Tsenoli NO v Lesotho Revenue Authority and Others (C of A (CIV) 25 of 2011) [2012] LSCA 13 (27 April 2012)

IN THE COUR T OF AP PE AL OF LE S OTH O C OF A (CIV) 2 5 / 2 0 1 1 In t h e m a t ter b etween : PATR ICK TS E NOLI N. O. Ap p e lla n t AND THE LE S OTH O R E VE NUE AUTH OR ITY F ir s t R e s p o n d e n t THE ATTOR NE Y-GE NE R AL Se c o n d R e s p o n d e n t THE MAS TE R OF THE HIGH COUR T Th ir d R e s p o n d e n t COR AM: RAMODIBE DI P S MALBE RGE R J A S COTT J A HOWIE J A FARLAM J A HE ARD: 1 8 APRIL 2 0 1 2 DE LIVE RE D: 2 7 APRIL 2 0 1 2 S UMMAR Y S a les Ta x a n d Va lu e Ad d ed Ta x Act s – S eizu r e of t h ir d p a r t y’s good s in t er m s of t h e Act s b y t h e Les ot h o Reven u e Au t h or it y wit h a view t o a cqu ir in g s ecu r it y t o cover t h e t a x d eb t or ’s lia b ilit y - con s t r u ct ion of t h e s eizu r e p r ovis ion s in t h e ligh t of s 1 7 (4 ) (a ) (i) of t h e Con s t it u t ion – wh et h er a ll s eized good s s u b ject t o s eizu r e. J UDGME NT HOWIE J A [1 ] Lek im Textiles (Pty) Lt d (in liqu id a tion ) (“Lek im ”), a Les ot h o com p a n y, im p or t ed r olls of k n it t ed a n d woven fa b r ic in t o Les ot h o a s well a s qu a n tities of s ewin g t h r ea d a n d clot h in g a cces s or ies (collectively, “t h e good s ”). Th e im p or ta tion occu r r ed b etween Ap r il 2 0 0 2 a n d Novem b er 2 0 0 3 , a n d wou ld or d in a r ily h a ve a ttr a ct ed p a ym en t of cu s t om s d u ty, s a les t a x (u p to 1 J u ly 2 0 0 3 ) a n d va lu e - a d d ed ta x (VAT) (a fter 1 J u ly 2 0 0 3 ). S a les ta x wa s p a ya b le in t er m s of t h e Sa les Ta x Act , 1 9 9 5 (t h e GS T Act) a n d VAT wa s p a ya b le in ter m s of t h e Va lu e -Ad d ed Ta x Act , 2 0 0 1 , (t h e VAT Act). 1 J u ly 2 0 0 3 wa s t h e la s t d a t e on wh ich t h e GST Act a p p lied a n d a fter wh ich t h e VAT Act ca m e in t o for ce. [2 ] Lek im wa s gr a n ted a r eb a t e a b s olvin g it fr om t h e p a ym en t of d u ty a n d im p or t ta x on t h e s tr en gt h of it s d ecla r ed in ten t ion t h a t t h e good s wer e t o b e m a d e in t o ga r m en t s for exp or t ou ts id e t h e a r ea of op er a tion of t h e S ou t h er n Afr ica n Cu s t om s Un ion . [3 ] Con tr a r y t o t h a t d ecla r a tion of in ten t, a n d b efor e t h e good s h a d a ll b een m a d e u p in to ga r m en t s , Lek im s old a n d tr a n s fer r ed a qu a n tity of com p leted ga r m en ts a n d t h e r em a in in g r olls of m a ter ia l t o S ilver s id e Textiles (Pty) Lt d (in liqu id a tion ) (“Silver s id e”), a ls o a Les ot h o com p a n y. Silver s id e t h er eb y b eca m e own er of t h e good s s old a n d Lek im b eca m e lia b le for cu s t om s d u ty, s a les ta x a n d VAT in r es p ect of t h eir im p or ta tion . [4 ] To ob ta in s ecu r ity for p a ym en t of Lek im ’s s a les ta x a n d VAT d eb t (“t h e t a x d eb t ”) t h e Les ot h o Reven u e Au t h or ity (“LRA”) s eized t h e good s in Silver s id e’s p os s es s ion in Novem b er 2 0 0 3 . Th e LRA s ou gh t t o ju s tify t h e s eizu r e b y r elia n ce on t h e id en tica l s