WELZ 

AND ANOTHER v HALL AND OTHERS 1996 (4) SA 1073 (C)

1996 (4) SA p1073
 
Citation 1996 (4) SA 1073 (C)
   
Case No 2616/96
   
Court Cape Provincial Division  C
   
Judge Conradie J
   
Heard April 1, 1996
   
Judgment April 2, 1996
   
Counsel E Bertelsmann SC for the applicants
  J van der Berg (with him P Tredoux) for the first respondent
W de Haan for the seventh respondent
 
Annotations Link to Case Annotations
   
 
 

Flynote : Sleutelwoorde
Revenue - Income tax - Duty of secrecy of officials in terms of s 4(1) of Income Tax
Act  D 58 of 1962 - Principal policy guidelines - Subsidiary guidelines deduced from such
set out.  E
Evidence - Documentary evidence - Best evidence rule - Such rule nowadays applying
only in context of documents and only when content of document directly in issue - Rule
not applying where document serving to record fact capable of being proved outside
document - Rule providing that original of  F document best evidence of its contents -
Rule ancient and going back to before faxes and copy machines - Nowadays Court can
be asked to permit use of copy if original of document not available.
Evidence - Production and admission of - Hearsay - If hearsay evidence tendered
because revenue official who made document cannot give evidence Court will come to
conclusion that evidence, generally speaking, should in interest of  G justice be admitted
- Unless there is something unusual such as serious dispute of fact Court, if asked, will
exercise discretion (in terms of s 3 of Law of Evidence Amendment Act 45 of 1988) in
favour of allowing hearsay rather than making revenue officials break oath of secrecy.  H
Headnote : Kopnota
It is well-established law that a Court will not lightly direct an official of the Revenue to
divulge information imparted to him by a taxpayer. One reason for this reluctance
is  I found in public policy. The Legislature has thought it desirable to encourage full
disclosure of their tax affairs by taxpayers, even by those who carry on illegal trades or
have illegally come by amounts qualifying as gross income. This object might easily be
defeated if orders were freely made for disclosure of those communications. A second
and subsidiary reason for a Court's reluctance to make an order against the fiscus is that
it would cause great disruption in the revenue office if  J
1996 (4) SA p1074
anyone who desired financial information concerning a party to litigation could subpoena
an  A official to produce the necessary records. (At 1076G-1077B.)
These are the principal policy guidelines and from them one may deduce certain
subsidiary guidelines:
   (1)   A Court will be most reluctant to order disclosure of information if such
information can be obtained elsewhere. A revenue official is a witness of last resort.
There are procedures for procuring evidence for trial; foremost among these are
discovery and inspection, and subpoena. The mechanisms within the realms of discovery
and inspection ensure that full discovery is  B made. Mechanisms to ensure the presence
of witnesses at Court see to it that necessary documents are brought to Court. It is only
when these procedures have, through no fault of an applicant, yielded disappointing
results that a Court would ordinarily think of exercising its power in terms  C of s 4(1) of
the Income Tax Act 58 of 1962 ('the Act').
   (2)   The information sought from the fiscus must be central to the applicant's case. A
Court will not make an order under s 4(1) of the Act where the information would serve
only to establish peripheral issues. Moreover, the  D litigant's needs must be pressing. It
would not ordinarily be sufficiently so if information from the Revenue was wanted
merely to confirm or bolster some other less than satisfactory evidence. Further, the
success or failure of an application may well depend upon the extent of the
disclosure  E demanded by an applicant.
   (3)   The attitude of a respondent to an application such as this would not necessarily
dictate the outcome. A respondent who consents to the release of information might yet
run foul of the cardinal rule that the time of revenue  F officials is not to be taken up by
disputes between private citizens unless a strong case therefor is made out.
   (4)   The Court attempts to balance the competing interests of the litigants and the
Revenue. As inevitably happens in a balancing process, each party is likely to achieve
less than he might have desired. There is not necessarily  G an all or nothing solution. In
return for having an official of the Receiver of Revenue testifying to anything at all, the
parties adverse to the interests of the taxpayer may have to rest content with not
examining him as freely as would have been their right otherwise.
   (5)   The process of oral examination of a witness is too fluid to be regulated by rules
made in advance. A Presiding Judge may lay down the parameters within which it seems
to him proper that questioning (of the revenue official) should take place, but the ruling
is necessarily interlocutory. The questions themselves would have to be carefully
monitored and the Judge  H would have to be ready to uphold an objection against the
propriety of any question at any stage. If necessary the parameters might have to be
revised. In every case no more than absolutely minimum inroads into secret material will
be allowed.
