Zimbabwe Revenue Authority v Unki Mines (Private) Limited

### Preamble
Judgment No. SC 130/22
1
Civil Appeal No. SC 318/20
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REPORTABLE:		(114)

ZIMBABWE      REVENUE       AUTHORITY

v

UNKI      MINES   (PRIVATE)   LIMITED (referred to as U M (Pvt) Ltd in the judgment of the Special Court for Income Tax Appeals in HH437/20)

SUPREME COURT OF ZIMBABWE

BHUNU JA, MATHONSI JA & KUDYA AJA

HARARE: 10 MAY 2021 & 23 NOVEMBER 2022

T Magwaliba, for appellant

D Tivadar, for respondent

KUDYA AJA: 	The appellant appeals against the whole judgment handed down by the Special Court for Income Tax Appeals (the court a quo) on 8 July 2020 in ITC 10/19. The court a quo allowed the respondent’s appeal against the appellant’s disallowance of transport expenses purportedly incurred by the respondent in the disposal of concentrates from its mine in the 2013, 2014, 2015 and 2016 tax years (the relevant tax years).

THE FACTUAL BACKGROUND

On 25 March 2008, the Government of Zimbabwe (GOZ), on the one hand, and Southridge Limited and Unki Mines (Private) Limited on the other, concluded an “Agreement in terms of s 167 of the Mines and Minerals Act [Chapter 21:05] in respect of a Special Mining Lease for Unki Mine” (the agreement). The signatories to the agreement were the Minister of Mines and the respective chairpersons of the two locally registered companies.

The validity of the agreement was conditional upon its approval by the President and the issuance of the Special Mining Licence to the respondent, which would be in compliance with all the relevant provisions of the Mines and Minerals Act.

In terms of clauses 2.2 and 2.9 the agreement incorporated all the provisions of its four schedules, amongst which was the Concentrate Sales Agreement (CSA). The agreement also anticipated the conclusion of the CSA between Rustenburg Platinum Mines Limited, (RPM) a company duly registered in South Africa, the respondent and the Minerals Marketing Corporation of Zimbabwe (MMCZ). The interposition of the MMCZ as the selling agent of the respondent in clause 12 of the agreement and in the CSA was a mandatory statutory requirement or statutory stipulatio alteri decreed by the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04].

The contemplated CSA was concluded on 25 April 2008 by RPM as the purchaser, the respondent as the producer and seller and the MMCZ as the respondent’s selling agent. The CSA embodied in clauses 20.1 to 20.5 and 22 the procedure for its amendment.

On 19 August 2009, the Minister of Mines appended his signature on a document entitled “Special Mining Lease Title”.

On 31 August 2009, acting on the recommendations of the Mining Affairs Board, the Minister of Mines, sought the President’s authorization or approval to issue “the attached draft Special Mining Lease”, “in terms of 163 (1) of the Mines and Minerals Act [Chapter 21:05]”.

On 5 October 2009, the President duly granted his approval for the Minister to issue the draft special mining lease. On 14 October 2009 the Minister issued the special mining lease to the respondent. The agreement, therefore, took effect as prescribed in clause 4 (the “Conditions Precedent clause), on the fulfilment of the two conditions precedent stated therein.

On 18 May 2011 the triad of the respondent, RPM and MMCZ executed an addendum to the CSA, which “deleted and substituted” various clauses in the CSA. The addendum stipulated in clauses 2.1 and 2.2 that it was an amendment to the CSA. Significantly, clause 4 of the addendum backdated the amendments to “the Commencement Date as defined in the CSA”.  The effect of the addendum was therefore to treat the “deleted and substituted” clauses as if they never existed.

The respondent developed the mining location identified in the special mining lease and implemented the provisions of the s 167 agreement and its schedules, inclusive of the CSA. The respondent produced concentrate and in accordance with the marketing and selling provisions of the MMCZ Act [ss 20 (a), 22 (a) (ii) ss 42 (1) (a) (ii) and (b) (i), 46, 47 and 48 (4)], which were faithfully incorporated under clause 12 [sub-headed: “CONCENTRATE AGREEMENT”] particularly subclauses 12.1.1 to 12.1.3 of the agreement prescribed, inter alia, for the transportation and delivery of the concentrate to RPM.

The “delivery point” of each load of concentrate was specified in clause 7.1 and 12 of the CSA, as amended and backdated, to be the “boundary of the Mine”, “namely the exit point of the Mine”.  It was at this point that “ownership of and risk in the concentrate” passed from the respondent to RPM.

In terms of s 159 (1) (a) and (b) of the Mines and Minerals Act, a special mining lease is granted to the holder of a registered mining location who intends to establish or develop a mine thereon by investing predominantly in foreign currency an amount in excess of US$100m and the mine output is intended principally for export.

The business activities of the respondent arising from the special mining lease had tax consequences. The respondent, as it was required to do by s 37A as read with s 39 (2) (a) of the Income Tax Act [Chapter 23:06], duly submitted annual tax returns during the relevant tax years. It met and deducted the transport costs in the cumulative sum of US$14 428 696.74 for the carriage of the concentrate within the borders of Zimbabwe.

On 19 June 2018, the appellant issued amended assessments in respect of each relevant tax year. It disallowed the specified transport costs claimed within Zimbabwe from the exit at the mine. On 18 July 2018, the respondent objected to the disallowance to the Commissioner.  On 6 September 2018, the Commissioner dismissed the objection and disallowed the deductions on two grounds. The first was that ownership of the concentrate passed to the buyer at the delivery point defined in the CSA as the exit point of the mine. The respondent was therefore not entitled to pay any transport costs from that point.  The second was that the delivery point required by para 6 (3) of the 22nd Schedule to the Income Tax to be in the special mining lease, which was identified in the agreement through the CSA, was incorporated by reference into the special mining lease by the agreement.

Disgruntled by the Commissioner’s determination, the respondent appealed to the court a quo, which upheld the appeal and reversed the disallowance.

Aggrieved by the decision a quo, the appellant appeals to this Court.

THE CONTENTIONS A QUO

In the court a quo, the parties proceeded by way of a stated case. The factual conspectus of the stated case is replete with references to the special mining lease, the agreement, the CSA and the statutory provisions ordained in Part IX of the Mines and Minerals Act and the Income Tax Act.

