Gaga saga: the South African case

Remnants of Empire?

Introduction and summary by Andrew Malcolm

In 1991 the Commissioner of the South African Inland Revenue Service (Cape Town branch) wrote to OUP(SA) that he had come to the conclusion that OUP(SA) 'is not engaged in charitable or educational activities in the Republic of South Africa' and that it was 'merely carrying on the business of a dealer in books, acts as a publisher and receives interest'. He ruled that OUP(SA), like its marketplace rivals, would be subject to taxation, from the 1993 year of assessment.

OUP(SA) applied to have this ruling overturned, by way of a notice of motion to the Cape of Good Hope Provincial Division, and on 31 March 1994, the case came before Berman J. (57 SATC 231 - link below), who ruled in favour of the Commissioner, pointing out that under OUP's argument - that it should be exempt simply because (it claimed) its profits went back to a UK educational charity, the University - it would not matter whether their money came from selling mass-market thrillers, investing on the stock exchange, or running a franchise of Kentucky Fried Chicken.

OUP(SA) appealed against Berman J's ruling and in November 1995 the appeal came before a panel of five judges led by the South African Chief Justice, Michael McGregor Corbett, a Trinity Hall Cambridge man (and Honorary Fellow), who quickly reversed Berman's ruling, though with little reference to his reasoning. Corbett's long, windy judgment boils down to the single barmy point that Oxford University is (of course) an educational institution and therefore wherever and however it makes its money it should (of course) go untaxed. Given that his ruling would by implication apply also to the South African operations of Cambridge University Press, his very presence on the panel was arguably improper. The other four judges concurred without adding a single word.

At the time of his judgment, Chief Justice Corbett was aged 72. He retired just a few months later. His Who's Who entry is linked below.

Legal hair-splitting aside, just ponder for a moment, fair-minded readers, the whole magnificent obscenity of the poor, starving University of Oxford (see Sunday Times, 16/11/97) claiming to be an educational charity so as to bamboozle all those over-privileged kids in Soweto out of their schoolbook allowances. Once again, the OED will presumably have to be revising its entry for 'charity'. And for 'shame'.

Click for the two main SATC charity cases cited by Berman J (headnotes and summaries only):
SA ITC1262 (1977)
Exemption - Meaning of 'educational institutions' as used in s10(1)(f) of the Income Tax Act 58 of 1962 - Limited company promoting student travel not an 'educational institution', therefore liable to tax .
and SA ITC1376 (1983)
Requisites to fall within exempting provisions of s10(1)(f) - Society devoted its income to subsidising educational institution in foreign country - society exercised control over institution without participating in administration thereof - Society held exempt from tax

Click for the 1995 58 SATC 45 also cited as [1996] 1 All SA 287(A) OUP(SA)'s Appeal Court judgment Berman J's judgment (above) set aside by South African Chief Justice (includes Corbett CJ's Who's Who entry).

Click for the Corbett CJ's Who's Who entry as a separate file.