   (6)   The nature of the litigation is crucial. If a taxpayer were to be subjected to some
penalty because of the disclosure of fiscal information, a Court would not make an order
for disclosure. (At 1077F-1078G/H.)
As far as the best evidence rule is concerned, it is a rule which applies nowadays only in
the context of documents and then only when the content of a document is directly
in  I issue. It does not apply where the document serves to record a fact capable of being
proved outside the document. It provides that the original of a document is the best
evidence of its contents. The rule is a very ancient one. It goes back to the Dark Ages,
well perhaps the twilight days, before faxes and copy machines, when making copies
was difficult and such copies as were made were often inaccurate. Under these
circumstances Courts, naturally, insisted upon production of the original document as
being the most reliable evidence of its contents. Nowadays, a Court can be asked to
permit the use of a copy if the original of a document is not available. (At 1079C-E.)
It seems that if a Court is told that evidence cannot be given by a revenue official who
made a document, and that that is the reason why hearsay evidence is being tendered,
a Court would come to the conclusion that the evidence should, generally speaking, in
the interests of justice be admitted. After all, the person seeking to prove the document
is prevented by the secrecy provision in s 4 of the Act from doing so. Unless there is
something unusual, such as a serious dispute of fact, the  J
 1996 (4) SA p1075
CONRTADIE J
A Court, if it is asked to do so, would exercise its discretion (in terms of s 3(1) of the Law
of Evidence Amendment Act 45 of 1988) in favour of allowing the hearsay rather than
make revenue officials break their oath of secrecy. (At 1083G/H-I.)
The following decided cases were cited in the judgment of the Court:
Estate Dempers v Secretary for Inland Revenue1977 (3) SA 410 (A)
Greenspan v R 1944 SR 149
Margau v De Kok1947 (4) SA 318 (W)
Ontvanger van Inkomste, Lebowa, en 'n Ander v De Meyer NO1993 (4) SA 13 (A)  B
R v Kassim1950 (4) SA 522 (A)
Silver v Silver 1937 NPD 129
Strydom v Griffen Engineering Co 1927 OPD 47
The following statutes were considered by the Court:  C
The Income Tax Act 58 of 1962, s 4(1): see Juta's Statutes of South Africa 1995 vol 3 at
3-249.
The Law of Evidence Amendment Act 45 of 1988, s 3(1): see Juta's Statutes of South
Africa 1955 vol 1 at 2-423.
Case Information
Application for an order in terms of s 4(1) of the Income Tax Act 58 of 1962, permitting
certain revenue officials to communicate to the Court matters which came to  D their
knowledge in the performance of their duties in connection with the provisions of the
Act, and to allow the applicants access to certain records in the custody of the
Commissioner for Inland Revenue. The facts appear from the reasons for judgment.
E Bertelsmann SC for the applicants.
J van der Berg (with him P Tredoux) for the first respondent.
W de Haan for the seventh respondent.  E
Cur adv vult.
Postea (April 2).
Judgment
Conradie J: The applicants and the respondents, apart from the seventh respondent,
are  F parties to a defamation action. The first and second applicants are the first and the
second defendants. The first respondent is the plaintiff. The second to the sixth
respondents are the third to seventh defendants. The Receiver of Revenue, cited as
such, is the seventh respondent.
  G By way of background I should say that the plaintiff sues the first and the second
applicants alleging that they published defamatory matter concerning him in Noseweek,
a publication of which the first applicant is the editor and the second applicant the
publisher. In the same action, the plaintiff sues the third to seventh defendants. They
are also alleged to have published defamatory matter concerning the plaintiff, but it is
not necessary to go into that since they are not parties to the application, although of
course they are interested in its outcome. The allegedly defamatory allegations in the
article in Noseweek cover a wide field. I summarise those that are relevant to
the  H present application. It is said that -
   (a)   the first respondent knew how never to pay tax; the imputation, which has not been
denied, is that he ought to have paid tax;
  I    (b)   the Receiver of Revenue had decided to tax the first respondent on income arising from
'repeated and extremely profitable illegal dealings' in financial rands, from which the first
respondent made a living and which he has not declared as income;  J
1996 (4) SA p1076
CONRADIE J
   (c)   the first respondent's accountants had 'helped him disguise some inconvenient  A income'
amounting to R600 000 as a tax-free capital gain;
   (d)   the first respondent pretended to be a poor man and that in order to achieve 'this
incredibly valuable poverty status', he resorted to 'a few lies, a  B bit of flimflam';
   (e)   the first respondent had made a false assertion to the Receiver of Revenue that Grada
Corporation, a company with which he has some connection, had no accounts.
