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The Commissioner for the South African Revenue Service vs. Nyhonyha and Others - (18 May 2023)

Interference would be called for, if the exercise of the discretion was based on a misdirection of fact or a wrong principle of law


Present is an appeal by the Commissioner for the South African Revenue Service (SARS) against an order setting aside the winding-up of Regiments Capital (Pty) Ltd (Regiments). The issues before the present Court is whether the setting aside of a winding-up under Section 354 of the Companies Act, 1973 constitutes the exercise of a discretion in the strict sense (true discretion); and whether Regiments was commercially solvent at the time of the hearing in the court a quo.

The scope for interference on appeal with the exercise of a true discretion is limited. The question is not whether the appeal court would have reached the same conclusion, but whether the discretion was exercised properly. For present purposes, it suffices to say that interference would be called for if the exercise of the discretion was based on a misdirection of fact or a wrong principle of law.

A true discretion is one that provides a court with a range of permissible options. The test for setting aside a winding-up under Section 354 on the basis of subsequent events, is whether the applicant has proved facts that show that it is unnecessary or undesirable for the winding up to continue. This does not involve a choice between permissible alternatives. The test is satisfied or it is not. Therefore, it followed that the decision of the court a quo did not constitute the exercise of a true discretion.

It is trite that, the admissibility of an opinion as evidence in a court of law depends on whether it is expressed by an expert in the field. On Regiments’ solvency, the present Court held that on the evidence before the court a quo, Regiments was both factually and commercially insolvent. On these facts, there was no basis for finding that the continuation of its winding-up was unnecessary or undesirable.


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