The parties requested the court a quo to determine whether the limitations on allowable deductions set out in para 6 (3) of the 22nd Schedule to the Income Tax Act applies to the appellant’s (respondent before this Court) transportation expenses (purportedly) incurred in disposing of the concentrate.

The respondent, as the appellant a quo, made the following contentions. It earned income from the sale of concentrate from which it deducted the costs of transporting the concentrate within Zimbabwe. The special mining lease issued by the Minister with the President’s approval is the document entitled Special Mining Licence Title. It is distinct from the agreement, which is also concluded by the Minister, with the President’s approval. The special mining lease does not, on the face of it, define delivery point. The transport costs that were met and paid by it within Zimbabwe were not proscribed by para 6 (3) (b). It properly deducted them from its gross income. The reliance by the Commissioner on the provisions of the agreement and in particular the CSA embodied therein was therefore incorrect and ought to be set aside.

Per contra, the appellant, as the respondent a quo, made the following arguments. The Special Mining Lease Title ought to be construed in conjunction with the agreement. Although the two documents were separate and distinct, they were complementary to each other. Even though the Special   Mining Lease Title did not define delivery point, the agreement, whose provisions were effectuated by the Special Mining Lease Title, constituted the terms and conditions of the special mining lease. The agreement, through the provisions of the CSA defined the delivery point as the exit point at the Mine. The taxpayer was therefore by virtue of this definition precluded from claiming deductions for transport expenses within Zimbabwe beyond the delivery point as defined in the agreement. The Commissioner therefore correctly disallowed the deductions claimed beyond the delivery point as defined.

THE JUDGMENT A QUO

The court a quo held that the Special Mining Lease allowed the respondent to earn income from the sale of concentrate won from the mining location to which it related. The Income Tax adopted the definition of a special mining licence provided in the Mines and Minerals Act. Part IX of the Mines and Minerals Act distinguished a special mining lease issued under s 163 and the agreement concerning that mining lease, issued under s 167 of the Mines and Minerals Act.

The court a quo rejected the Commissioner’s submission that the agreement related to the special mining lease issued by the Minister of Mines with the approval of the President. It reasoned that as the definition section of the Income Tax Act, s 2, differentiated “a special mining lease” from “a special mining lease agreement”, the validity of the agreement was not dependent on the issuance of the special mining lease. Its reasoning was premised on the fact that the agreement predated the special mining lease. It held that as para 6 (3) (b) of the 22nd Schedule to the Income Tax Act limited the deduction of transport costs to “the delivery point defined in his special mining lease” and not in his special mining lease agreement, thus the Commissioner wrongly disallowed the deduction.

The court a quo, further opined that the special mining lease, the agreement and its attached CSA, were approved by the President before they were issued or concluded by the Minister of Mines. They did not provide for a delivery point. The delivery point was only contained in the addendum to the CSA that was issued, albeit with retrospective effect, some 19 months later on 18 May 2011. The addendum was not considered and approved by the President before it was concluded as mandated by ss 164 (5) and 167 (3) of the Mines and Minerals Act. It was concluded in breach of a statutory provision and was, for that reason, void ab initio, illegal and of no force or effect. The Commissioner could not therefore properly invoke such an addendum to limit the deductibility of the transport expenses “incurred” by the respondent in transporting the concentrate within Zimbabwe.

The court a quo therefore upheld the appeal with no order as to costs, set aside the assessments and remitted the matter to the Commissioner for re-assessment.

THE GROUNDS OF APPEAL

Aggrieved by the determination, the appellant appealed to this Court on the following grounds:-

“1.	The Special Court for Income Tax Appeals grossly erred on a point of law by failing to find that in terms of paragraph 6 (3) of the 22nd Schedule to the Income Tax Act, reference to the special mining lease included the special mining lease agreement and addendum to the concentrate sale agreement which defined the delivery point in respect of the minerals won by the Respondent from the special mining lease operations.

2.	The Special Court for Income Tax Appeals further erred in any event in failing to find that in terms of the general deduction formula in respect of special mining lease operations set out in paragraph 4 (1) (a) of the 22nd Schedule to the Income Tax Act, the respondent was not entitled to make deductions in respect of transport costs in issue because they were not incurred in each of the tax years wholly and exclusively for the purpose of special mining lease operations carried out by the respondent.[underlined words added by consent at commencement of the appeal]

3.	The Special Court for Income Tax Appeals therefore grossly erred in allowing the respondent deductions in respect of transport costs which were, in terms of the law, not allowable deductions.

WHEREFORE the appellant prays that:

The present appeal be allowed with costs and the judgment of the Special Court for Income Tax Appeals be set aside and substituted with the following:-

“The appeal is dismissed with costs.’’”

THE CONTENTIONS BEFORE THIS COURT

The Preliminary Points

At the hearing, Mr Tivadar for the respondent raised two preliminary points, which were contested by Mr Magwaliba for the appellant. After hearing argument thereon, the Court reserved its ruling, rolled over the matter to argument on the merits of all the three grounds of appeal and indicated that our determination would be contained in one judgment.

In the first preliminary point, counsel for the respondent sought the striking out of the second ground of appeal. He contended that a new issue could not properly be raised for the first time on appeal. He argued that as the sole issue for determination a quo was based on para 6 (3) (b), the appellant could not invoke the provisions of para 4 (1) (a) of the 22nd Schedule to the Income Tax Act for the first time on appeal.

He, however, made three concessions. The first was that para 6 (3) (b) to which the court a quo related was inexorably linked with the opening words of para 4 (1). The second was that the impugned ground of appeal was indivisible from the other two grounds. The third was that a new issue could be raised for the first time on appeal if it did not cause prejudice to the party against whom it is raised. Notwithstanding the concessions, he forcefully contended that the appellant was precluded by the Stated Case from straying beyond para 6 (3) (b). Further, that the Stated Case confined the focus of the parties, the court a quo and this Court to the consideration of the narrow issue referred on appeal. He submitted that, like the parties and the court a quo, this Court was precluded by the Stated Case from going on a frolic of its own.  He further contended that the respondent would be prejudiced by the absence of the pleaded facts upon which the determination of this ground would rest, that is, facts pertaining to whether the costs were incurred wholly and exclusively for the purposes of mining operations.

Secondly, he sought that the appeal be stuck off the roll. He argued that the remaining two grounds of appeal were not clear and concise. They violated the peremptory provisions of r 44 (1) of the Supreme Court Rules, 2018. They constituted a nullity. Resultantly, the appeal ought to be struck off with costs.