In each case, the issue is whether the statement is true in the public interest. The
applicants must prove truth and public benefit. I shall return to deal with each of
these  C allegations in the context of the relief sought but first let me say a word about
the nature of the application presently before me. It is an application for an order in
terms of s 4(1) of the Income Tax Act 58 of 1962 ('the Act'), to permit certain officials
who perform their duties under the control of the Commissioner for Inland Revenue to
communicate to the Court matters which came to their knowledge in the performance of
their duties in connection with the provisions of the Act, and to allow the
applicants  D access to certain records in the custody of the Commissioner. The
Commissioner, represented by Mr De Haan is, as I have said, the seventh defendant,
although cited as the Receiver of Revenue. Mr De Haan made nothing of this
misdescription.
  E Section 4(1) of the Act reads as follows:
   'Every person employed in carrying out the provisions of this Act shall preserve and aid in
preserving secrecy with regard to all matters that may come to his knowledge in the performance
of his duties in connection with  F those provisions, and shall not communicate any such matter to
any person whatsoever other than the taxpayer concerned or his lawful representative nor suffer
or permit any such person to have access to any records in the possession or custody of the
Commissioner except in the performance of his duties under this Act or by order of a competent
court. . . .'
There then follow two provisos with which I need not deal since they are not
relevant  G to the present enquiry.
It is well-established law that a Court will not lightly direct an official of the Revenue to
divulge information imparted to him by a taxpayer. One reason for this reluctance is
found in public policy.
The Legislature has thought it desirable to encourage full disclosure of their affairs
by  H taxpayers, even by those who carry on illegal trades or have illegally come by
amounts qualifying as gross income. This object might easily be defeated it was said
in Greenspan v R 1944 SR 149 at 155-6, if orders were freely made for disclosure of
those communications. These dicta were referred to by the Appellate Division in R
v   I Kassim1950 (4) SA 522 (A) at 526G, without dissent.
In Ontvanger van Inkomste, Lebowa, en 'n Ander v De Meyer NO1993 (4) SA 13 (A) at
26A-C Smalberger JA, speaking for the Appellate Division, said that no departure from
the secrecy principle would lightly and without sufficient cause be permitted. In Estate
Dempers v Secretary for Inland Revenue1977 (3) SA 410 (A) at 420A-C Corbett JA (as
he then was) approved the dicta in Silver v Silver 1937 NPD 129 concerning  J
1996 (4) SA p1077
CONRADIE J
  A the rationale of the secrecy provision. A second and subsidiary reason mentioned by
Featham JP in Silver's case, for a Court's reluctance to make an order against the fiscus,
is that it would cause great disruption in the revenue office if anyone who desired
financial information concerning a party to litigation could subpoena an official to
produce the necessary records. This is what he said at 134:
    B 'Now in the case of income tax returns and in matters in connection therewith, there is definite
statutory provision that these documents should be regarded as secret though the last words of
the subsection quoted seem to imply that the court has a discretion in the matter. The reason why
the statute requires these income tax returns, and all information obtained by officials of the
Revenue Department in connection with them to be kept secret is apparent. For the purpose of the
administration of the Income Tax Act, it is  C necessary that the fullest information should be
available to the Department of Inland Revenue. If that information is to be obtained, there must
be some guarantee as to secrecy. It is obvious that if courts were to be in the habit of making
orders requiring such information to be disclosed in suits between private individuals, there could
be no guarantee at all as to secrecy and the  D difficulties of the Department of Inland Revenue
would be greatly increased. On grounds of public policy the department should be enabled to carry
out its duty without being hampered and, if I were to make the order for disclosure of the
information and documents asked for in this case, I should certainly be hampering the department
in carrying out its duties. It may be that, if the order were made, the plaintiff might obtain some
evidence which would assist him in establishing his contentions, but the mere fact that the plaintiff
might be Eenabled to obtain such evidence is not a sufficient ground for making the  E order, and I
 consider I must uphold the contention that the officials concerned are justified in withholding the
documents, and in declining to disclose the information.'
These are the principal policy guidelines. I think one may deduce certain
subsidiary  F guidelines from them. I venture to formulate them like this.