eizu r e p r ovis ion s in t h e GS T a n d VAT Acts a n d on t h e r eleva n t ter m s of t h e Cu s t om s a n d E xcis e Act , 1 9 8 2 (“t h e Cu s t om s Act”). [5 ] Th e liqu id a tor of Silver s id e (“t h e liqu id a t or ”) t h er ea fter p a id t h e cu s t om s d u ty b u t t h e ta x d eb t r em a in s u n p a id . [6 ] In J u n e 2 0 0 5 t h e LRA s u ed t h e liqu id a t or in t h e High Cou r t (CIV/ T/ 2 5 4 / 0 5 ) for p a ym en t of t h e t a x d eb t . Ha vin g b een p r es en t ed with a n a gr eed s t a t ed ca s e for h is d ecis ion , t h e tr ia l J u d ge (Peete J ) h eld , in effect , t h a t t h er e h a d b een la wfu l s eizu r e in ter m s of t h e Cu s tom s Act b u t t h a t Silver s id e, h a vin g b een a n in n ocen t p u r ch a s er , wa s n ot lia b le for “im p or t ta x” a n d t h e cla im t h er efor e fa iled . [7 ] On a p p ea l t o t h is Cou r t b y t h e LRA t h e p r im a r y is s u e wa s n ot wh et h er Silver s id e wa s lia b le for t h e ta x d eb t b u t wh et h er it wa s lia b le t o t h e s eizu r e, t h e con s t itu tion a lity of t h e s eizu r e com in g in to con t en tion b y r ea s on of Silver s id e’s h a vin g b een a t a ll tim es u n a wa r e of Lek im ’s n on -p a ym en t of t h e ta x d eb t . Th e exis ten ce of t h is con s titu tion a l qu es tion led to th e r em it ta l of th e m a t ter t o b e d ea lt wit h b y t h e High Cou r t exer cis in g its con s titu tion a l ju r is d iction . An a p p r op r ia t e a p p lica tion wa s d u ly b r ou gh t in t h a t ju r is d iction (CC 5 / 2 0 0 9 ) for a d ecla r a t or t h a t t h e s eizu r e p r ovis ion s in t h e GS T a n d VAT Act s wer e u n con s titu tion a l or lia b le to a con s tr u ction t h a t a void ed u n con s titu tion a lity. [8 ] In a ju d gm en t con cu r r ed in b y t h e ot h er m em b er s of a t h r ee-J u d ge p a n el, Ma ja r a J h eld t h a t t h e s eizu r e p r ovis ion s , p r op er ly con s tr u ed , wer e n ot u n con s titu tion a l. Hen ce t h e p r es en t a p p ea l b y t h e liqu id a tor . [9 ] Th er e a r e t h u s , in effect, two a p p ea ls in t h is m a t ter a n d t h ey r a is e es s en tia lly two qu es tion s for d ecis ion . Th e fir s t is t h e con s tit u tion a l on e a n d t h e s econ d is wh et h er t h e good s s eized wer e t h e good s t o wh ich t h e ta x d eb t r ela ted . Pu t a n ot h er wa y: wer e t h e good s s eized t h e good s im p or ted ? [1 0 ] In wh a t follows on ly t h e VAT Act p r ovis ion s n eed b e r efer r ed to. Th ey a r e con ta in ed in s 4 1 (1 ): “Th e Com m is s ion er m a y s eize a n y good s in res p ect of wh ich th e Com m is s ion er h a s rea s on a b le gr ou n d s to b elieve th a t va lu e a d d ed ta x th a t is , or will b ecom e, d u e a n d p a ya b le in r es p ect of th e s u p p ly or im p or t of th os e good s h a s n ot b een , or will n ot b e, p a id .” [1 1 ] It is n ot in d is p u te t h a t Lek im a n d n o ot h er en tity or p er s on wa s lia b le to p a y t h e ta x d eb t . It is a ls o clea r t h a t t h e ta x d eb t r ela ted to t h e good s wh ich Lek im im p