Per contra, Mr Magwaliba submitted that a point of law, which goes to the root of the matter, can be raised at any time, even for the first time on appeal, provided its consideration would not involve any unfairness to the party against whom it is directed. He contended that the requisites for accepting the second ground of appeal for the first time on appeal were all present. He relied on the provisions of s 66 (1) of the Income Tax Act, supra, and the cases of Muchakata v Netherburn Mine 1996 (1) ZLR 153 (S) at 157A,  Zimasco (Pvt) Ltd v Marikano 2014 (1) ZLR 1 (S) at 9E and Austerlands (Pvt) Ltd v Trade & Investment Bank Ltd & Ors 2006 (1) ZLR 372 (S) at 378E. He further contended that the second ground of appeal arose from the agreed facts. He also disputed that the remaining grounds were imprecise. He, therefore, prayed for the dismissal of the two preliminary points.

The second ground of appeal raises a point of law.  S 66 (1) of the Income Tax Act provides that:

“66 Appeals from determination of High Court or Special Court to Supreme Court

(1) 	On the determination by the High Court or the Special Court of an appeal under section sixty-five or other proceedings incidental to or connected therewith, the appellant or the Commissioner, if dissatisfied with the determination—

(a) 	may appeal to the Supreme Court on any ground of appeal which involves a question of law alone;”

The right of appeal from the High Court sitting as Tax Court or the Special Court to this Court is overbroad. As long as the ground raises a point of law, the taxpayer or Commissioner may appeal on it to this Court. It is clear to us that the second ground falls into the  ambit of s 66 (1) (a).  It cannot properly be impugned by the respondent.  The rationale for s 66 (1) is provided in Van Rensburg v Van Rensburg en Andere 1963 (1) SA 505 (A) at 510A and Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA 16 (A) at 24B-D cited with approval by this Court in the Muchakata case, supra.  It prevents the creation of an intolerable position by allowing an appeal court to give the right or correct decision on the accepted facts, which is based on the correct law. JANSEN JA pertinently remarked in the latter case, at 24B-D that:

“If e.g. the parties were to overlook a question of law arising from the facts agreed upon, a question fundamental to the issues they have discerned and stated, the Court could hardly be bound to ignore the fundamental problem and only decide the secondary and dependent issues actually mentioned in the special case. This would be a fruitless exercise, divorced from reality, and may lead to a wrong decision. It follows that the Court cannot be confined in all circumstances to the issues of law explicitly raised in the special case. This does not mean that the Court will always be free to enlarge the issues, whether mero motu or at the request of a party. The question of prejudice may arise, e.g., where a party would not have agreed on material facts, or on only those stated in the special case, had he realized that other legal issues, not stated in the special case, were involved.”

The four factors, in the absence of s 66 (1) of the Income Tax Act, which may preclude an appeal court from determining a new point of law on appeal were set out by INNES J in Cole v Government of the Union of South Africa 1910 AD 263 at 272 and summarized by CHIDYAUSIKU CJ, in the Austerlands case, supra, at 378E. They are:

“(1) 	the point is covered by the pleadings;

(2) 	there would be no unfairness to the other party;

(3)	the facts are common cause or well-nigh  incontrovertible; and

(4) 	there is no ground for thinking that other or further evidence would have been produced that could have affected the  point.”

The second ground pertains to the determination of whether the transport expenses were in the first-place eligible for deduction. The formula for computing taxable income under the Income Tax Act, is the same for special mining lease holders and the generality of other tax payers. The only difference between these two categories is that the calculation of taxable income for special mining lease holders, in terms of ss 2 (1), 8 (1) (r) and 15 (2), 22 (1) of the Income Tax Act, is governed by the provisions of the 22nd Schedule to the Income Tax. Indeed, the 22nd Schedule is appropriately headlined “DETERMINATION OF GROSS INCOME AND TAXABLE INCOME OR ASSESSED LOSS FROM SPECIAL MINING LEASE OPERATIONS”.  The taxable income of the generality of tax payers is governed in the main by PART III and in particular the provisions of ss 7, 8, 14, 15 and 16 of the Income Tax Act.

The formula for computing taxable income was set out in Commissioner for Inland Revenue v Delfos 1933 AD 242 at 25, Joffe & Co (Pty) Ltd v CIR 13 SATC 354 (A) at 35, Sub-Nigel Ltd v Commissioner for Inland Revenue 1948 (4) SA 580 (A) at 589. The taxpayer’s gross income must be ascertained. All exempt amounts are deducted to calculate the taxpayers’ income. Thereafter allowable deductions are subtracted to compute the taxable income. The formula derived from the above equation is thus: Gross Income less Exempt Amounts less Allowable Deductions.

Under the 22nd Schedule para 1 constitutes the definition section. Para 2 prescribes the formula for computing taxable income. Para 3 deals with the ascertainment of gross income.  Para 4 sets out both the general deduction formula for and the specific deductions allowed to the holders of a special mining lease.  Para 5 deals with capital redemption allowances that are eligible for deduction from income. And para 6 places limitations on some of the allowable deductions.

Now, before the court a quo, the parties assumed that the transport costs the respondent taxpayer incurred within Zimbabwe were deductible. They then sought a determination of whether those transport expenses were limited by the provisions of para 6 (3) (b). In making the assumption, the parties and the court a quo clearly overlooked an important component of the formula for calculating taxable income. It is that the parties would have to satisfy the provisions of para 4 before they could reach para 6.  In the architectural statutory design prescribed by the 22nd Schedule, the parties and the court a quo first needed to be satisfied that the deduction sought to be limited was, in terms of para 4, an allowable deduction. It is a point of law which requires the application of the agreed facts to the provisions of para 4.

The answer to the question posited by the second ground of appeal is reposed in the agreement. Simply put, it is whether in terms of the agreement executed by the GOZ and the special lease holder, the special lease holder had an unconditional legal liability to pay for the costs of transporting the concentrate within Zimbabwe. The respondent’s responsibility is set out in the agreement, which constitutes part of the agreed facts. It is common cause that the respondent met the transport costs in issue and deducted them in the self-assessments submitted to the appellant during the relevant tax years. The eligibility of the transport costs to such a deduction ought to have been determined before its limitation was decided.

