.

10.6 In view of the above findings and conclusion, I do not find the remainder of the Ministers’ points referred to in paragraph 3 above, to have any merit.

[11] Order

1. Section 35 and 46 of the Promotion of Access to Information Act 3 of 2000 (‘PAIA’) are unconstitutional and invalid to the extent that they preclude access to tax records by’ a person other than the taxpayer (‘a requester’) even in circumstances where the requirements set out in subsections 46(a) and (b) of PAIA are met.

2. Section 67 and 69 of the Tax Administration Act 28 of 2011 (‘the TAA’) are unconstitutional and invalid to the extent that:

2.1 they preclude access to information being granted to a requester in respect of tax record in circumstances where the requirements set out in subsections 46(a) and (b) of PAIA are met and
2.2 they preclude a requester from further disseminating information obtained as a result of a PAIA request.

3. The declarations of invalidity in paragraphs I and 2 above are suspended for a period of two years from the date of this order to enable Parliament to correct the relevant defects.

4. Pending the correction of the defects:

4 .1 Section 46 of PAIA shall be read as if the phrase “’35(l)” appeared immediately after the phrase “section 34(1)” contained therein, and
4.2 Section 69(2) of the TAA shall be read as if it contained an additional sub-section (bA) after existing sub-section (b), which provides:

“(bA) where access has been granted for the disclosure of the information in terms of the Promotion of Access to Information Act”; and

4.3 Section 67(4) of the TAA shall be read as if the phrase

“unless the information has been received in terms of the Promotion of Access to Information Act”

appeared immediately before the full stop.

5. The decision of the first respondent, dated 19 March 3019, to refuse the third applicant’s request under PAIA for access to the individual tax return of the second respondent for the 2010 to 2018 tax year (“the refusal decision”) is set aside.

6. The decision of the first respondent, dated 30 May 2019, to confirm the refusal decision on internal appeal is set aside.

7. The first respondent shall supply the first and third applicants with the individual tax returns of the second respondent for the 2010 to 2018 tax years within ten days of the order.

8. The orders in paragraphs I to 4 above are referred to the Constitutional Court in terms of section 172(2)(a) of the Constitution.

9. The costs of this application shall be paid by the first, third and fourth respondents jointly and severally, the one paying the other to be absolved and including the costs of two counsel.

Court summary

Summary

To follow.