or t ed . It s h ou ld b e ob s er ved t h a t t h e a p p ea l con cer n s on ly im p or t VAT, n ot s u p p ly VAT. [1 2 ] Th e ca s e for t h e liqu id a t or is , fir s t , t h a t t h e s eizu r e p r ovis ion s offen d a ga in s t s 1 7 (1 ) a n d (2 ) of t h e Con s tit u tion a n d t h a t even if t h ey qu a lify t o b e s a ved fr om u n con s tit u tion a lity b y t h e t er m s of s 1 7 (4 ) (a ) (i) t h ey a r e n ot s o r es cu ed b eca u s e t h ey a r e n ot, in t h e wor d s of t h e la t ter s u b -p a r a gr a p h , “n eces s a r y in a p r a ctica l s en s e in a d em ocr a tic s ociety”. In t h e la t t er r ega r d t h e on u s , s o it wa s s a id , wa s on t h e LRA t o s h ow s u ch n eces s ity a n d it h a d n ot b een d is ch a r ged . S econ d , t h e liqu id a t or con ten d s t h a t even if t h e p r ovis ion s wer e n eces s a r y in s om e s it u a tion s t h ey wer e n ot n eces s a r y in t h e ca s e of a s o -ca lled in n ocen t p u r ch a s er . Th ir d , it wa s s u b m it ted t h a t a s on ly a b ou t a qu a r ter of t h e im p or ted good s for m ed t h e s u b ject of t h e s a le t o Silver s id e t h e r em a in in g good s s old , b ein g m a n u fa ct u r ed ga r m en t s , wer e n ot lia b le t o s eizu r e. [1 3 ] Th e Con s tit u tion s a ys t h a t n o p r op er ty s h a ll b e t a k en p os s es s ion of com p u ls or ily excep t wh er e cer t a in con d ition s (n ot a p p lica b le in t h is ca s e) a r e s a tis fied (s 1 7 (1 )) a n d t h a t s u ch ta k in g is s u b ject to p a ym en t of com p en s a tion (s 1 7 (2 )). Section 1 7 (4 ) t h en p r ovid es (wh er e r eleva n t ): “Noth in g con ta in ed in or d on e u n d er th e a u th or ity of a n y la w s h a ll b e h eld to b e in con s is ten t with or in con tr a ven tion of s u b s ection (1 ) or (2 ) – (a ) t o t h e ext en t t h a t t h e la w in qu es t ion m a k es p r ovis ion t h a t is n eces s a r y in a p r a ct ica l s en s e in a d em ocr a t ic s ociet y for t h e t a k in g of p os s es s ion or a cqu is it ion of a n y p r op er t y ….. - (i) in s a t is fa ct ion of a n y t a x ……” [1 4 ] As m en tion ed , th e good s s eized wer e t h e p r op er ty of Silver s id e wh er ea s t h e t a x d eb t wa s t h e lia b ility of Lek im . Th e a d d ition a l vita l fa ct , h owever , is t h a t t h e good s s eized wer e, a t lea s t in p a r t (t h e r em a in d er b ein g s u b ject t o wh a t follows ) good s to wh ich t h e t a x d eb t r ela ted . Th ey wer e good s in r es p ect of wh ich t a x wa s p a ya b le. Th er e wa s t h er efor e a s ign ifica n t n exu s b etween t h e ta x d eb t a n d s om e of t h e s eized good s . [1 5 ] Th e exis ten ce of t h a t con n ection d is tin gu is h es t h e s eizu r e p r ovis ion s h er e fr om t h os e h eld in t h e Sou t h Afr ica n ca s e of Fir s t Na tion a l Ba n k of SA Lt d t / a Wes b a n k v Com m is s ion er , Sou t h Afr ica n Reven u e Ser vice a n d An ot h er 2 0 0 2 (4 ) SA 7 6 8 (CC) a t 8 1 4 -8 1 5 t o b e over b r oa d in p er m ittin g a r es u lt gr os s ly d is p r op or tion a l t o t h e in fr in gem