The Republic of South Africa
THE SUPREME COURT OF APPEAL
reportable
case no: 472/98
In the matter between:
COMSHIPCO SHIFFAHRTSAGENTUR GmbH
Appellant
and
THE COMMISSIONER FOR SOUTH AFRICAN
REVENUE SERVICE
Respondent
Coram: Vivier, Olivier, Streicher, Zulman, JJ A and Mpati, A J A
Heard: 29 November 2000
Delivered: 19 March 2001
Summary
Address commission paid by a disponent owner of a ship to the charterer is not expenditure for the
purposes of section 11 bis (4) (f) of the income Tax Act 58 of 1962 as amended.
J U D G M E N T

STREICHER JA:
[1] I agree with Olivier JA that the so-called address commissions to which the
charterers were entitled in terms of the relevant charterparties did not constitute
marketing expenditure which entitled the appellant to a marketing allowance in terms
of s 11bis of the Income Tax Act 58 of 1962.
[2] In terms of s 11bis(2) an exporter who has during the year of assessment
incurred marketing expenditure (determined as provided in s 11bis(4)) is allowed
to deduct from his income a marketing allowance determined as provided in s
11bis(3). S 11bis(4)(f) provides as follows:
“(4)   For the purposes of subsection (3) the marketing expenditure on which
the marketing allowance is to be calculated shall be so much of the
expenditure incurred by the exporter during the year of assessment and
allowed to be deducted from his income under sections 11 and 17 as is
proved to the satisfaction of the Commissioner to have been incurred
directly-
. . .
(f)
in respect of commission or other remuneration for orders for
goods exported to any export country. . .and, in the case of an
exporter who carries on any trade defined or recognized under

subsection (4B) as an export service industry, any commission
or other remuneration for orders for services or goods obtained
in the course of such trade from persons based in an export
country;”
[3] It is common cause between the parties that the appellant does business in
Durban and that it is an “exporter” carrying on a trade, namely that of a charterer
of ships, “recognized as an export service industry” within the meaning of those
words in the section. It follows that in order for the address commissions to qualify
as marketing expenditure on which a marketing allowance could be calculated they
had to be  expenditures which had been incurred “directly” in respect of “any
commission or other remuneration for orders for services or goods obtained in the
course of” the trade of the appellant, within the meaning of those words in s
11bis(4)(f). Whether that was the case is the issue to be decided in this appeal.
[4] At all material times the appellant’s mode of carrying on business was to
charter ships in and to charter  ships out. Both charters in and charters out by the
appellant were either time or voyage charters. In the case of a time as well as a

voyage charter the services of the vessel were made available to the charterer, but
possession of the vessel and employment of the master and the crew remained with
the owner of the vessel.
[5] In terms of the relevant charterparties between the appellant and the
charterers an address commission was payable by the appellant to the charterers.
The appellant tendered evidence as to what an address commission was. According
to this evidence, historically, vessels were addressed to the master of the vessel or
an agent at the port of loading or discharging and an amount of money was
provided by the owner to the master or to the agent for whatever services were
required in respect of  the ship in a port, for example services required for getting
the ship in and out of the port and for the loading and the discharging of the cargo.
That is the origin of the expression “address commission”. At present, according
to the evidence, when a ship is chartered, it is the charterer who has to render the
service of providing the cargo for the vessel and who has to ensure that the vessel
gets into the port, loads and gets out quickly.  In most cases the charterer requires

an address commission to be paid by the person from whom he charters the ship
in respect of the provision of such services.  In short an address commission is,
according to the evidence tendered by the appellant, a commission payable for the
provision of services in respect of a ship. However, the address commission is not
actually paid to the charterer, it is deducted from the hire at the time the hire is paid.
[6] The standard form of charterparty approved by the New York Produce
Exchange is the form most commonly used by the appellant.  In terms of clause 2
of one such charterparty referred to in the evidence the charterer is obliged to pay
for all “Port Charges, Compulsory Pilotages, Canal Dues, Agencies, Commission,
Consular Charges (except those pertaining to the Crew), and all other usual
expenses except those before stated . . . ”.In terms of clause 8 thereof the
charterers “are to load, stow, trim, secure and discharge the cargo at their expense
under the supervision and responsibility of the Captain, . . .” .Clause 28 thereof
provides as follows: “An address commission of 2½ per cent payable to Charterers
on the hire earned and paid under this Charter.”