We agree with Mr Magwaliba that the legal point raised for the first time on appeal is, firstly, premised on the pleadings, (the agreed facts).  Secondly, the point was raised in the notice of appeal on 21 July 2019 and motivated by the appellant in the heads of argument on 2 November 2020. The respondent countervailed the point in its heads of argument on 26 November 2020.  The respondent was afforded adequate time to counteract the point. The raising of the point for the first time on appeal did not, therefore, prejudice the respondent. Thirdly, Mr Tivadar made a bald and unsubstantiated contention that evidence would be required to determine the new ground. The agreed facts on which the point is premised are not only incontrovertible but are common cause. Lastly, the point would not be affected by any other evidence which the respondent could possibly lead.

In the circumstances, the second ground of appeal is properly before this Court.

Mr Tivadar further contended that the first and third grounds of appeal were imprecise. He argued that they failed to articulate how the court a quo erred. He is incorrect. The first impugns the court a quo’s failure to treat the agreement and its schedules as an integral part of the special mining lease. The use of the subordinate conjunctive adverb, “therefore”, in the third ground clearly attacks the court a quo’s favourable finding for the respondent for upending para 6 (3) (b) of the 22nd Schedule. We are satisfied that these two grounds pass muster the clear and concise test, which is set out in Kunonga v CPCA SC 25/17 paras [19]-[30] and Econet Wireless (Pvt) Ltd v Trustco Mobile (Pty) Ltd & Anor 2013 (2) ZLR 309 (S) at 318. The second preliminary point is accordingly dismissed for lack of merit.

The merits

The sole issue raised by all the grounds of appeal is whether the court a quo correctly allowed the deduction of transport costs claimed by the respondent beyond the delivery point.

In both his oral and written arguments, counsel for the appellant submitted that para 6 (3) (b) of the 22nd Schedule ought to be interpreted by reference to both the Special Mining Lease Title and the agreement as the two, though distinct, were inseparable. He urged the court not to interpret it by reference to the Special Mining Lease Title only. He advocated for the adoption of a contextual or purposive approach rather than a literalist approach to the construction of para 6 (3) (b). He argued that the purposive approach as espoused in South Africa in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at para 18, was followed in Zimbabwe in Zambezi Gas (Pvt) Ltd v NR Barber (Pvt) Ltd & Anor SC 3/20 at p 8. He submitted that applying the contextual approach to both the special mining lease title and the agreement would demonstrate the incorrectness of the court a quo’s operative judgment.

Per contra, counsel for the respondent strongly argued for the adoption of the golden rule to the construction of para 6 (3) (b). He contended that the special mining lease could not be equated to nor co-exist with the agreement, as the two documents were separate and distinct. For that reason, the terms and conditions peculiar to the agreement could not be imported into the special mining lease. As the special mining lease did not embody the definition of a “delivery point”, a literal construction of para 6 (3) (b) would not preclude the respondent from deducting the specified transport costs. The application of the literal construction was clear and unambiguous and would not result in an absurdity in the instant case. The decision of the court a quo allowing the deductions was therefore correct.

He also argued that the President’s power to issue a special mining lease was non-delegable. Such a lease could only be properly amended by the President and not by any other person or persons. Consequently, the addendum, albeit valid as between the subscribing parties, would not in the circumstances of this case, validly amend the special mining lease.

THE LAW

Case law

The resolution of the sole issue, which is derived from all the grounds of appeal requires the consideration of three statutes and three contractual documents that were executed by the respondent.

In this jurisdiction, both the golden rule and the purposive rule of interpretation are some of the many principles that are applied to, and assist the courts in the construction of statutes, contracts, wills and other documents. The choice of the applicable principle is often dictated by the overall facts and circumstances of each case. Where the text to be construed is clear and unambiguous and its construction does not lead to an absurdity, the court seized with the matter would simply apply the golden rule of interpretation. Where, however, an absurdity arises, the court is obliged to apply the contextual or purposive approach. There is no one-size fit-all approach between these two principles in the interpretation of fiscal or tax legislation.

In VFSL (Pvt) Ltd & Ors v Zimra HH 23/19 at pp 29-32, the Fiscal Appeal Court collected a retinue of cases that have made pronouncements on the use of each principle. The picture that emerges from a consideration of those cases is that it is proper for a court construing fiscal legislation to go beyond literalism and embrace the contextual approach in a bid to find the true intention of the legislature, contractants or testator. See Mxumalo & Ors v Guni 1987 (2) ZLR 1 (S) at 8C-D, Venter v R 1907 TS 910 at 914, 915, Glen Anil Development Corporation Ltd v Secretary for Inland Revenue 1975 (4) SA 715 (A) at 727G.

Mr Tivadar’s submissions resonate with the remarks made by this Court in Commissioner of Taxes v CW (Private) Limited 1989 (3) ZLR 361 (S) at 372D that:

“Generally speaking, where taxation is concerned, it has to be acknowledged that justice and equity have little significance. If the language of the statute is plain the court must give effect to it, even if the result to the taxpayer is harsh and unfair. “

The above remarks stand on the immutable words of LORD CAIRNS in Partington v The Attorney-General 21 LT 370 at 375 that:

“If the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the law the case might otherwise appear to be. In other words, if there be an equitable construction, certainly such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute.”

The golden rule was further espoused in Endeavour Foundation & Anor v Commissioner of Taxes 1995 (1) ZLR 339 (S) at p 356F:

“The general principle of interpretation is that the ordinary, plain, literal meaning of the word or expression, that is as popularly understood, is to be adopted, unless that meaning is at variance with the intention of the legislature as shown by the context, or such other indicia as the court is justified in taking into account, or creates an anomaly or otherwise produces an irrational result. See Stellenbosch Farmers’ Winery Ltd v Distillers’ Corp (SA) Ltd & Anor 1962 (1) SA 458 (A) at 476 E-F. The same notion was expressed in another way by MARGO J in Loryan (Pvt) Ltd v Solarsh Tea & Coffee (Pvt) Ltd 1984 (3) SA 834 (W) at 846G-H”

And in ZIMRA & Anor v Murowa Diamonds (Pvt) Ltd 2009 (2) ZLR 213 (S) at 218E:

“The grammatical and ordinary sense of the words is to be adhered to unless that would lead to some absurdity or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity and inconsistency, but no further – see Chegutu Municipality v Manyora 1996(1) ZLR 262(S) at p 264D-E: Madoda v Tanganda Tea  Company Ltd 1999 (1) ZLR 374(S) at p 377A-D.”