en t of th e p r op er ty r igh ts s u b ject t o t h e s eizu r e con cer n ed . [1 6 ] Th er e wa s t h u s in t h is m a tt er a r a tion a l con n ection b etween t h e good s a n d t h e s eizu r e. Mor eover , t h e ob ject of t h e s eizu r e wa s t o exa ct p a ym en t of a ta x d eb t . As s a id in t h e ca s e ju s t r efer r ed to, exa ct in g p a ym en t of a d eb t d u e to t h e r even u e is a “legitim a t e a n d im p or t a n t legis la tive p u r p os e, es s en tia l for t h e fin a n cia l well-b ein g of t h e cou n tr y a n d in t h e in ter es t of a ll its in h a b it a n ts ” (s ee 8 1 4 H). [1 7 ] Th e qu es tion t h en is wh et h er s eizu r e of p r op er ty b elon gin g t o a th ir d p a r ty, a s op p os ed t o t h e ta x d eb tor , ca n b e s a id t o b e “n eces s a r y in a p r a ctica l s en s e in a d em ocr a tic s ociety”. S u ch a s ociety gu a r a n tees p r op er ty r igh t s a n d r egu la tes t h eir d ep r iva tion b y fa ir m ea s u r es . Th e Con s tit u tion a n d s u b s ection s (1 ) a n d (2 ) of s 1 7 in p a r ticu la r evin ce t h e in ten tion t o es ta b lis h a n d m a in ta in ju s t s u ch a s ociety in Les ot h o. An d , a s p oin t ed ou t , r ecover y of ta x d eb t s is a legitim a t e a n d im p or ta n t p u r p os e a im ed a t t h e m a in ten a n ce of t h a t s ociety. [1 8 ] It wa s s u b m itt ed for t h e liqu id a tor t h a t t h e on u s wa s on t h e LRA to es t a b lis h t h a t s u ch n eces s ity exis t ed . As I u n d er s t ood h im , cou n s el for t h e LRA d id n ot con ten d t o t h e con tr a r y b u t u r ged t h a t t h e ca s e for p r a ctica l n eces s ity h a d b een m a d e ou t . [1 9 ] In t h is r ega r d cou n s el for t h e liqu id a tor a r gu ed t h a t t h e s t a t em en ts m a d e in t h e a ffid a vit d ep os ed t o b y t h e Com m is s ion er Gen er a l of t h e LRA wer e ex ca t h ed r a , u n h elp fu l a n d la ck ed s p ecificit y. [2 0 ] S u m m a r is ed , t h e Com m is s ion er Gen er a l’s d ep os ition wa s t o t h is effect . VAT eva s ion is com m on a n d extr em ely d ifficu lt to con tr ol a n d VAT is on e of t h e cou n tr y’s m a in s ou r ces of r even u e. Beca u s e ta x d eb t or s fr equ en tly eva d e p a ym en t it b ecom es n eces s a r y to ta r get t h e good s t o wh ich t h e ta x d eb ts r ela te. Th e good s a r e b y t h en in t h e p os s es s ion of t h ir d p a r ties wh o com m on ly d o n ot h a ve p r oof of p a ym en t of t a x b y t h e t a x d eb tor s . Wh en con fr on ted b y t h e LRA t h ey s h ift a t ten tion to t h e ta x d eb t or s , fr om wh om t h e good s wer e a cqu ir ed . Th e ta x d eb t or s b ein g b y t h en u n tr a cea b le m or e often t h a n n ot , r ecover y of VAT b ecom es im p os s ib le in t h e va s t m a jor ity of ca s es . E ven if tr a ced t h ey a r e often u n a b le to p a y – a s in t h e ca s e of Lek im . Th e con s ta n t p u r s u it of ta x d eb tor s occa s ion s a m a jor a n d u n a ffor d a b le exp en s e. Fa ced wit h s eizu r e, h owever , t h ir d p a r ties , h a vin g b ecom e own er s of t h e good s , a r