Digital Mechanics (Pvt) Ltd v Zimbabwe Revenue Authority

1
                                                                                 HB 129/21
                                                                                 HC 860/20
                                                                           XREF HC 1280/19

DIGITAL MECHANICS (PVT) LTD
Versus
ZIMBABWE REVENUE AUTHORITY


IN THE HIGH COURT OF ZIMBABWE
MAKONESE J
BULAWAYO 30 JUNE 2021 & 15 JULY 2021


Opposed Application
Adv Phulu, for the applicant
T Marange, for the respondent


       MAKONESE J: This is an application for a declaratur. The applicant seeks an order
in the following terms:

   “IT IS ORDERED THAT:
   1. The conduct of the respondent to withhold the applicant’s vehicle on condition that
      that he has to pay duty in foreign currency be and is hereby declared ultra vires the
      law prevailing at the time and therefore illegal.
   2. The ordinary meaning of the phrase” within 42 days of importation “of goods in
      section 3 (3) of SI 252A, be declared not to be reckoned from 23 rd November 2018,
      but from the date of importation.
   3. The applicant qualified for exemption from payment of duty in foreign currency and
      as such the respondent should have released the vehicle to the applicant for
      assessment and payment in the local currency, the RTGS, without cross rating either
      on open market or interbank rate.
   4. The applicant be and is hereby exempted from paying any storage charges levied by
      the respondent in respect of the applicant’s vehicle.
   5. The conduct of the respondent to sell the applicant’s vehicle at a rummage sale be and
      is hereby declared unlawful and wrongful as it is premised on an illegal basis.
   6. The respondent be and is hereby ordered to deliver to the applicant, within thirty (30)
      days of the date of this order, a motor vehicle of similar make with similar
      specifications as the one sold unlawfully.
   7. The respondent shall pay the costs of suit on an attorney and client scale.”


   This application is opposed by the respondent who has raised certain preliminary
objections, which, if upheld, would be dispositive of the matter.
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                                                                                   HB 129/21
                                                                                   HC 860/20
                                                                             XREF HC 1280/19

       FACTUAL BACKGROUND
       The applicant imported a motor vehicle, an Audi A4, from Japan on 8 th January 2019.
The vehicle was purchased on 22nd November 2018 and consigned to Zimbabwe on 7 th
December 2018. The vehicle was detained at Plumtree border post by Zimbabwe Revenue
Authorities on a Receipt for Items Held (RIH), Serial number 06230 pending clearance of the
vehicle. The RIH advised the applicant to clear the motor vehicle within 3 months failing
which the vehicle would be disposed of. On 8 th January 2019 applicant applied to the
respondent for exemption from paying duty in foreign currency. This was done upon reliance
on the provisions of SI 252A of 2018. The statutory instrument provides in part that goods
purchased on or before 22nd November 2018 and consigned on or before the 3 rd of January
2019 shall be exempted from payment of duty in foreign currency. Approval for the
exemption is to be obtained from the Ministry of Finance and Economic Development within
42 days from the date of importation of the goods. By letter dated 12 th January 2019
applicant’s request was turned down. Applicant made another similar application on 21
January 2019. It was turned down. A further request was again turned down by letter dated 22
January 2019. On 23rd January 2019 the applicant appealed to the Commissioner, Zimbabwe
Revenue Authority against the decision denying it the option to pay duty in local currency.
By letter dated 26th February 2019 the appeal was denied. On 12 th April 2019 the Audi A4
motor vehicle was disposed of at a rummage sale as the 2 months within which the goods
should have been cleared in terms of section 39 of the Customs and Excise Act (Chapter
23:02) had expired. Even the 3 months stipulated in the Receipt for Items Held (RIH) had
expired. By e-mail dated 29th April 2019 applicant once again wrote to the Ministry of
Finance for an exemption but nothing came out of that attempt. On 31 st May 2019 applicant
instituted civil proceedings under case number HC 1280/19 seeking a declaratur against the
respondent compelling it to be allowed to pay duty in local currency. After the application
was lodged with this court the parties attempted to resolve the matter out of court. A draft
deed of settlement was prepared by the parties but eventually the parties could not agree.

