In a scathing judgment the Supreme Court of Appeal has slammed controversial businessman Paul de Robillard for abusing court processes through a failed bogus business rescue application he launched to stave off a R146m tax bill.
The judgment, handed down by justice Sharise Weiner, reveals how the former business partner of Edward Zuma and tobacco baron Yusuf Kajee, breached multiple agreements with the taxman and secretly stripped and sold off his estate’s assets, including two multimillion-rand yachts and three Gauteng mansions.
After last week’s ruling the businessman is now squarely back in the SA Revenue Service (Sars) crosshairs.
For 11 years, Sars fought De Robillard over VAT and income tax liabilities in legal battles which spanned high courts in Gauteng and KwaZulu-Natal and now the Supreme Court of Appeal.
In her ruling, Weiner revealed De Robillard launched a scheme to prevent PFC Properties, which is registered in the De Robillard Family Trust, from being wound up.
De Robillard’s wife, Brita de Robillard, was made the trust’s trustee in 2012.
Sars had been gunning for PFC Properties, which is controlled by the trust, over a VAT and income tax liabilities and had approached the Pretoria high court to have the company liquidated
Weiner stated that to stop the winding-up, the trust registered Pietermaritzburg as the company’s new business address, then launched a business rescue application in the Pietermaritzburg high court just days before the Pretoria high court hearing.
“A business rescue application was brought after the launch of the winding-up application. The trust, the sole shareholder of PFC, [applied] to place PFC into business rescue. The business rescue application was thereafter dismissed.”
Weiner said PFC argued, that under the Companies Act, a business rescue application automatically suspended winding-up proceedings, until the business rescue application was adjudicated.
She said the company was a property and asset owning company, which De Robillard was a director of until February 2011 when his wife became director.
“Sars conducted an audit on PFC for the tax periods 2007 to 2018 in respect of VAT and income tax. Sars issued assessments totalling over R52m in VAT and over R5m in income tax.
The purpose of business rescue proceedings is to facilitate the rehabilitation of a financially distressed company. There must be reasonable prospects of rescuing the company ... Business rescue proceedings are ... not to be abused by a company ... to avoid a winding up.
— Justice Sharise Weiner
“In the 2010 tax year, PFC commenced with the construction of a residential home in the Serengeti Golf and Wildlife Estate in Gauteng. Sars was informed that this was a property development by PFC and numerous VAT claims were submitted to Sars in respect of this development. However, Mr and Mrs De Robillard used this property as their matrimonial home.”
The judgment revealed that in September 2012, Sars informed De Robillard that it was also holding him personally liable for customs and excise related debts incurred by his company Doltek Enterprises totalling more than R89m.
She said while in November 2012, De Robillard brought an urgent application to interdict Sars from collecting these debts, he never took steps to prosecute the case.
“When construction of the Serengeti property was completed in 2014, PFC claimed input tax on the construction and development costs. In August 2018, Sars issued audit findings stating the input tax claimed was of a private nature and any expenses incurred would be disallowed.”
Weiner said Sars provided De Robillard reasons and issued letters confirming the finalisation of the VAT and income tax audits.
She said an objection and request by PFC in November 2019 to suspend the debt payment was refused by Sars after the company failed to tender any security.
“In December 2019, PFC submitted another request for suspension of payment of its tax debt. It undertook not to dispose of the Serengeti property, as well as two other properties in Dainfern and Douglasdale pending the finalisation of the dispute resolution.”
Weiner said PFC undertook that if the properties were sold “the proceeds will be kept in trust until the dispute resolution process was finalised”.
She said Sars granted the suspension and enrolled the matter for hearing.
“In July 2020, nearly seven years after [De Robillard] instituted the 2012 court action, he withdrew it. The withdrawal enabled Sars to recover the outstanding R148m from De Robillard. Payment was not forthcoming and in November 2020, Sars applied to sequestrate De Robillard.
“De Robillard did not file an answering affidavit dealing with the merits of the sequestration application. He filed a preliminary answering affidavit with a counter-application to stay the sequestration. In November 2020, a provisional sequestration order was granted against De Robillard which was confirmed in May 2021.”
She said in December 2020 court appointed trustees of the trust discovered PFC had sold the Serengeti property for R11.5m in November 2020, despite it being valued at R50m.
“Only R1m of the purchase price was paid to PFC. Despite giving Sars its undertaking that if they were sold, the proceeds would be kept in trust. PFC, acting through De Robillard, embarked upon a campaign to strip itself of all its assets.
“It sold all three immovable properties. It disposed of a luxury yacht valued at R45m in PFC’s 2019 financial statements for R12m. Another yacht valued at R13m was sold for R570,000.
“As a result of this fraudulent conduct, Sars withdrew the suspension of payment of PFC’s VAT and income tax.”
She said PFC also failed to honour a second agreement with Sars around its winding-up matter.
“Shortly after the winding-up proceedings commenced, PFC’s registered address was suddenly changed from Gauteng, to an address within the jurisdiction of the Pietermaritzburg high court. In March 2021, a few days before the winding-up hearing application, the trustees launched the business rescue application in the Pietermaritzburg high court.
“The purpose of business rescue proceedings is to facilitate the rehabilitation of a financially distressed company. There must be reasonable prospects of rescuing the company. It must be just to place it under supervision. Business rescue proceedings are ... not to be abused by a company ... to avoid a winding up.
“The conduct of the trustees amounts to an abuse. From the outset the application was a stratagem. The address of PFC’s registered office was deliberately changed, so the business rescue application could be brought in the Pietermaritzburg high court.”
She said while the trustees claimed in court that Sars allegations were “unsubstantiated and based on speculation”, what they did not disclose was that PFC never answered Sars’ allegations concerning its fraudulent VAT claims and the dissipation of its assets, despite its undertaking to do so.
Questioning the reasons for PFC’s existence she said the trustees ought to have known that the business rescue application had no prospect of success.
“The trustees sought to use the legal process ... for an ulterior purpose, to thwart the winding-up proceedings. The conduct of the trustees and PFC is so tainted with impropriety.”
Sars in a statement welcomed the ruling.
Sars commissioner Edward Kieswetter said: “It was unfortunate that some taxpayers abuse the business rescue proceedings to the detriment of creditors. In most instances, the fiscus is the main victim. Sars will continue to act firmly and decisively when business rescue proceedings are abused to the detriment of the fiscus. We will without any equivocation oppose such abusive applications.”
Sars failed to respond to emailed questions on what steps it would take to recoup monies De Robillard owed.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.