   1.   A Court will be most reluctant to order disclosure of information if such information can be
obtained elsewhere. A revenue official is a witness of last resort. There are procedures
for procuring evidence for trial; foremost  G among these are discovery and inspection,
and subpoena. The mechanisms within the realms of discovery and inspection ensure
that full discovery is made. Mechanisms to ensure the presence of witnesses at Court
see to it that necessary documents are brought to Court. It is only when these
procedures have, through no fault of an applicant, yielded  H disappointing results that a
Court would ordinarily think of exercising its power in terms of s 4(1) of the Act.
   2.   The information sought from the fiscus must be central to the applicant's case. I cannot
conceive of a Court making an order under s 4(1) where the information would serve
only to establish peripheral issues. Moreover, the litigant's need must be pressing. It
would not ordinarily, in my view, be  I sufficiently so if information from the Revenue was
wanted merely to confirm or bolster some other less than satisfactory evidence. Further,
the success or failure of an application may well depend upon the extent of the
disclosure demanded by an applicant. In Strydom v Griffen Engineering Co  J
1996 (4) SA p1078
CONRADIE J
  A       1927 OPD 47 at 51-2 an application to lead evidence from a revenue inspector succeeded
because not only was the taxpayer dead and could not be cross-examined or subjected
to a penalty, but the information required was merely whether a return of income had
been made, not what  B the contents thereof were. The decision was followed in Margau
v De Kok1947 (4) SA 318 (W) at 320, where the fact of the return having been made
was permitted to be disclosed.
   3.   The attitude of a respondent to an application such as this would not necessarily dictate
the outcome. A respondent who consents to the release of information might yet run foul
of the cardinal rule that the time of revenue  C officials is not to be taken up by disputes
between private citizens unless a strong case therefor is made out.
   4.   The Court attempts to balance the competing interests of the litigants and the Revenue. As
inevitably happens in a balancing process, each party is likely to achieve less than he
might have desired. There is not necessarily  D an all or nothing solution. In return for
having an official of the Receiver of Revenue testifying to anything at all, the parties
adverse to the interests of the taxpayer may have to rest content with not examining
him as freely as would have been their right otherwise.
   5.   I would think that the process of oral examination of a witness is too fluid to be regulated
by detailed rules made in advance. A presiding Judge may lay down the parameters
within which it seems to him proper that  E questioning should take place, but the ruling
is necessarily interlocutory. The questions themselves would have to be carefully
monitored and the Judge would have to be ready to uphold an objection against the
propriety of any question at any stage. If necessary the parameters might have to
be  F revised. In every case no more than absolutely minimum inroads into secret
material will be allowed.
   6.   Although this point comes last, it is probably the most important. The nature of the
litigation is crucial. If a taxpayer were to be subjected to some penalty because of the
disclosure of fiscal information, a Court  G would, in my view, not make an order for
disclosure. This would apply for example in a criminal trial where, as far as I have been
able to ascertain, the State has never even attempted to invoke this section in order to
obtain evidence of an admission by an accused to the fiscus.  H
The relief sought in the notice of motion is of a very wide-ranging kind. Prayers
1(a) and (b) seek orders that the revenue officials should consult with the applicants and
their legal representatives and with the respondents and their legal representatives. I
have never heard of such an order being made by a Court and I am not about to
make  I such an order now. It would be singularly inappropriate in any event to make an
order entailing that the presiding Judge should not be able to monitor the questions put
to the fiscus by the parties or their representatives. In prayers 1(c), (d) and (e) the
applicants ask for all files relating to the tax affairs not only of the first respondent but of
other entities said to be controlled by the first respondent. The relief against non-parties
was  J
1996 (4) SA p1079
CONRADIE J
  A mercifully abandoned so I need say no more about it. Extensive relief continues,
however, to be sought against the first respondent:
   - an order allowing the seventh respondent to disclose fully the complete contents of all files
relating to the first respondent;  B
   - an order granting the applicant and the respondents 'full and unrestricted access' to each of
the files of the seventh respondent.
The only bases for this wide-ranging relief are stated to be the following:
   - the best evidence that there is, is contained in the files of the seventh respondent;  C
   - the first respondent himself has placed the question of whether his income is illegal under the
spotlight.