       On 14th June2019 respondent opposed the application. Applicant was advised that the
application was not properly before the court as notice of intention to sue as required by
section 196 (1) of the Customs and Excise Act had not been given. Applicant was advised
that the motor vehicle had     been sold at a rummage sale on 12th April 2019. Applicant
withdrew its court application and proceeded to give the requisite notice of intention to sale
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                                                                                       HB 129/21
                                                                                       HC 860/20
                                                                                 XREF HC 1280/19

as required under section 196 (1) of the Act. Applicant did nothing until 5 th June 2020 when it
instituted these proceedings. The issues for determination in this application are these:

       1. Whether or not the applicant’s claims have prescribed
       2. Whether or not there was material non-joinder of the Ministry of Finance and
          Economic Development
       3. Whether or not the applicant is entitled to the declaratur being sought.

       The first two issues have been raised as preliminary objections, whereas the third
issue deals with the merits of the matter. I shall firstly deal with the points in limine.

       WHETHER THE APPLICANT’S CLAIMS HAVE PRESCRIBED
       Respondent contends that the claims have prescribed as proceedings were not brought
within 8 months from the date on which the cause of action arose. Respondent avers that the
cause of action in this matter arose from the date of the sale of the motor vehicle. Respondent
argues that applicant had a cause of action from the date it was advised that the vehicle had
been sold. In paragraph 20 of its Founding Affidavit applicant admits that it was advised of
the sale of the vehicle on 19 th June 2019 through both the Respondent’s opposing affidavit in
case number HC1280/19 and the letter dated 19 June 2019. This is confirmed by the letter
dated 19th June 2019 that was received by applicant’s legal practitioners on the same day
which confirmed this position. The letter by respondent is in the following terms:

“19 June 2019
MESSRS NCUBE AND PARTNERS
BULAWAYO


RE: DIGITAL MECHANICS (PVT) LTD V ZIMBABWE REVENUE AUTHORITY HC
1280/19
1. We make reference to the above matter.
2. Our internal client advised us on 14 June 2019 that the vehicle at the centre of this dispute
was sold by the Authority in terms of section 39 of the Customs and Excise Act (Chapter
23:02) sometime in April 2019.
3. In terms of section 39 of the Customs and Excise Act, goods that have not made entry
within sixty days of importation are sold by public auction.
4. Further, the Receipt for Items Held issued to your client on 8 January 2019 explicitly
states that if goods remain uncleared for three months from the date of the notice, they will be
sold in terms of section 39 of the Customs and Excise Act.
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                                                                                    HB 129/21
                                                                                    HC 860/20
                                                                              XREF HC 1280/19

5. Your client failed to comply with the provisions of section 39(1) and its vehicle was sold in
a rummage sale.
6. Regrettably we only became aware that the vehicle had been sold following further
engagements with the internal client, and after you had prepared and forwarded the draft
deed of settlement for our consideration. Naturally, we have had to file opposing papers to
your client’s application as the vehicle was sold pursuant to your client’s failure to comply
with its statutory obligations within the prescribed timeframes.
7. In view of the foregoing, we regret to advise that the matter cannot be resolved in the
manner the parties had initially contemplated since your client only approached the court
long after the vehicle had been lawfully disposed.