e in m os t ca s es willin g t o p a y t h e t a x d eb t r a t h er t h a n p a r t wit h t h e good s . Wit h ou t t h e s eizu r e p r ovis ion s t h e LRA wou ld los e ver y s u b s ta n tia l s u m s a n d t h e a b s en ce of t h e p r ovis ion s wou ld a id n ot on ly p u r ch a s er s s u ch a s Silver s id e t h a t wer e ign or a n t of n on - p a ym en t of t h e ta x d eb ts b u t a ls o t h os e wh o b ou gh t in t h e k n owled ge of n on -p a ym en t . [2 1 ] Th a t a ccou n t b y t h e Com m is s ion er Gen er a l wa s cr iticized b y cou n s el for t h e liqu id a tor a s fa t a lly d eficien t in s ta tis tica l d et a ils . Ap a r t fr om t h e u n d is p u t ed a s s er tion t h a t t h e LRA wa s n ot in p os s es s ion of s u ch d et a ils , it s eem s to m e t h a t t h e u n ch a llen ged evid en ce for t h e LRA – a n d a ccep tin g t h a t it b or e t h e on u s – ca n n ot fa ir ly b e d is p a r a ged a s ex ca t h ed r a a n d u n h elp fu l. On t h e con tr a r y, it es ta b lis h ed t o m y m in d t h a t t h e s eizu r e p r ovis ion s a r e a p r a ctica l n eces s ity. [2 2 ] In a d d ition t h er e is th e con s id er a tion t h a t it is a r ea d ily p r a ctica l exp ed ien t a va ila b le t o t h e t h ir d p a r ty wh o b u ys in b u lk fr om a n im p or t er -ta x d eb t or t o d em a n d fr om t h e la tt er p r od u ction of a n officia l LRA r eceip t. It wa s a r gu ed for t h e liqu id a tor t h a t t h is is n ot h ow b u s in es s m en op er a t e. Th a t is n ot a n a ccep t a b le a n s wer . If th e im p or t er in s is t s on a ccep ta n ce b y t h e b u yer with in a tim e-fr a m e wh ich d oes n ot p er m it p r od u ction of a va lid r eceip t t h e b u yer will k n owin gly a ccep t t h e r is k of s eizu r e if it t h en b u ys . On e m igh t a d d t h a t t h is con s id er a t ion s er ves t o d em on s tr a te t h a t if Silver s id e fa iled to r a is e t h e m a t ter o f a ta x r eceip t its ign or a n ce of t h e ta x d eb t cou ld h a r d ly b e s a id t o h a ve r en d er ed it a n “in n ocen t p u r ch a s er ” in t h e s en s e of on e en tir ely b la m eles s . Be t h a t a s it m a y, t h e b la m ewor t h in es s or n ot of t h e t h ir d p a r ty’s s ta te of m in d h a s n o b ea r in g on t h e is s u es in t h is ca s e for in m y view t h e s eizu r e p r ovis ion s in t h e VAT Act a r e n ot u n con s titu tion a l eit h er in t h em s elves or wh en a p p lied to t h e ca s e of a t h ir d p a r ty b u yer ign or a n t of t h e t a x d eb t . [2 3 ] Tu r n in g t o t h e s econ d qu es tion , t h er e wa s in d eed a ch a n ge in t h e a p p ea r a n ce a n d n a t u r e of t h e gr ea ter p or tion of t h e im p or ted good s . By a p r oces s of m a n u fa ctu r e t h ey h a d b een s u b s ta n tia lly tr a n s for m ed in t o ga r m en t s s u ch a s T-s h ir ts , tr ou s er s , ch ild r en ’s clot h in g, p yja m a s , la d ies ’ ves ts a n d d r es s es . At t h e s a m e tim e n o evid en ce on r ecor d s h ows or even ten d s t o s h ow th a t t h e m a d e u p good s con s is t ed of a n yt h in g b u t t h e im p