As far as the best evidence rule is concerned, it is a rule which applies nowadays only in
the context of documents and then only when the content of a document is directly in
issue. It does not apply where the document serves to record a fact capable of
being  D proved outside the document. It provides that the original of a document is the
best evidence of its contents. The rule is a very ancient one. It goes back to the Dark
Ages, well perhaps the twilight days, before faxes and photocopying machines, when
making copies was difficult and such copies as were made often inaccurate. Under those
circumstances Courts, naturally, insisted upon production of the original document as
being the most reliable evidence of its contents. Nowadays, a Court can be asked
to  E permit the use of a copy if the original of a document is not available. One of the
very best reasons for permitting the use of a copy in this case, I would have thought,
was that the original of the document could not be procured, at any rate not without a
substantive application, because it is in the possession of the Revenue. If the first
respondent were to object to the use of a copy, which seems to me to be
doubtful,  F then that is a matter which could have been dealt with at that stage. If the
decision then went against the applicants, that is perhaps the stage at which they could
have contemplated invading the files of the fiscus. To compel the fiscus to violate his
oath of secrecy before these steps have been taken is, in my view, premature. Moreover,
the best evidence rule clearly does not apply to all documents in the Revenue's
possession. Where documents are generated by a Receiver of Revenue and sent to a
taxpayer, the  G taxpayer gets the original, the Receiver is the one who keeps the copy.
This would apply to notices, assessments and so forth. No attempt was evidently made
to establish what original documents, such as the ones I have mentioned, were available
outside the domain of the fiscus. The question of whether the first respondent's income
is illegal has, as far as I can see, nothing to do with the fiscus. That is a question
of  H Exchange Control. The Reserve Bank may be able to help there, but to the Revenue
it is of no concern.
On these inadequate foundations the applicants sought to build their extensive relief.
With the illegality out of the way it seems to me that only the best evidence rule remains
as a basis. It is relevant, then, to see what documentary evidence the applicants
had  I available. This is important because of the first subsidiary guideline which I
mentioned, namely that the Court would not make an order for disclosure of documents
against  J
1996 (4) SA p1080
CONRADIE J
  A the Revenue in circumstances where those documents were procurable elsewhere. It
is therefore necessary to look at the adequacy or otherwise of the steps taken by the
applicants to procure evidence elsewhere than from the seventh respondent. Their
application is entirely silent in this respect. I would have thought that in requesting the
Court to exercise a discretion in their favour they should, at the very least,
have  B explained that the evidence that they require has not been procurable from
anyone other than the seventh respondent. The applicants, however, deal with this only
in response to allegations from the first respondent that he has made available to the
applicants each document which he was requested to make available.
During argument Mr Bertelsmann, for the applicants, contended that all income
tax  C returns and assessments were relevant, that they could be obtained only from the
Revenue and thus that the Court should exercise its discretion in favour of ordering
disclosure. This was a large part of the applicants' case and much time was devoted to
it. The applicants mentioned certain income tax returns and assessments which had
been obtained by way of discovery, but they failed to mention that as far as
documents  D obtained by means of subpoena were concerned, they had not yet had
time to establish what was there and what was not. Had I known that the applicants in
fact did not know what documents they had available, without the aid of the fiscus, I
would at that stage have made clear my view that the application was premature. I
would then have indicated to the applicants that they should prepare properly first and
then confine their application to what they did not have. I shall return to these matters
briefly in the  E course of discussing an order as to costs.
Permit me however, at this time, a short excursus on the question of the income tax
returns. Apart from the preceding difficulty, which I have mentioned, let us look at what
assistance the applicants could reasonably have expected from the first  F respondent's
income tax returns. The issue, bear in mind, is that the first respondent knew how never
to pay tax when he ought to have paid tax. The Receiver would have the returns of the
taxpayer and if they disclosed receipts and accruals of a revenue nature and, of course
from a South African source, they would have been taxed. If they did not disclose such
receipts and accruals (and disclosed no receipts and  G accruals regarded as being of a
capital nature and which the Receiver of Revenue perhaps disagreed as such) the first
respondent would not be taxed. Unless, under these circumstances, there were an
investigation, the Revenue would not know of undisclosed receipts and accruals of a
revenue nature. The taxpayer's ordinary returns therefore would not help the applicants
in attempting to prove a case of tax evasion.  H After all, one does not evade tax by
disclosing one's income in a return to the Revenue. As to the second issue, the
Revenue's decision to tax first respondent on his dealings in financial rands, there are
documents before the Court which show that the fiscus raised an additional assessment
in respect of the 1990 year of assessment. It is stated in the additional assessment that
it is raised in respect of what is called a 'Forex gain' and in the remarks column, 'a Forex
profit on Fin rand transaction'. A 200%  I penalty was also raised in terms of s 76(1) of
the Act. The reason is given as 'non-disclosure of income'. I would have  J
1996 (4) SA p1081
CONRADIE J
  A thought that this information was quite sufficient for the applicants' purposes. This
document was in the applicant's possession before they launched the application. As to
the issue that the first respondent, aided and abetted by his accountants, disguised
income of R600 000 as a tax- free capital gain, this also appears from the assessment
for the 1990 tax year. It concerns an item of accrued interest which the
Revenue  B remarks had 'previously not been declared'. In respect of this amount, as
well, a penalty of 200% was imposed. One does not need to be an expert to know that
the 200% penalty, popularly referred to as triple tax, is imposed in cases of non-
disclosure where the Revenue finds no extenuating circumstances to be present. Again,
it is not  C clear to me what information, beyond that which appears from the income tax
assessment, is wanted by the applicants.