[7] On behalf of the appellant it was submitted that the payment of an address
commission was required by the relevant charterers and that it was therefore a
commission paid for an order for services (being the agreement to charter a ship)
as required by s 11bis (4)(f). It was suggested to counsel for the appellant that if
the address commissions were not commissions they could nevertheless qualify as
remuneration. However, counsel persisted in his argument that they were
commissions.
[8] In my view it cannot be said that the address commissions were
commissions or remuneration for the orders received from the charterers. In
Commissioner for Inland Revenue v Wandrag Asbestos (Pty) Ltd 1995 (2) SA 197
(A) this court had to decide whether what was called a “selling commission”,
payable by  Wandrag Asbestos (Pty) Ltd (‘Wandrag’) to Griqualand Exploration
and Finance Co Ltd (‘Gefco’), in clause 4(a) of an agreement which spoke of a sale
of asbestos by Wandrag to Gefco, was a commission within the meaning of that
word in s 11 bis(4)(f). Corbett CJ said at 214B-D:

“Turning to para (f) of s 11bis(4), I would point out that the word
‘commission’ is not a term of legal art. The relevant meaning in the Oxford
English Dictionary reads:
‘A remuneration for services or work done as agent, in the form of a
percentage on the amount involved in the transactions; a pro rata
remuneration to an agent or factor.’
In Drielsma v Manifold [1894] 3 Ch 100, at 107, Davey LJ said:
‘Commission is prima facie the payment made to an agent for agency
work, usually according to a scale - it may be an ad valorem scale,
but not necessarily an ad valorem scale, It is in my opinion the most
general word that can be used to describe the remuneration paid to an
agent for an agency work other than a salary. . .’ ”
Although Corbett CJ found it unnecessary to decide exactly how much wider the
net was spread by the words ‘other remuneration’ he did say at 214E:
“The words ‘commissions or other remuneration for orders for goods
exported to any export country’ are cryptic, but I think that their meaning is
reasonably clear. What the Legislature had in mind, in my view, was
expenditure incurred in the payment of, or an obligation to pay, commission
or other remuneration to a person for services rendered in obtaining
orders for goods which in terms of the order are exported to any export
country.” (My emphasis.)
[9] The address commissions were not payable to the charterers as agents and

it was not submitted on behalf of the appellant that they were. What was submitted
was that Corbett CJ’s judgment was a minority judgment and that the majority held
that an amount paid by Wandrag as seller to Gefco as purchaser qualified as a
commission within the meaning of that word in s 11bis(4)(f). Corbett CJ’s
judgment was a minority judgment but there is no indication in the majority
judgment that the majority disagreed with him in respect of the meaning of the word
‘commission’ or in respect of the meaning of the words “commissions or other
remuneration for orders for goods”  in s 11bis(4)(f). On the contrary, they would
seem to have agreed. It is probably for this reason that Kumbleben JA found it
necessary to hold, firstly at 206E, that if one had regard to substance rather than
form, the agreement between Wandrag and Gefco could not be said to be one of
sale, and secondly,  at 208H:
“It is true that the agreement as a whole cannot be classified as one of
agency. But, on the assumption that the selling commission in clause 4(a)
was the quid pro quo for marketing Wandrag’s asbestos and for nothing
else, one may validly regard this term of the agreement as one of agency in
the sense of a mandate given by Wandrag (the mandator) to Gefco (the
mandatory) in terms of which the latter undertook to perform the task of
procuring orders for export for the former”

[10] To me it is likewise reasonably clear that the words ‘commission or other
remuneration for orders for services or goods obtained in the course of . . . trade
from persons based in an export country’ in the second part of s 11bis(4)(f) are to
be interpreted to mean expenditure incurred in the payment of, or an obligation to
pay, commission or other remuneration to a person for services rendered in
obtaining orders for services or goods in the course of a trade recognized as an
export service industry, from persons based in an export country.
[11] The question to be decided is therefore whether the address commissions
constituted payments to persons for services rendered in obtaining the orders that
is to say for services rendered in obtaining the charterers’ agreement to charter the
ships. In my view they did not.  The charterer of a ship does not by simply placing
the order to charter the ship render a service to the owner or the disponent owner
(himself a charterer) of the ship.  If an address commission is paid simply because
of the order being placed or as an inducement to place the order and not for
services

