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Estate Agency Affairs Board v McLaggan

Supreme Court of Appeal -SCA161/04 Hearing date: 14 March 2005
  Judgment date: 31 March 2005
Dishonesty is an element of the offences of contravening paras 1 and 2(1), read with para 30(1)(b) of the Fourth Schedule to the Income Tax Act 58 of 1962 (deducting employees’ tax and failing to pay it to Revenue), and of contravening s 28(1)(b), read with s 58 of the Value Added Tax Act 89 of 1991 (collecting VAT and failing to pay it to Revenue). The fidelity fund certificate of an estate agent convicted of these offences lapses under s 28(5) of the Estate Agency Affairs Act 112 of 1976. Appeal against decision of High Court, South Eastern Cape upheld. Order is contained in para 34.

Media Summary of Judgment

This media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today held that offences committed under the Income Tax Act 58 of 1961 and the Value Added Tax Act 80 of 1991 involved an element of dishonesty. The respondent, an estate agent, had deducted employees’ tax, and VAT levied and received by it, and used the moneys in question for purposes other than paying what was owed to the South African Revenue Service as he was obliged to do. Although SARS was aware that he had not made the payments due to it, the court held that it is intrinsically dishonest to use moneys collected for one purpose (payment to the fiscus of employees’ taxes, and VAT collected for the fiscus) for an entirely different purpose. Accordingly, in terms of s 28(5) of the Estate Agency Affairs Act 112 of 1976, McLaggan’s fidelity fund certificate automatically lapsed when he was convicted on 39 counts under the respective tax acts. The SCA upheld the appeal of the Estate Agency Affairs Board and declared that McLaggan’s fidelity fund certificate had lapsed upon his convictions.



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