Finally, there is the allegation that the first respondent had acquired what was called 'an
incredibly valuable property status by lies and flimflam'. Wealth of course had
nothing  D directly to do with taxation or income. Particularly if wealth is kept overseas,
there may be no income from a South African source to tax and a multi-millionaire may
pay no tax in this country. It is unclear what the seventh respondent could be expected
to contribute in this regard. The statement of assets and liabilities, on which
the Noseweek article clearly relied, is already in the possession of the applicants. The
first  E respondent appears to have signed it. It is a simple matter to ask him to
acknowledge his signature to the document which can then go in as proof of its contents.
On these issues, there is no evidence in the founding affidavit concerning the availability
of documentation dehors the fiscus. This, I would have thought, is essential for
the  F success of the application. In the replying affidavit the applicants at last sought,
after a fashion, to specify the documents they want the Revenue to disclose. This is too
late. It is trite law that one cannot make out a case in reply. However, Mr Tredoux, who
argued the application on behalf of the first respondent, did not take this point. His point
was that the documents finally sought in the last page of the replying affidavit were -
   -  concerned with matters which are not in issue on the pleadings; or
   - in the possession of the applicants already;
-   documents to the disclosure of which there was no objection.  G
In view of Mr Tredoux's attitude, I shall deal with the matter on the footing that it was
competent for the applicants to have asked for relief in their replying affidavit. In
response to Mr Tredoux's argument, Mr Bertelsmann abandoned some of the relief. Let
me then look at the remaining documentation which is requested. In para 51.1 and 51.2
all the first respondent's income tax returns since 1979 and the originals of all income
tax assessments are requested. This prayer is hopelessly overbroad.  H Moreover, I have
already stated why returns would not assist in proving a case of tax evasion. It is
common cause that the first respondent never declared receipts and accruals of a
revenue nature. It has already been pointed out that the applicants have had access to
some of these returns and assessments, those from 1989-1994 I am  I told, and these
should not have been requested from the seventh respondent again. In para 51.3 a
request is made for documents in the possession of the seventh respondent indicating
that the first respondent was involved  J
1996 (4) SA p1082
CONRADIE J
  A in Finrand transactions. The applicants already have an assessment showing that the
Revenue regarded a Finrand profit as taxable. The first respondent says moreover that
he has no objection to obtaining such documentation from the seventh respondent.
Finally, I think, it is primarily the Reserve Bank's affair whether or not there were
Finrand transactions. Since it is proposed to call evidence from the Reserve Bank,
that  B is the source from which this evidence should be obtained. In para 51.4 the
applicants want documents indicating that the first respondent had failed to declare
accrued interest. The applicants, as I have already indicated, have the assessment which
shows the imposition of a penalty. It says explicitly that the income tax has previously
not  C been declared. It is not clear to me what other evidence is essential to the
applicants' case on this score. As to para 51.5, documents are requested relating to
rental income earned by the first respondent referred to in the 1991 tax assessment.
The same, as I have said previously, applied here. The applicants already have the 1991
assessment and anyway the first respondent says he does not object to such documents
being  D made available. In para 51.6 documents are requested relating to penalties
raised by the seventh respondent. There is no objection from Mr Tredoux to the
disclosure of documents of this kind. Some documents concerning penalties that have
been raised are already in the possession of the applicants. No case has been made out
that penalties may have been raised, except in the two cases that we know about. In
para  E 51.7 the applicants want the bank accounts of the first respondent. I am not
certain why bank accounts should be in the possession of the Receiver. Normally one
does not send one's bank accounts to the Receiver. The first respondent says he
discovered some of these. That may well be so considering the inadequacy of the
applicants' affidavits. He says he is searching for the rest. The relevance of the bank
accounts is  F obscure but it appears to be a matter which can be resolved between the
parties. Paragraph 51.10 relates to the minutes of a meeting held on 27 July 1993. I am
not entirely certain whether this item has or has not been abandoned by
Mr Bertelsmann, but in any event it would appear to me to be of marginal relevance and
not sufficiently cogent to override the prohibition on disclosure imposed by the Act.