or ted m a ter ia ls . In ot h er wor d s t h e m a n u fa ct u r ed good s wer e, b y n eces s a r y in fer en ce, id en tifia b le a s con s is tin g of n ot h in g b u t t h e im p or ted m a ter ia ls . Th e im p or ted m a ter ia ls wer e, of cou r s e, t h e good s in r es p ect of wh ich Lek im ’s ta x d eb t wa s d u e. [2 4 ] Pr ior t o t h e h ea r in g b efor e Peete J t h e p a r ties for m u la ted a n a gr eed s p ecia l ca s e. In ter m s of t h eir a gr eem en t if VAT wa s p a ya b le on t h e va lu e of t h e fa b r ic a n d ga r m en ts it h a d to b e ca lcu la ted on t h e va lu e of t h e fa b r ic a n d ga r m en t s a s im p or ted . (Th ey a ls o r efer r ed t o cu s t om s d u ty, a s u b ject wh ich is p r es en tly ir r eleva n t .) Th e liqu id a tor u n d er took t o p r ovid e s ecu r ity to t h e s a tis fa ction of t h e Com m is s ion er in a s ta ted a m ou n t of VAT p en d in g d eter m in a tion of h is lia b ility t o p a y “s u ch t a x”. To en a b le t h e High Cou r t t o d eter m in e if s u ch lia b ility exis t ed , t h e s p ecia l ca s e em b od ied t h e p a r ties ’ r iva l con ten tion s . Th a t of t h e liqu id a t or wa s t h a t t h e im p or ted good s on wh ich VAT wa s p a ya b le b y Lek im wer e r olls of m a t er ia l wh er ea s t h e va s t m a jor ity of t h e s eized good s wer e ga r m en ts m a d e fr om s u ch m a ter ia l a n d wer e n ot t h e good s im p or ted . Th e LRA’s con ten tion , on t h e ot h er h a n d , wa s t h a t Silver s id e wa s lia b le for t h e VAT t h a t Lek im s h ou ld h a ve p a id a n d t h a t s u ch VAT wa s ca lcu la b le on a r econ s tr u ction of t h e a m ou n t of im p or ted fa b r ic in t h e ga r m en ts . Peete J d id n ot r es olve t h a t d is p u te a n d , a s m en tion ed a b ove, h eld t h a t Silver s id e wa s n ot lia b le for “im p or t ta x” b eca u s e it h a d “in n ocen tly p u r ch a s ed ” t h e good s la ter s eized . [2 5 ] Th e qu es tion in is s u e is t h er efor e t h is . Do t h e s eized good s fa ll wit h in t h e a m b it of t h e wor d s “a n y good s ” in s 4 1 (1 ) of t h e VAT Act if it is clea r th a t t h e la ter wor d s in t h e s u b s ection – “t h os e good s ” – p la in ly r efer t o t h e im p or ted u n m a d e u p good s on wh ich t h e ta x d eb t wa s d u e? [2 6 ] Cou n s el for t h e LRA s u b m it ted in t h is r ega r d t h a t t h e ta x s ou gh t fr om Silver s id e wa s n ot ca lcu la b le on t h e va lu e of t h e good s s eized b u t t h e va lu e of t h e m a ter ia ls im p or t ed a n d t h a t Silver s id e wa s n ot lia b le for its own d eb t b u t t h a t of Lek im . Th e fa lla cy t h er e is t h a t Silver s id e (a n d t h e liqu id a tor ) h a d n o lia b ility in la w to p a y Lek im ’s d eb t . All t h a t Silver s id e wa s lia b le t o wa s s eizu r e of t h e im p or ted good s . [2 7 ] In a n s wer in g t h e qu es tion p os ed in t h e p r eced in g p a r a gr a p h on e ca n n ot, in m y view, ign or e two con s id er a tion s . Fir s t, t h e im p or ted m a ter ia ls wer e in ten d ed t o b e u s ed in t h e m a n u fa ctu