Who can legally represent taxpayers in Tax Court?

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Who can represent a litigant in court?

It is a well-established principle of the South African common law that only a qualified legal professional is allowed to represent a litigant in court proceedings. This principle is entrenched by the constitutional right to legal representation afforded to all persons in criminal and civil matters.

The Legal Practice Act 28 of 2014 (LPA) entrenches the common law position by providing that only a person "who has been admitted and enrolled to practice as a legal practitioner" may represent another in a court of law. The overarching public policy consideration that everyone should have a right to have any dispute that can be resolved by application of law decided before a court, in many instances, can only be effectively achieved where one has access to legal representation.

No person may appear in a court of law unless that person is an admitted and enrolled legal practitioner

Section 33 of the LPA further provides that no person may appear in a court of law or before any board, tribunal or similar institution where only legal practitioners are entitled to appear for any fee, commission, gain or reward, unless that person is an admitted and enrolled legal practitioner. The court in Poulter held that section 33 does not afford a layperson a right to represent a company in a court of law that he otherwise did not possess merely because he acts without reward or the expectation of reward.

The Supreme Court of Appeal (SCA) in the case of Manong & Associates (Pty) Ltd v Minister of Public Works and Another held that a layperson may represent a juristic person (since a juristic person is an entity and cannot represent itself – it must necessarily have a representative). In doing so, the court relied on its inherent jurisdiction to regulate its own procedures. It then becomes clear that South African courts do not have a discretion to allow representation of a natural person where the intended representative is not an admitted legal practitioner.

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Tax Court is not a High Court

Whether the Tax Court possesses this discretionary power to develop its own procedures to allow a layperson to represent a litigant is dependent on whether a Tax Court is a superior court and therefore a court of law. However, section 173 of the Constitution of the Republic of South Africa, 1996 (Constitution), only provides the Constitutional Court, SCA, and the High Court with this inherent power. The Tax Court is thus not a superior court with the power to regulate its own processes.

However, this does not mean that it is not a court of law, and whether a Tax Court is a court of law is precisely the issue the Poulter case turned on.

Poulter v CSARS: The facts

This appeal, heard by a full bench of the Western Cape High Court in April of this year, follows a taxpayer's dispute of an "original assessment" or a decision by Sars regarding the tax for which she is liable. Sars determined that Poulter was liable to pay R44m in tax on a gift of R142m received from a companion abroad in her 2014 tax year.

Poulter was not present at the Tax Court hearing and the court rejected her father, Mr van der Merwe’s request to represent her in her absence. That rejection is the subject of the current appeal.

The current legal position

It is trite that only a legal representative may appear on behalf of another in a court of law, and so the High Court was tasked with determining whether the Tax Court is a court of law.

The High Court considered foreign jurisprudence and in doing so, traversed the English and Australian legal terrain in search of an answer to this legal question. Binns-Ward J, writing for the unanimous full bench of the High Court, found that these foreign courts consider the function or purpose of the court as opposed to the name of the court in determining whether a body is a court of law.

Some of the factors considered were that the findings of the Tax Court do not create binding precedents, which indicate that it may not be a court of law. But if this were true, Magistrates' Courts would not be courts of law as their judgments do not create precedents for other courts – and this cannot be true.

The High Court then turned to our own legal system and found that courts of law are identified in section 166 of the Constitution. Since it is not a superior court specifically mentioned in section 166, in order to qualify as a court of law, the Tax Court would need to fall within the ambit of section 166(e) to do so, it would need to fit within the definition of "any other court established or recognised in terms of an Act of Parliament, including any court of a similar status to the High Court or the Magistrates' Courts".

The Tax Court is recognised by the Tax Administration Act 28 of 2011 (TAA) and has jurisdiction to decide appeals of decisions made in terms of the TAA. Tax Court proceedings are not open to the public (as opposed to Magistrates' Court and High Court proceedings) and the TAA limits one's right to approach a Tax Court until after one has exhausted the dispute resolution mechanisms provided for in the Act (reminiscent the internal remedies provided for in the Promotion of Administrative Justice Act 3 of 2000).

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Tax Court outside judicial system

The Tax Court performs the functions of a body of ultimate assessment in terms of the TAA in that it is tasked with the reconsideration of administrative decisions of Sars. Its main function, coupled with its characteristics as above, point towards the court's function being similar to that of an administrative tribunal (notwithstanding the judicial forum in which it operates). The Tax Court therefore finds itself firmly outside of the judicial system set out in section 166(e) of the Constitution, and therefore does not qualify as a court of law.

Section 125(5) of the TAA, prior to its deletion from the Act, provided that the appellant or "the appellant's representative" may appear at the hearing of an appeal. Binns-Ward J, however, quickly found that the deletion of this section did not serve to disallow representation in the tax court as such provision would be unconstitutional and unfair.

Authorised representative to appear in Tax Court

The Tax Court rules refer throughout to an "authorised representative" that may act on a taxpayer's behalf and there is no requirement in the regulations that this representative must be an admitted legal practitioner. If this were so, the reference would necessarily be to a "legal representative" and not an "authorised representative". This aligns with past practice where accountants and tax practitioners have represented taxpayers in tax court proceedings.

Ultimately, and in line with the considerations above, the High Court found that the Tax Court is not a court of law, and as such, taxpayers may be represented by a representative of their choosing, regardless of whether that representative is an admitted legal practitioner or not. Poulter's appeal was thus upheld.

Conclusion

This judgment undoubtedly gives effect to the right of access to courts afforded to all persons by our Constitution as taxpayers need not incur the costs associated with procuring legal representation, or stumble through the process of obtaining Legal Aid in order to be represented in a Tax Court.

Poulter clears up years of uncertainty as to whether laypersons may represent taxpayers in Tax Court proceedings and is a welcome addition to the legal landscape of representation by one of another.