The literalist approach has been relegated to a mere starting point in the construction of statutes, contracts, wills and other documents in foreign jurisdictions. In South Africa, in Loryan (Pty) Ltd v Solarsh Tea & Coffee (Pty) Ltd 1984 (3) SA 834 (W) at 846H MARGO J cautioned against placing excessive reliance on the dictionary definition of a word or phrase in a statute, contract or will at the expense of its meaning in the particular context in the document to be construed. The caution was affirmed by the South African Appellate Division in Fundstrust (Pty) Ltd (in Liquidation) v Van Deventer 1997 (1) SA 710 (A) at 726H-727A.  The purposive approach was, however, entrenched in South Africa in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at paras [18], [19] and [27]. WALLIS JA wrote:

“[18] The present state of the law can be expressed as follows: Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument or contract having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provisions appear; the apparent purpose to which it is directed; and the material known to those responsible for its production. Where more than one meaning is possible, each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used.  To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual case it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself’, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.

[19]	…the proper approach to the interpretation of documents [is] that from the outset one considers the context and the language together, with neither predominating over the other. This is the approach that courts in South Africa should now follow,……

[26]	In resolving the problem [of ambiguous language], the apparent purpose of the provision and the context in which it occurs will be important guides to the correct interpretation. An interpretation will not be given that leads to impractical, unbusinesslike or oppressive consequences or that will stultify the broader operation of the legislation or contract under consideration.”

In England, the House of Lords also appeared to have abandoned the literalist approach advocated in Partington’s case, supra in preference to the purposive approach in W T Ramsay Ltd v Inland Revenue Commissioners [1981] 1 All ER 865 (HL) at 870-871 where LORD WILBERFORCE restated some familiar principles to construing fiscal legislation. One of them was:

"1.	A subject is only to be taxed on clear words, not on 'intendment' or on the 'equity' of an Act. Any taxing Act of Parliament is to be construed in accordance with this principle. What are 'clear words' is to be ascertained on normal principles; these do not confine the courts to literal interpretation. There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded." (my emphasis)

The underlined words resonate with the pronouncement of GRIFFITHS LJ in Peer v Hart [1993] 1 All ER 42 that:

“The days have long passed when courts adopted a strict constructionist view of interpretation which required them to adopt a literal meaning of the language. The courts now adopt a purposive approach which seeks to give effect to the true purpose of the legislation and are prepared to look at much extraneous material that bears on the background against which the legislation was enacted.”

The remarks of GRIFFITHS LJ were considered to be in tandem with Zimbabwe law by MAKARAU J, as she then was, in Sibanda & Anor v Chinemhute HH 131/2004 at p 4. Indeed, this position was affirmed in Biltrans Services (Pvt) Limited v The   Minister of Public Service Labour & Social Welfare &Ors CCZ 16/16 at pp 5-6:

“A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant. A court must not in expounding a statute be guided by a single sentence or member of a sentence.   It must look to the provisions of the whole law, and to its object and policy. See Hibbs v Winn 542 US88 (2004) at 101.”

And again, in Innscor Africa Limited & Anor v Competition & Tariff Commission SC 52/18 at p 11 thus:

“Interpreting words in their context requires the courts to pay due regard not only to the meaning assigned to the grammatical use of language but also the context, which requires consideration of the rest of the statute as well as its subject matter and its content. This position was affirmed in the case of Stellenbosch Farmers’ Winery Ltd v Distillers Corp (SA) Ltd 1962 (1) SA 458 (AD) 476, as quoted by G M Cockram, p 41 of The Interpretation of Statutes 3rd ed, as follows:

“It is the duty of the court to read the section of the Act which requires interpretation sensibly, i.e. with due regard, on the hand, to the meaning which permitted grammatical usage assigns to the words used in the section in question, and, on the other hand, to the contextual scene, which involves consideration of the language of the rest of the statute as well as the matter of the statute, its apparent scope and purpose, and, within limits, its background.”

See also Zambezi Gas Zimbabwe (Pvt) Ltd v NR Barber (Pvt) Ltd & Anor, supra, at p 8.

The relevant statutory provisions

The relevant statutory provisions for the determination of this appeal comprise ss 158 to 168 in Part IX of the Mines and Minerals Act, paras 1 to 6 of the 22nd Schedule to the Income Tax Act and ss 22, 42 to 48 of the Minerals and Marketing Corporation of Zimbabwe Act.

The Mines and Minerals Act (MMA)

S 159 prescribes the minimum requirements for eligibility to a special mining lease. The contents of the application form are set out in s 159 (2). In terms of s 160 (2) f), the applicant certifies amongst other things his ability to comply with the terms and conditions “of any special mining lease that may be granted to him and the terms and conditions of the agreement that may be concluded with him”. In terms of s 160 (4) (e) the applicant further undertakes to comply with the terms and conditions to be inserted in the special mining lease and in any agreement to be entered with him under s 167. The Board must, in terms of s 162, forward its recommendations to the Minister for onward transmission to the President.

S 163 (1) and (2) state that:

“163 Issue of special mining lease

(1) 	After considering documents submitted to him in terms of subsection (2) of section one hundred and sixty-two, the President may authorize the Minister to issue a special mining lease in accordance with the Board’s recommendations or on such other terms and conditions as the President may direct.

(2) 	Where the President has authorized him to do so, the Minister shall forthwith issue a special mining lease to the applicant, subject to sections one hundred and sixty-four and one hundred and sixty-seven, in accordance with the President’s authorization or directions. (my emphasis)

S 164 requires the Minister to issue the special mining lease for a period of up to 25 years, which may be renewed after every 10 years. The Minister is permitted to supplement the Presidential directions with his own, as long as they are consistent with the Act.