  G One must always remember the balancing of interests of which I spoke earlier and the
subsidiary guideline that disclosure which pertains to peripheral issues will not be
permitted. In paras 51.11 and 51.12 documentation concerning a security bond is
 requested. I do not know why this should any longer be in issue. The information was
furnished at the pre-trial conference. We know that security was requested. We
know  H that on advice from the first respondent's tax adviser it was not furnished. It is
the Argus article that mentions the security and not the Noseweek article. If further
information were required, I suppose the applicants should subpoena the first
respondent's tax adviser to tell them about his advice. In para 51.14 the
applicants  I want documents relating to debts which the first respondent owes to Else
Hall and to Lenert (Pty) Ltd. These are not issues before the Court. There are no
allegations concerning Else Hall or Lenert (Pty) Ltd in the Noseweek article. In para
51.15, as far as the overseas assets are concerned, the applicants already  J
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CONRADIE J
  A know from the statement signed by the first respondent himself, what he says about
assets which he holds overseas. It is unclear to me what further documentation they
want in this regard. In para 51.16 the applicants want documentation concerning money
which the first respondent allegedly received on behalf of Stellenkloof (Pty)  B Ltd. This is
clearly not one of the issues, as I conceive them to be, arising from
the Noseweek article. In para 51.17 the applicants want all other documentation which
relates to the first respondent's overseas holdings, Finrand transactions and local or
overseas funds. In the light of what I said earlier, this prayer is clearly overbroad. Its
relevance has not been demonstrated and to my mind it is a fishing expedition.
Mr Bertelsmann in argument posed the rhetorical question how he was to
prove  C documents made by the Revenue, except through a Revenue official. The
answer is that the hearsay rule, like the best evidence rule, is not what it used to be.
The Law of Evidence Amendment Act 45 of 1988 deals with hearsay evidence. Section 3
is a fairly long section. I fear that I shall have to read ss (1) in full:
    D 'Subject to the provisions of any other law, hearsay evidence shall not be admitted as
evidence at criminal or civil proceedings, unless -
   (a)   each party against whom the evidence is to be adduced agrees to the admission thereof as
evidence at such proceedings;
   (b)   the person upon whose credibility the probative value of such evidence depends, himself testifies
at such proceedings, or  E
   (c)   the court, having regard to -
      (i)   the nature of the proceedings;
      (ii)   the nature of the evidence;  F
      (iii)   the purpose for which the evidence is tendered;
      (iv)   the probative value of the evidence;
      (v)   the reason why the evidence is not given by the person upon whose credibility the probative
value of such evidence depends;
      (vi)   any prejudice to a party which the admission of such evidence might entail; and
      (vii)   any other factor which should in the opinion of the court be taken into account,
         is of the opinion that such evidence should be admitted in the interests of justice.'  G
It seems to me that if a Court is told that evidence cannot be given by a revenue official
who made a document, and that that is the reason why hearsay evidence is being
tendered, a Court would come to the conclusion that the evidence should, generally
speaking, in the interests of justice be admitted. After all, the person seeking to prove
the document is prevented by the secrecy provision in s 4 of the Act from doing so.
Unless there is something unusual, such as a serious dispute of fact, I think the Court,
if  H it is asked to do so, would exercise its discretion in favour of allowing the hearsay
rather than make revenue officials break their oath of secrecy. I therefore see no
difficulty in getting these documents before the Court without fiscal assistance.