Yours Faithfully
LEGAL OFFICER
FOR COMMISSIONER GENERAL”
        It seems to me to be quite evident that from the 19 th June 2019 the applicant had 8
months within which to institute proceedings against the respondent as required under section
196 (1) of the Act. The 8 months period ended on the 19 th February 2020. Applicant did not
institute civil proceedings within the stipulated period as provided in the Act. In my view,
applicant’s conduct was characterized by a sluggardness that is difficult to comprehend. After
being advised on 19th June 2019 that its motor vehicle had been disposed of and that there
was need for it to give notice of intention to sue, applicant decided to do nothing for two and
half months. Applicant only gave 60 days’ notice of intention to sue on 29 August 2019. The
60 days’ notice expired on 29 October 2019. From the 29 th October the applicant still had
three and half months within which to institute civil proceedings, up to 19th February 2020.
However, notwithstanding the expiry of the notice period the applicant still sat on its laurels
and did not institute civil proceedings within the statutory period. Applicant only commenced
the current legal proceedings on 5th June 2020 well after 3 months after the expiry of the 8
months period. I have no doubt that applicant’s claim has hopelessly prescribed. On this
ground alone, and on this point in limine, this court must not entertain the claims by virtue of
the operation of prescription.

        In Murphy v Director of Customs and Excise 1992 (1) ZLR 28 the learned Judge had
this to say at p 34:
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                                                                                    HB 129/21
                                                                                    HC 860/20
                                                                              XREF HC 1280/19

       “With regard to the whisky that was seized on 18 September, the notice given in terms
       of s178 gave, as the cause of action, the unlawful seizure of the whisky. In terms of
       subs (9) of s 176 of Chapter 177, the plaintiff could institute proceedings for the
       recovery of the whisky within three months of the notice of seizure that was given to
       him. He failed to do so and therefore it must follow that his cause of action based on
       unlawful seizure has prescribed (Emphasis added)
       In a more recent case, this court dealt with a similar matter in Betty Dube v Zimbabwe
Revenue Authority HB 2/14. An importer applied for a declaratur declaring that she was
entitled to an immigrant’s rebate which had been denied by the Zimbabwe Revenue
Authority. The application for a declaratur was filed well after the 8 months period stipulated
in section 196 (1) of the Act. The court held that the importer’s claim had prescribed and the
claim for a declaratur could thus not be granted. The learned judge had this to say:

       “The rights that the applicant sought to invite this court to determine were prescribed
       and extinguished. Cadit question. There are no existing rights, future or contingent
       rights to determine.”
       See also; Machacha v Zimbabwe Revenue Authority HB 186/11.
       The ratio in the above case applies with equal force in this matter. The rights applicant
is seeking to enforce are prescribed. It would be an exercise in futility to attempt to determine
rights that no longer exist by operation of law. There are no rights that can flow from such a
determination. I am satisfied that this preliminary objection does have merit. This point in
limine is accordingly upheld. Applicant argued that this court is empowered to exercise its
discretion in terms of section 14 of the High Court Act (Chapter 7:06) to enquire into and
determine any existing, future or contingent right or obligation. This court, however, is not
empowered to override the provisions of other legislation in the land. In particular the
mandatory provisions of sections 196 (1) and 196 (2) of the Act. Further, and in any event, in
terms of section 39 of the Act goods that are not cleared within 60 days of importation are to
be sold by public auction. See: Betty Dube v Zimbabwe Revenue Authority (supra).

        For the aforegoing reasons reasons, I conclude that the applicant’s claims are indeed
prescribed. It shall not be necessary to deal with the second preliminary objection raised by
the respondent, that is, the issue of material non- joinder. I observe that Rule 87 of the High
Court Rules, 1971 provides that “No cause or matter shall be defeated by reason of the
misjoinder or non -joinder of any party and the court may in any cause or matter determine
the issues or question in dispute so far as they affect the rights and interests of the persons
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                                                                               HB 129/21
                                                                               HC 860/20
                                                                         XREF HC 1280/19

who are parties to the cause or matter”. The non-joinder of the Ministry of Finance was not
fatal to these proceedings.

       Accordingly, and in the result, it is ordered that the application be and is hereby
dismissed with costs.




Ncube & Partners, applicant’s legal practitioners