S 167 provides that:

“167 Agreement re issue of special mining lease

The Minister, with the approval of the President, may enter into an agreement, not inconsistent with this Act, with any person regarding—

(a) 	the issue of a special mining lease to that person, and the renewal of the special mining lease; and

(b)	the terms and conditions of any special mining lease that may be issued to that person; and

(c)	the liabilities and obligations of that person in terms of any special mining lease that may be issued to him, including payments by way of royalties, rents and fees; and

(d) 	any other matter connected with or incidental to any special mining lease that may be granted to that person. (my emphasis)

S 167 deals with an agreement consistent with the Mines and Minerals Act concluded by the Minister with the approval of the President. The phrase “the issue of a special mining lease to that person” in para (a) denotes the subject matter of an existing or prospective s 163 special mining lease and not the object of issuing a special mining lease under para (a). S 167 merely prescribes the contents of the agreement that would be inseparable from the special mining lease. It is not another special mining lease source provision.

ii	The Income Tax Act

The provisions relevant to the determination of this appeal under the Income Tax Act are ss 2 (1) (the definition section), 8 (1) (r), 15 (2) (ff), para 4 and 6 (3) (b) of the 22nd Schedule. They provide that:

“2 (1)“special mining lease” means a special mining lease issued under Part IX of the Mines and Minerals Act [Chapter 21:05];

“special mining lease agreement” means an agreement between the Government and the holder of a special mining lease, entered into in terms of section 167 of the Mines and Minerals Act [Chapter 21:05];

“special mining lease area” means the area covered   by a special mining lease;

“special mining lease operations” means any mining operations, or exploration operations or development operations as defined in paragraph 1 of the Twenty-Second Schedule, carried out in or in relation to a special mining lease area pursuant to the special mining lease;

8 (1)(r) 	any amount so received or accrued to the holder of a special mining lease, where the amount, in terms of the Twenty-Second Schedule, is income attributable to special mining lease operations carried out by him;

15 (2)	The deductions allowed shall be—

(ff) in respect of special mining lease operations, the allowances and deductions for which provision is made in the Twenty-Second Schedule in lieu of the allowances and deductions provided for under the other paragraphs of this subsection;”

"4.1	Subject to subsection (1) of section 16 and para 6 for the purposes of determining the taxable income of the holder of a special mining lease for a year of assessment, there shall be deducted from the income attributable to his special mining lease operations in that year the amount of any-

Expenditure and losses, other than of a capital nature, incurred in that year wholly and exclusively for the purpose of the special mining lease carried out by him.” (my emphasis).

“Limitations on allowable deductions

6 (3)  Where the holder of a special mining lease disposes of any of his chargeable minerals, he shall not be allowed any deduction under this Schedule in respect of the transportation of the minerals—

(b)	if applicable, within Zimbabwe beyond the delivery point as defined in his special mining lease.”

THE CONTRACTS

The respondent taxpayer applied for a special mining lease before concluding the agreement.  The execution of the agreement, however, predated the approval of the draft special mining lease by the President and its subsequent issuance by the Minister of Mines.

It was common cause that the 7 paged addendum in the appeal record comprised the odd page numbers and not the even page numbers. In exchanges with the Court, both counsel were unable to answer the question as to whether the addendum had retrospective effect. The question arose from the penultimate sentence in the court a quo’s reasons for judgment. The court a quo stated that:

“The parties to the addendum cannot usurp the statutory powers of the President by purportedly entering into an agreement which operates retrospectively.”

This Court is entitled to make reference to its own records and proceedings and to take note of their contents. See Mhungu v Mtindi 1986 (2) ZLR 171 (S) at 173A. It was in this spirit that, after judgment had been reserved, the Court mero motu and without reference to the parties called for the original record of proceedings from the court a quo.  We were able to relate to the even page numbers that were missing in the appeal record. Contrary to the contentions of counsel, clause 4 of the addendum, which deals with the retrospective effect of the addendum is not only relevant but is also decisive to the resolution of this appeal.

A sub-issue upon which the determination of this appeal stands concerns the relationship between the Special Mining Lease Title, on the one hand and the agreement, the CSA and the addendum on the other.  The appellant contended that these two sets of documents were inseparable. The respondent made the contrary contention that they were separate and distinct.

The relationship between the agreement, CSA and addendum

It is common cause that the agreement, CSA and addendum constitute one document. This is apparent from the concentric structure of these documents. That is, they are documents within documents. In the definition clause (clause 2) “agreement” denotes “this agreement with the schedules hereto”, CSA means the CSA to be entered into between RPM and Unki annexed hereto as Schedule1”, MMCZ and MMCZ Act, Payable Metals denote metals, namely platinum, palladium, rhodium, iridium, ruthenium, gold, nickel, copper and cobalt whose selling price is determined in terms of the CSA.

Clause 12.1 of the agreement provides that Unki shall be entitled to sell concentrate in terms of the CSA and will be exempted from the provisions of s 46 of the MMCZ Act, which prescribe annual renewals during the duration of the agreement. Clause 12.2 prescribes that the Government had already procured the approval in writing of the terms and conditions of the CSA from the central bank, MMCZ and the Ministry of Mines.

Clause 26 of the agreement embodies the sole agreement, non-variation, amendment, non-waiver, and good faith and best endeavours clauses. Similar clauses are contained in clause 20 of the CSA.

The CSA identifies the parties as RPM, the respondent and MMCZ. It complies with the sole marketing and selling mandate accorded to MMCZ by s 42 of the MMCZ Act. The definition clause defines concentrate as the product produced from the crushing and floatation of rock and ore containing payable metal. It also defines delivery month as the cost month when concentrate is delivered to the producer in terms of clause 7, MMCZ Act. The Parties, payable metals, the Producer, Purchaser and Selling agent and refinery are also defined. Clause 4.2 stipulates that the CSA a has a ten-year duration. Clause 6 prescribes a delivery monthly plan, which would be furnished by the producer and selling agent to the purchaser.

The original delivery of concentrate clause (clause 7.1) stipulated that:

“The Producer and Selling Agent shall be responsible for arranging the delivery of Concentrate by road transport agreed by the Parties to the Smelter and the costs of such transport shall be paid by the Producer and the Selling Agent. The point of delivery for each load of Concentrate shall be the receiving facility at the Smelter for the purposes of evaluating the Concentrate delivered.”

It was deleted and substituted on 18 May 2011, with retrospective effect to the date on which the original CSA took effect. In this regard, clause 4 of the addendum; together with clause 5 state that:

“4: EFFECTIVE DATE

This addendum shall be deemed to have taken effect on the Commencement Date as defined in the Agreement.

5. OTHER PROVISIONS

The balance of the provisions of the Agreement shall remain unamended and of full force and effect.”

