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Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September 2013)

Friday, 27 September 2013   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical


The appellant in this case was Stabilpave (Pty) Ltd and the respondent was the South African Revenue Service (SARS).

Stabilpave was issued with a tax assessment form (IB34), dated 16 October 2006, which stated that SARS owes Stabilpave a tax refund of R724 494.29 The tax assessment included a notice stating that the transfer will be made electronically but in the instance that the banking details are incomplete or incorrect; the payment will be made by issuing a cheque.


Stabilpave’s banking details were not available to SARS and therefore the payment was made by issuing a cheque. The cheque was crossed, marked "not transferable”, sealed and posted with Securemail. The cheque was stolen during transit and withdrawn by a third party. Stabilpave instituted action against SARS for payment which was not received. The argument used by Stabilpave was supported by the case, Barclays National Bank Ltd v Wall 1983 (1) SA 149 (A) at 156H-157C. This case stipulated that: "in law there is no payment if a cheque is posted and lost before it reaches the creditor”.

SARS’s contention was that their obligation to pay the tax refund was deemed fulfilled even though the amount was never credited by Stabilpave. SARS’s argument was grounded on the principle set by Dadoo & Sons Ltd v Administrator, Transvaal 1954 (2) SA 442 (T) at 445. This case stipulated: "that if a creditor requests a debtor to settle his debt by sending a cheque through the post, he agrees to run the risk during transit”.

The court accepted the contention of SARS and the claim of Stabilpave was dismissed with costs. The case was later appealed. 


In the appeal case, it become clear that any agreement about the particular mode of payment will be reached only if the creditor stipulates requests or authorise a particular method of payment and the debtor accepts the decision. 

The notice in the tax assessment did not provide Stabilpave with a choice in which method the refund will be made. The notice merely informed the taxpayer. The notice did not imply request or election of a payment method by Stabilpave. The payment method was dictated by SARS. 

It was held that the risk of loss of the cheque was not assumed by Stabilpave but remained with SARS. The court order read as follows:

a)    The appeal is upheld with costs.

b)    The judgement is granted in favour of the plaintiff against the defendant for:
i)             Payment of the amount of R724 494.29;
ii)            Interest a tempore morae on the aforesaid sum at the rate of 15.5 percent per annum from 17 October 2006 until date of payment;
iii)           Cost of suit.

Please click here to access the full case.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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