Judgment No. HB 26/2003
Case No. HC 215-6/2003 HC 217-8/2003
HC 219-20/2003 HC 121-22/2003
(1) KERRIGAN INVESTMENTS (PVT) LTD
T/a RIFA WILDLIFE SAFARIS
WESTERN SAFARIS (PVT) LTD
ZIMBABWE REVENUE AUTHORITY
IN THE HIGH COURT OF ZIMBABWE
BULAWAYO 14 & 27 FEBRUARY 2003
Ms N. Ncube for the applicants
A. B. C. Chinakefor the respondent
CHEDA J: Applicants filed urgent applications seeking an interim order
interdicting respondent from freezing, garnishing or interfering with their bank
accounts held by several banks in Bulawayo.
As all applicants present the same issue and were being represented by the
same legal practitioner and equally so, respondent, I decided to deal with them
together. Applicants are registered safari operators in terms of the laws of Zimbabwe.
Respondent is a parastatal empowered to collect revenue for and on behalf of the
Government of Zimbabwe. They do so under various Acts of Parliament and the
appropriate one in this case being the Income Tax Act [chapter 23:06]. It is under this
Act that respondent is authorised to audit, investigate and also freeze any person or
business concern’s account should they, during their investigations form an opinion
that there have been some irregularities, which may financially prejudice their fiscal
It is common cause that during audit inspections being carried out by
respondent such irregularities were found which led to the freezing of applicants’
It is pertinent to mention that applicants have, also filed separate applications
asking this court to declare that respondent’s actions in freezing the said accounts
acted ultra vires its powers in terms of section 30 as read with schedule 17 of the
Income Tax Act [chapter 23:06], in ruling that, the withholding tax is due and
collectable by applicant for commission paid by non-resident clients to non-resident
independent operators. They further seek an order that in terms of section 30 as read
with schedule 17 of the Income Tax Act there is no statutory obligation on the part of
applicant to collect withholding tax on commission paid directly to a non-resident
operator by a non-resident hunter. These issues are yet to be determined by this court.
Ms Ncube for the applicants argued that respondent has no legal basis for
freezing the said accounts because the commission on which the withholding tax is
founded does not originate from Zimbabwe. Her further argument, is that, if
respondent is allowed to continue freezing applicants’ account, applicant will be
rendered bankrupt as they cannot economically operate their businesses without these
Mr Chinakefor respondent has vigorously opposed this application as he
argued that respondent is empowered to withhold tax in terms of section 30 of the
Income Tax Act which reads:
“Section 30 - Non-residents’ tax on fees
There shall be charged, levied and collected through out Zimbabwe for the benefit of the Consolidated Revenue Fund on non-residents’ tax on fees in accordance with the provisions of the seventeenth schedule at the rate of tax fixed from time to time in the changing Act.” (my emphasis)
The question which should be determined is whether the word “commission”
as used in the present context falls within the scope of section 30 of the Income Tax
It is basically on that basis that respondent is of the view that it is entitled to
freeze these accounts. It is clear that there is a need for the determination by this
court as to whether there is any legal basis for respondent to have acted in the manner
they did .
Applicants also argued that it is essential that they be allowed to utilise
their accounts pending the final determination of the other court application referred
to above. Their fears are that in the event that the court holds in their favour
respondent will not be able to reimburse them. In fact, Ms Ncube argued that not only
does respondent have problems in securing foreign currency but local currency as
well. In reply Mr Chinake pointed out that this in fact is not correct as in the current
year respondent has successfully collected Z$258 billion and has this year budgeted to
collect Z$728 billion in revenue. While it is correct to say that respondent has
problems with foreign currency, it cannot be correctly said so of the local currency.
This therefore stands to reason that respondent is in a position to reimburse applicants
should applicants succeed in their other applications.
This argument by Ms Ncube although sound however, it seems to overlook
one real possible route which applicants can take in the event that they are allowed to
utilise their accounts pending determination of their other applications by this court
that is of winding up their companies. She buttressed her argument by pointing out
that the economy of the country in general is not favourable for business and that the
tourism industry in particular has taken a slump. While these observations are indeed
correct, I find that there is reason enough for any business person to close shop or
diversify into other businesses. It is possible therefore for applicants in those
circumstances to declare themselves insolvent after they have been allowed to utilise
their accounts. Should this happen, then respondent will suffer irreparable harm as
they will not be able to recover tax in the event that, the court’s determination is in
their favour. The situation will be however, entirely different if the courts determine
in applicants’ favour as their money will still be held in the bank.
In an application of this nature applicant must show a prima facie case in order
to succeed. In the present case it is clear that, there is a dispute as to the interpretation
of the relevant provisions of the Act under discussion.
As pointed out above their fears are without justification in view of what they
might do after they have been allowed to freely utilise their accounts, this argument
is therefore rejected as it is devoid of any merit. In addition they have failed to make
a prima facie case against respondent. The reason for this is that, they have not been
truthful with the court in arguing that respondent will not be able to pay them in the
event of their success. I am persuaded to agree with Mr Chinake’s argument that in
the case of Western Safaris P/L, the account held is $1.8m, which represents, possibly
one asset of e.g. a motor vehicle. To say that a business will be bankrupt as a result of
a freeze on an asset of $1.8m or so in a business which has been receiving such large
sums of foreign currency is not entirely correct. It also emerged that the collection
percentage of the said commission is not uniform as it varies from one safari
operator to the other. One wonders why this is so and applicants were unable to
explain this irregularity. This on its own is reason enough to justify the freezing of
the accounts. This goes to demonstrate their lack of bona fides.
Having listened to both arguments and perused various documents before me I
am of the view that there is a need for the courts to determine the main application,
more particularly in view of the fact that the commission referred to in the National
Parks Declaration forms lacks uniformity as far as the calculation of the commission
is concerned. With all due respect, the fact that the calculation of commission is left
at the whims of applicants, is an indication that proper determination should be made
by this court.
It is for the above reasons that respondent should be allowed to freeze
accounts in the meantime, which it reasonably believes, there have been irregularities
in the declaration of foreign currency.
The court will therefore be failing in its duty, if it is seen to be hindering
respondent in its quest to correct what is prima facie an irregularity. The balance of
convenience favours the freeze.
There is no irreparable harm which will be suffered by the applicant if their
accounts are frozen and I accordingly dismiss this application with costs.
Messrs Lazarus & Sarifapplicants’ legal practitioners
Kenntor & Immerman respondent’s legal practitioners