The substitute clause states that:

“The Producer and the Selling Agent shall be responsible for arranging the transport of delivered Concentrate by road transport agreed to by the Parties to the Smelter and the costs of such transport shall be paid by the Producer. The point of delivery for each load of Concentrate shall be at the boundary of the Mine. The evaluation point of the load of Concentrate shall be the receiving facility at the Smelter.”

The original Clause 12 stipulated that:

“Risk in and ownership of the Concentrate shall remain with the Producer until delivery of the Concentrate to the Purchaser. On discharge of the Concentrate at the delivery point, risk and ownership of the Concentrate shall pass to the Purchaser.”

And the substitute clause 12 reads as follows:

“Ownership of and risk in the Concentrate shall remain with the Producer until delivery of the Concentrate to the Purchaser in accordance with clause 7, namely at the exit point of the Mine. At the exit point of the Mine ownership of and risk in the Concentrate shall pass to the Purchaser.

Lastly clause 22 of the CSA contemplates the future amendment of the “documentation and procedures” of the CSA.

The symbiotic or concentric relationship between the Special Mining Lease and the Agreement

It is necessary to set out the clauses in each agreement, which connect them to each other.

The Special Mining Lease Title

It certifies that it is issued under and subject to Part IX of the Mines and Minerals Act to the respondent. It delineates the mining district to which it relates and the principal and derivative minerals to be mined on the 15 639.22 hectares mining location. The mining area was gazetted on 28 March 2008. The draft was signed by the Minister of Mines on 19 August 2009. It was submitted to the President-in-Cabinet on 31 August 2009 wherein the President was requested to authorize the issuance of the s 163 (1) of the MMA special mining lease. On 5 October 2009, the President authorised the issuance of the Special Mining Lease Title. The Minister of Mines issued it on 14 October 2009.

The procedure for issuing a special mining licence is prescribed in Part IX of the MMA. It may be summarized as follows. The prospective Special Mining Lease holder submits an application to the mining commissioner. The application must comply with the provisions of s 159 (1) and (2). The applicant certifies, in terms of subs (2) (f) and (4) (e) of s 160 that it “is able and willing to comply with the terms and conditions of any special mining lease that may be granted to him and of any agreement that may be concluded with him in terms of section one hundred and sixty-seven”.

The mining commissioner scrutinizes the application for compliance and submits it with his or her recommendations to the mining affairs board. The board considers the application and in terms of s 162 (2) forwards it together with its own recommendations, to the Minister of Mines for onward transmission to the President. The Minister then submits these documents, together with his own recommendations to the President for his consideration. The President, in the exercise of his discretion, “may authorize the Minister to issue a special mining lease in accordance with the Board’s recommendations or on such other terms and conditions as the President may direct.” The Minister then issues “the special mining lease, to the applicant, subject to sections one hundred and sixty-four and one hundred and sixty-seven, in accordance with the President’s authorization or directions.”

THE AGREEMENT

“2.	INTERPRETATION

2.2	The expressions set forth below shall bear the following meanings:

“Mining Area”	the area covered by the Special Mining Lease

Mining Operations	all operations to be undertaken by or on behalf of Unki relating to the searching for, winning, exploitation and processing (including refining and smelting) of Platinum Group of Metals on the Mining Area…

Special Mining Lease	the special mining lease, for which application has been made by Southridge and Unki in terms of s 159 of the Act.

Tax Year	a year of assessment as defined in the Income Tax Act

2.8	Words and expressions defined in any applicable legislation shall when used in this agreement bear the meanings ascribed in such legislation…

3. INTRODUCTION

3.2	Southridge and Unki wish to obtain a Special Mining Lease in respect of the Mining Area upon the terms and conditions contained in this Agreement.

3.4	Government wishes to encourage efficient mining operations in accordance with good international mining industry practice upon terms and conditions which will secure significant financial and other benefits for the people of Zimbabwe as well as an appropriate return on investment for Unki or any holder in connection with the mining operations having regard to the investment involved.

3.5 	Accordingly, Government is prepared, subject to the approval of the President, to enter into this Agreement in accordance with the provisions of s 167 of the Act.

4. 	CONDITIONS PRECEDENT

The provisions of this Agreement are subject to:

4.1	the approval of the President being obtained  thereto and

4.2	the issue of the Special Mining Lease to Southridge and Unki

By not later than 27 March 2008 (or such later date as Southridge and Unki may, by written notice to the Minister of Mines, agree), failing which this Agreement shall lapse and be of no force or effect.”

5:	ISSUE OF THE SPECIAL MINING LEASE

Subject to compliance by Southridge and Unki with the applicable provisions of the Act in regard thereto, the Minister of Mines shall issue the SML to Southridge and Unki by not later than the date specified in 4,

6:   SPECIAL MINING LEASE

6.1	Subject to compliance by Southridge and Unki with the applicable provisions of the Act in regard thereto, the Minister of Mines shall issue or procure the issue of the Special Mining Licence to Southridge and Unki by no later than the date referred to in 4.

26	GENERAL

26.4	The Parties undertake at all times to do such things, to perform all such acts and to take all such steps and to procure the doing of all such things, the performance of all such actions and the taking of all such steps as may be open to them and necessary for or incidental to the putting into effect or maintenance of the terms, conditions and import of this agreement.” [good faith best endeavours clause]

The CSA also makes reference to the Special Mining Lease under the Payment clause in subclause 10.1, which reads:

“10.1  Payment for Concentrate delivered to the Purchaser in any Cost Month shall be made in US$ by Purchaser by electronic fund transfer or cheque on the last day of the fourth Cost Month following the Delivery Month into a bank account as provided for in the Special Mining Lease to be concluded between  the Government of Zimbabwe and the Producer, as amended from time to time with the consent of the Purchaser.