to be rendered in respect of the ship it is in the nature of a discount and not for
services rendered in obtaining the order.
[12] In any event, the evidence establishes that the address commissions were not
agreed to simply because of the order being placed or as an inducement for the
placing of the order but were agreed to as remuneration to the charterers for
services to be rendered by them in respect of the ships chartered. However, those
services were services that were to be rendered after conclusion of the relevant
charterparties, as a result of the conclusion of the charterparties and were thus not
rendered in obtaining the charterers’ agreement to charter the ships. The fact that
the charterers required to be paid an address commission and that the charters
would probably have been lost had appellant refused to pay address commissions
does not change the nature of the services in respect of which the address
commissions were to be paid, they were still not payable for services rendered in
obtaining the charters.

[13] For these reasons I agree that the appeal should be dismissed with costs
including the costs of two counsel.
__________________
P E STREICHER JA
Vivier,   JA)
Zulman, JA)
Mpati,    JA)     concur

OLIVIER JA
[1] The issue on appeal is whether the appellant is entitled to deduct the
so-called address commission paid by it as disponent owner of ships to charterers
of these ships from its income for the years 1 October 1988  to 30 September 1992
as a marketing allowance for the purposes of section 11 bis (4) (f) of the Income Tax
Act 58 of 1962 as amended (“the Act”).
[2] The respondent (“the Commissioner”) disallowed the deduction of
the said commission.   An appeal by the taxpayer, the appellant, against such
disallowance was dismissed by the Natal Income Tax Special Court, Galgut J
presiding.   The learned judge later granted leave to the appellant to appeal the said
decision to this Court.
The background
[3] The appellant conducts business in Durban as a ship charterer.   It
is a “domestic company” for the purposes of the Act, and is liable for payment of
income tax in terms of the Act.

[4] The appellant’s business operations were described as follows by the
court a quo:
“The taxpayer’s business operations consist of the chartering in by it of
ships, and in turn by chartering them out.   When chartering in it does so by
means of time charterparties, and when chartering out by means of either
voyage or time charterparties.   Unlike charters by demise, which are
charters whereby the vessel itself is leased to the charterer and is therefore
placed in the possession and control of the charterer, voyage and time
charters are both contracts of carriage, in which the owner retains such
possession and control and in which the owner remains responsible for the
navigation and management of the vessel.
In the case of a voyage charter the carriage is on a defined voyage or series
of voyages, the owner being renumerated by the payment of freight, which
is usually fixed according to the quantity of cargo shipped.   The master and
crew remain the owner’s servants, the owner retaining possession of the
vessel through them.
A time charter is one where, for a specific period, the owner makes the
vessel available to the charterer, the consideration payable by the charterer
being fixed by way of a rate for the time concerned (the rate being called
hire, despite the fact that it is not a lease).   Once again the owner retains
possession of the vessel through its master and crew, who remain his
servants, but the charterer is entitled to determine how the ship is to be

used.   Like in the case of a voyage charter, the owner remains responsible
for the navigation and management of the vessel, something that I will return
to presently.
When a charterer in its turn charters out the vessel, as does the taxpayer, for
the purpose of chartering out it is referred to as the disponent owner.   As
such its obligations to its charterer, whether it be a voyage or a time charter,
are essentially those of an owner.   It will therefore be such a charterer out,
as disponent owner, who will be responsible, to the charterer at any rate, for
the navigation and management of the vessel.
Important to the issue in the instant appeal is the responsibility of an owner
or disponent owner for the navigation and management of the vessel.   (In
this regard any reference I make to an owner hereinafter will include a
disponent owner.)   As part of the said responsibility, and in the absence of
a provision to the contrary in the charterparty concerned, in both voyage and
time charters it is  the function and obligation of the owner towards the
charterer to arrange inter alia that the vessel gets into and out of the ports
it stops at and that the loading and unloading are done, and in these
connections to pay such disbursements as may be necessary, such as port
charges, the hire of labour, and the like.   It even includes bribes for the
purpose of getting a favourable berth.   Because these services and
payments are vital to the issue in the instant appeal, in the absence of a
better description I shall refer to them collectively as port services.
What is at issue in the instant appeal, as I said earlier, are so-called