r e of clot h in g. Th ey wer e in ten d ed to b ecom e s p ecific a r ticles , n ot r a n d om a ggr ega t es of im p or ted m a ter ia ls . S econ d , n eit h er in or d in a r y p a r la n ce or t h e com m er cia l wor ld is a m a n u fa ct u r ed ga r m en t r ega r d ed or d efin ed a s t h e s u m of its com p on en t p a r t s . It is ca lled , a n d tr a d ed a s , a s h ir t or a d r es s , a s t h e ca s e m a y b e. In m y op in ion , t h er efor e, t h e com p leted ga r m en t s s eized wer e n o lon ger th e good s im p or ted a lb eit t h a t t h ey wer e m a d e of t h e im p or ted m a t er ia ls . Th ey h a d b ecom e s om et h in g els e. Th e ta x d eb t wa s d u e on t h e m a t er ia ls a s im p or ted , n ot on t h e m a n u fa ct u r ed ga r m en ts wh ich wer e t h e r es u lt of t h e exp en d it u r e of tim e, la b ou r a n d s k ill on th e im p or ted m a t er ia ls . Th es e con clu s ion s a r e s u p p or t ed b y t h e ca s e of Min is ter of Fin a n ce v Ba ch er Ar on & Co (Rh od ) Ltd 1 9 5 6 (1 ) S A 6 3 (S . R.) wh er e t h e qu es tion wa s wh et h er a lter a tion of im p or ted clot h in g wit h a view t o its r es a le in volved m a n u fa ct u r e. S ta tem en t s wer e m a d e (a t 6 4 H) a n d a p p r oved (a t 6 5 A-B) t o t h e effect t h a t m a n u fa ct u r e in volves tr a n s for m in g a n a r ticle in to s om et h in g s u b s ta n tia lly d iffer en t b y effectin g “a ver y gr ea t ch a n ge” in t h e ch a r a ct er of t h e com p on en t m a ter ia ls . [2 8 ] I a ccor d in gly h old t h a t t h e m a d e u p ga r m en t s wer e n ot lia b le t o s eizu r e a n d t h a t on ly t h e r em a in in g good s s eized wer e s o lia b le. Th e evid en ce is n ot clea r a s t o t h e e xa ct p er cen ta ge p r op or tion of u n m a d e u p m a ter ia ls to m a d e u p ga r m en t s b u t it wou ld b e fa ir to s a y t h e u n m a d e u p m a t er ia ls con s t itu ted a qu a r t er of t h e tota l im p or t. [2 9 ] Th e two qu es tion s in is s u e in t h is a p p ea l h a vin g b een t h u s a n s wer ed , t h e a p p ea l a ga in s t t h e or d er of t h e High Cou r t in ca s e CC 5 / 2 0 0 9 m u s t fa il. Th e d ecla r a t or s ou gh t t h er e wa s con fin ed to t h e con s tit u tion a l is s u e on wh ich t h e LRA h a s s u cceed ed in b ot h cou r ts . As r ega r d s cos t s , t h e ca s e s ta r t ed a s a com m er cia l cla im a n d wa s op p os ed on com m er cia l gr ou n d s . Wh en Peet e J ’s or d er wa s ta k en on a p p ea l it wa s a s a r es u lt of t h is Cou r t’s p oin tin g ou t t h a t a con s titu tion a l is s u e wa s in volved t h a t r es u lt ed in t h e liqu id a tor a p p lyin g, on r em it ta l, for a con s tit u tion a l d ecla r a t or . Th is wa s n ot a ca s e of a s u b s ta n tia l con s titu tion a l ch a llen ge of a p u b lic n a tu r e. Th e liqu id a t or d id n ot s et ou t to ch a llen ge t h e r eleva n t s t a t u t es in t h e p u b lic in ter es t. Th e ca s e r em a in ed a n es s en tia lly com m er cia l on e. Cos t s s h ou ld follow t h e r es u lt . (Roa d Tr a n s p or t Boa r d & Ot h er s v