RESOLUTION OF THE APPEAL

In upholding the respondent’s appeal, at p 7 of its judgment, the court a quo reasoned thus:

“In essence, the basis of the disallowance and the issuance of Amended Assessments is premised on the contents of the addendum to the concentrate sale agreement.  In other words, the respondent contends that the addendum in 2011, to which the President was not a party – had an impact on the terms of the special mining lease approved by the President in 2009.  This approach is in conflict with express Presidential oversight of issuing special mining leases.  The power to issue the Special Mining Lease is the province of the President – section 163, supra.  The power to enter into an agreement in connection with the issue of special mining lease and the renewal of a special mining lease is the domain of Minister (with the approval of the President).  The Minerals Marketing Corporation is a creature of statute i.e. the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04].  Its functions and powers are clearly set out in sections 20 and 21 of the enabling Act.  These functions and powers do not extend to the amendment or variation of special mining leases issued by the President or special mining lease agreements entered into by the Minister with the approval of the President.  The powers and functions of the Corporation are in connection with the sole marketing and selling of minerals, they have nothing to do with the issuance of special mining leases and conclusion of agreements in respect of special mining leases.  The purported amendment of the special mining lease or special mining lease agreement by the “Addendum to the concentrate sale” is a nullity.  The respondent cannot base its case on such an illegal act.  The President could not have considered the import of a subsequent amendment when approving the special mining lease.  The parties to the addendum cannot usurp the statutory powers of the President by purportedly entering into an agreement which operates retrospectively.  In the circumstances concentrate transport costs have to be allowed for tax purposes.” (my emphasis)

A proper contextual construction of Part IX of the Mines and Minerals Act, demonstrates that a special mining lease can only be issued in terms of s 163 (1) and (2). As framed, s 167 (a) does not constitute a special mining lease issuing provision. The subject matter under s 167 is an additional agreement to an existing special mining lease, which may be entered into between the Government and the holder of the special mining lease. The remaining paras (b) to (d) thereof prescribe the embodiment of the terms and conditions of the special mining lease, the liabilities and obligations of the holder or prospective holder and any other matters connected with or incidental to the special mining lease, in such an agreement.

It will also be recalled that s 163 (2) prescribes that a special mining licence issued by the minister under the authority of the President must not only comply with the provisions of the Mines and Minerals Act but must also be subject to the provisions of inter alia s 167. The import of s 163 (2) is that the terms and conditions of the special mining licence and the liabilities and obligations of the holder thereof, which are embodied in the s 167 agreement are incorporated by reference into the special mining lease. In other words, the s 167 agreement is by operation of law part and parcel or an extension of the special mining lease. This symbiotic or concentric relationship or connection between the special mining lease and the s 167 agreement is also underscored by the express wording of subs (2) (f) and (4) (e) of s 160, supra. It is further reinforced by the parties, inter alia, in clauses 3.2 and 4.2 of the agreement which stipulate:

“3.2	Southridge and Unki wish to obtain a Special Mining Lease in respect of the Mining Area upon the terms and conditions contained in this Agreement.”

“4.2	 The provisions of this Agreement are subject

to:

‘The issue of the Special Mining Lease to   Southridge and Unki;’”

We agree with both Mr Magwaliba and Mr Tivadar that the provisions of para 6 (3) of the 22nd Schedule are invoked by the definition of the delivery point in the special mining lease. A special mining lease is defined in the Income Tax Act by reference to the definition in the Mines and Minerals Act. S 5 (1) of the latter Act defines it as follows:

““special mining lease” means a special mining lease issued under Part IX or the area covered by such a special mining lease, as the context may require”.

A special mining lease, therefore, relates to both the document and the area covered by the document.

It is clear from a proper reading of the Mines and Minerals Act and the agreement that the special mining lease and the agreement are, at best, one and the same document and at worst, an integral part of each other. The same concentric relationship that characterizes these two documents also pertains to the agreement and the CSA. Like the special mining lease, the agreement also received the President’s approval. The agreement, through clause 7.1 of the original CSA, defined the “point of delivery” as the “receiving facility at the Smelter” situated in Polokwane, in South Africa. It was, therefore, remiss of the court a quo to find that the original CSA did not define the delivery point. Mr Tivadar advanced three reasons why the definition of delivery point in the addendum could not be applied to the agreement. The first was that it was executed some 19 months after the agreement came into effect. The second was that the President did not authorize its execution. The third was that it was presumptuous of the parties to usurp the President’s authority.

It was common cause that the original CSA was approved by the President. Clause 20.3 thereof, presaged its own amendment by the authorized signatories. The power to amend such an agreement by the authorized signatories is also provided by s 44 (2) (d) of the Minerals Marketing Corporation of Zimbabwe Act. In their wisdom, the authorized signatories, who included the respondent’s very own representative, gave the addendum retrospective effect. We agree with Mr Magwaliba that, firstly, the amendments wrought by the addendum, thus received the President’s assent in advance. Secondly, its execution did not constitute an illegality or a usurpation of the President’s powers. Thirdly, clause 4 thereof, had retrospective effect to the commencement date of the original CSA, which incidentally coincided with the commencement date of the agreement. Fourthly, the commencement date in question predated the relevant tax years to which the amended assessments related.

In our view, this was a proper case for the court a quo to invoke the contextual or purposive approach and not the literal approach to the construction of para 6 (3) of the 22nd Schedule to the Income Tax Act.  Had it done so; it would have found that the “delivery point” for the transportation of the concentrate was defined in the special mining lease. It would, in those circumstances, have dismissed the respondent’s appeal.

In view of the above finding, it is not necessary for us to determine the second ground of appeal.

We are satisfied that the first and third grounds of appeal are meritorious, and would uphold them.

COSTS

The costs of appeal must follow the cause.

The appellant sought the vacation and substitution of the court a quo’s operative judgment with a dismissal with costs. S 65 (12) of the Income Tax Act provides as follows:

“(12)The High Court or the Special Court to which an appeal is made under this section shall not make any order as to costs save when the claim of the Commissioner is held to be unreasonable or the grounds of appeal therefrom to be frivolous.”

The appellant failed to establish nor do we find that the respondent’s grounds of appeal a quo were frivolous.

Accordingly, no order as to costs will be made in the substitutory order.

DISPOSITION

A proper reading of the relevant provisions of Part IX of the Mines and Minerals Act [Chapter 21:05] and the s 167 agreement, especially clauses 3.2 and 4.2, shows that the special mining lease issued by the Minister of Mines with the approval of the President and the s 167 agreement in question were inseparable documents. The intention of the Legislature in promulgating para 6 (3) of the 22nd Schedule to the Income Tax Act would best be discerned by the application of the purposive rather than the literal approach to interpretation.

In the circumstances, the following order will issue.

The appeal be and is hereby allowed with costs.

The judgment of the court a quo is set aside and substituted with the following:

“The appeal be and is hereby dismissed with no order as to costs.”

BHUNU JA			:		I agree

MATHONSI	JA		:		I agree

Gill, Godlonton & Gerrans, appellant’s legal practitioners

Zimbabwe Revenue Authority, legal services division for the respondent