  I Mr De Haan, for the seventh respondent, appeared briefly, although he waited long,
and emphasised that he was not taking sides. However, he explained that
the fiscus could not be seen to just relinquish its right to confidentiality of the taxpayer's
information and that, with respect to  J
1996 (4) SA p1084
CONRADIE J
  A Mr De Haan, is a perfectly proper approach. He drew attention to the general
guidelines, which I mentioned at the beginning of the judgment, as to when an order
against the fiscus would be made. He, moreover, did the Court a sterling service by
abandoning any reliance on the provisions of s 4(2A) of the Act. This section is an
extraordinary one. It prohibits any person from revealing any instruction or
communication from a revenue official concerning an enquiry or investigation, or
any  B information concerning any tax matters of a taxpayer. It is extraordinary
principally for the fact that in debating it before me no one could really suggest what it
was supposed to mean. It refers to ss (1) of s 4, but the section itself is not explicitly
made subject to the Court's right to order relaxation. There is a very serious conflict, at
least as far as the Commissioner and his officials are concerned, between the provisions
of ss (2A)  C and ss (1). I cannot think what the Legislature could have wanted to
achieve by this section and I merely express my gratitude for not having to interpret it. I
agree with the author of the article in The Taxpayer of June 1989, to which Mr De
Haan drew my attention, that the subsection should not have been introduced in the
form in which it  C appears here. However, as it happens, in view of my conclusions this
matter can be disposed of entirely under s 4(1) of the Act.
Let me say a few words about the consent of the first respondent to permit access to
some or all of the documentation sought by the applicants. I have indicated earlier in
this judgment that I do not think that the first respondent can put the onus on
the fiscus, saying that he consents to the documents being revealed and then leaving it
to  D the officials of the seventh respondent to search out such documents. It is most
unsatisfactory as far as the fiscus is concerned. The first respondent himself or his
advisers must obtain each document from the fiscus and make it available to the
applicants. If it is suspected that the first respondent will not make the right document
available, or will not make all the documents available, or if some stratagem
or  E subterfuge is feared, arrangements should be made that the documents be
requested from the fiscus in the presence of the first respondent's legal advisers. In that
way there can be no accusations of concealment and there can be no question that by
not asking the right questions the right answers were not given.
For the reasons which I have stated, it is my opinion that the application cannot succeed
and should be dismissed. That brings me to the question of costs. At my request, it was
debated before me whether costs should be on an attorney and client  F or on a party
and party scale. I consider that the applicants were remiss in not having advised the
Court in their affidavit that they had not yet inspected all documents relevant to the
revenue aspects of this case. One must remember that there are different categories of
documents, some are of greater importance, others of lesser  G importance. There was
nothing to make me think, despite what Mr Bertelsmann argued to the contrary, that the
category of fiscal documentation, which is the only relevant category, had in the five
days at the applicants' disposal not been inspected.  H After all, that was what the
application was about and I would have thought that those
1996 (4) SA p1085
CONRADIE J
  A documents would have been the ones to have been inspected first, that the remainder
of the 16 000 documents could have been left to one side to be dealt with later.
On reflection, I think that the applicants' failure to deal pertinently with the
availability  B of the document to them dehors the fiscal domain was due to a failure on
their part to appreciate the nature of the application and the considerations which ought
to apply, as well, perhaps, as the importance which a Court attaches to the secrecy
provision in the Act. The applicants appear to have thought that, if the Revenue could be
shown to be a convenient source of documentation and appear to have helpful
information, it would be ordered to help. That is the only explanation which I can think of
for the prayers for  C generalised access to the Revenue's records, not only of the first
respondent but of other taxpayers as well, and over an unlimited period. The
requirements for an application such as this had not previously been spelled out in such
detail as I have spelled them out today, so the applicants did not have the help of what I
have called the subsidiary guidelines, but nonetheless, it is my view that the application
was  D misconceived. It was this misconception which led to the inadequate treatment by
the applicants of the first respondent's answering allegation concerning the discovered
documents.
On this view of the matter, I do not believe that such recklessness or deceitfulness on
the part of the applicants as would justify an order for attorney and client costs
has  E been shown. Lest I be misunderstood in this regard, let me say that I do not mean
to suggest that any recklessness or deceitfulness on the part of the applicants has been
shown. The costs of two counsel should, in my view, be allowed. The application clearly
warrants the costs of two counsel by virtue of the complexity of the issues and  F the
volume of the documentation. Mr De Haan, for the seventh respondent, asks for his
costs and in the circumstances I think they ought to be paid by the applicants.
The order which I make is that the application is dismissed with costs, such costs to
include the costs of two counsel on behalf of the first respondent and one counsel
on  G behalf of the seventh respondent.
Applicants' Attorneys: Reillys, Cape Town. First Respondent's Attorneys: Vavatzanidis &
Associates, Cape Town. Second to Sixth Respondents' Attorneys: ionel Murray,
Schwormstedt & Louw, Cape Town. Seventh Respondent's Attorneys: Rooth & Wessels,
Pretoria.