Nor t h er n Ven t u r e As s ocia tion , LAC (2 0 0 5 -2 0 0 6 ) 6 4 a t 7 1 E -G; Kh a t h a n g-Tem a -Ba its ok oli & An ot h er v Ma s er u City Cou n cil & Ot h er s LAC (2 0 0 5 - 2 0 0 6 ) 8 5 a t 9 8 C-E ; Ts ep e v In d ep en d en t E lector a l Com m is s ion & Ot h er s LAC (2 0 0 5 -2 0 0 6 ) 1 6 9 a t 1 8 8 D-H; Min is ter of La b ou r a n d E m p loym en t & Ot h er s v Ts eu oa LAC (2 0 0 7 -2 0 0 8 ) 2 8 9 a t 3 0 2 G-J . [3 0 ] In ca s e CIV/ T/ 2 5 4 / 0 5 Peet e J d is m is s ed t h e cla im b y t h e LRA on t h e b a s is , a s I h a ve s a id , t h a t Silver s id e wa s n ot lia b le for im p or t ta x b eca u s e it h a d in n ocen tly b ou gh t t h e good s s old . [3 1 ] Alt h ou gh n ot lia b le t o p a y Lek im ’s d eb t, t h e liqu id a tor , in r es p on s e t o Silver s id e’s lia b ility for s eizu r e, p u t u p s ecu r ity p r ecis ely t o a void s eizu r e. Th e s ta ted ca s e a n d t h e a gr eem en t t o p u t u p s ecu r ity wer e b efor e t h e lea r n ed J u d ge. Th e liqu id a tor ’s con t en tion t h a t t h e s eized good s wer e in t h e m a in n ot t h e im p or ted good s wa s in clu d ed in t h e s ta ted ca s e. Accor d in gly t h e LRA wa s en titled a t lea s t to d ecla r a t or y r elief t h a t s eizu r e wa s com p eten t in r es p ect of a qu a r ter of t h e im p or t ed good s a n d t h a t t h e LRA t h er efor e h a d t h e r igh t t o execu te on t h e s ecu r ity t o t h e exten t of a qu a r ter of t h e s u m p u t u p . Th a t wou ld h a ve con s titu ted s u b s ta n tia l s u cces s in t h e a ct ion a n d h a ve ju s tified cos t s b ein g a wa r d ed to t h e LRA. Th e a p p ea l m u s t t h er efor e s u cceed t o t h a t exten t . [3 2 ] Th e or d er of t h is Cou r t is a ccor d in gly a s follows : 1 . Th e a p p ea l a ga in s t t h e or d er in High Cou r t con s titu tion a l ca s e CC 5 / 2 0 0 9 is d is m is s ed wit h cos t s . 2 . Th e a p p ea l a ga in s t t h e or d er in High Cou r t ca s e CIV/ T/ 2 5 4 / 0 5 is a llowed wit h cos t s . Th e or d er of t h e cou r t b elow is s et a s id e a n d in it s s t ea d t h er e is s u b s tit u t ed t h e followin g: lega lly com p eten t “It is d ecla red th a t th e s eizu re effected b y in th e p la in tiff wa s res p ect of on e qu a r ter of th e qu a n tity of th e good s im p or ted b y Lek im Textiles Pty Ltd (in liqu id a tion ) a n d th a t th e p la in tiff is en titled to execu te on on e qu a r ter of th e a m ou n t of s ecu r ity p u t u p b y th e fir s t d efen d a n t. Th e fir s t d efen d a n t is or d ered to p a y th e cos ts of th e a ction .” _______________________ C. T. H OWIE J US TICE OF APPE AL I a gr ee: ______________________ M. M. R AMODIBE DI PRE SIDE NT OF THE COURT OF APPE AL I a gr ee: I a gr ee: I a gr ee: ______________________ J . W. S MALBE R GE R J US TICE OF APPE AL ____________________ D. G. S COTT J US TICE OF APPE AL ____________________ I. G. F AR LAM J US TICE OF APPE AL For t h e Les ot h o Reven u e Au t h or ity in b ot h a p p ea ls : Ad v H. P. Viljoen SC For t h e Liqu id a tor in b ot h a p p ea ls : Ad v R. A. S u h r