address commissions.”
[5] Three witnesses were called by the appellant to explain to the court
a quo the nature of address commission.   The court a quo summarised its nature
and effect as follows:
“These are peculiar to the shipping industry, and have been in existence for
a few centuries.   They are commissions paid by an owner to a charterer.
When such a commission is demanded by a charterer it is because, despite
the fact that what I call the port services are the obligation of the owner, it is
the charterer who, in the interests of the owner no less than in its own
interest, as a rule
undertakes them.   The address commission is in other words paid by the
owner for the benefit of having the charterer undertake the port services for
which the owner would otherwise have been responsible.   The commission
is not reimbursive in the sense of compensating the charterer for its
expenses, firstly because it is not only for disbursements but also in part for
services rendered that it is intended to remunerate the charterer, and
secondly because to the extent that it serves to cover disbursements that the
charterer will incur, it is not intended to be an exact remuneration.   On the
contrary the amount, which is fixed in advance, is always expressed to be
a percentage of ‘the hire earned and paid’ under the charterparty, the
percentage usually being 1.25%.   The percentage is by no means fixed,

however, because in some cases, very much in the minority, the address
commission is not demanded by the charterer, and in other cases the
percentage demanded might be less or more that 1.25%.”
[6] The description by the judge a quo of the nature and ambit of
“address commission” seems to me to be in accordance with the universal
understanding of that concept.   In the Oxford English Dictionary, 2nd  ed, 1989 one
finds as one of the meanings of the word “address”, “ ... the action of directing or
dispatching (to a person or place).   Still said of ships.”  As example the following is
quoted “1882 Charter-party, ship to be addressed to Charterers or their Agents at
port of discharge, paying 3% address commission”.   See also the discussion of
“address commission” by Ackner, L J in Harmony Shipping Co.  S.A. v Saudi-
Europe Line Ltd
(The “Good Helmsman”), Court of Appeal, 1981 vol 1 Lloyd’s Law Reports 377 at
419 - 421.
[7] It appears from the exhibits before the court a quo that the address

commissions claimed by the appellant for the years in issue were provided for in
terms of the written charterparties entered into between the appellant and the various
charterers.   The charterparties were concluded on the commonly used New York
Produce Exchange form.   Clause 28 thereof provides for the address commission
and reads as follows:
“28
An address commission of 1.25% payable to charterers on
the hire earned and paid under this charter.”
[8] The peculiar character of the address commission is, therefore, that
it is paid by the “lessor” to the “lessee”.  Was this commission deductible by the
lessor from its income for taxation purposes?
The Act
[9] The appellant relies on the provisions of section 11 bis (4) (f) of the
Act.   In order to understand the provision, it is necessary to refer to its history.
[10] Section 11 bis of the Act was enacted and introduced in 1962.   It
created a deduction which was additional to the usual deductions claimable by a

taxpayer who derived income from trade.   It created an exporter’s “market
development allowance” and at that time it was intended, and so worded, to benefit
the exporter of goods only (see section 11 bis and the remarks in Secretary for
Inland Revenue v Consolidated Citrus Estates Limited 1976 (4) SA 500 (A) at 510
E - G and 517 H).
[11] In 1972, however, and by various amendments to section 11 bis,
the ambit of the section was broadened to embrace not only the export of goods, but
of certain services as well, such services being those which had to do with what the
section as amended called the “export service industry”.   For this purpose the
definition of “exporter” was supplemented to include, not only an exporter of goods,
but also any person who conducted an export service industry, and the definition of
“export trade” was supplemented to include any trade recognised by the Minister of
Finance under sub-section (4B) as an export service industry.   Sub-section (4B)
provided in turn that the Minister might by notice in the Government Gazette
recognise as an export service industry any trade carried on in the Republic if he was

satisfied that in the course of that trade income was derived in a manner calculated
to result directly in an inflow of foreign currency into the Republic.   Acting in terms
of sub-section (4B), the Minister caused Government Notice no 1184 to be published
in Government Gazette no 5208 dated 9 July 1976, and in terms thereof one of the
trades that he recognised as an export service industry for the purposes of section
11 bis was that of the “owners or charterers of ships”.
[12] It is common cause that the appellant then duly took the necessary
steps, and was registered as an exporter for the purposes of sub-section (4C).
Consequently it is not in dispute that for the tax years in question the appellant was
involved in the “export service industry” for the purposes of section 11 bis, and that
it was an exporter as defined in sub-section 11 (1) and that it would qualify for the
exporter’s marketing allowance should it meet the other requirements of the section.
[13] Section 11 bis (2) provides that the marketing allowance would be
available to exporters who have incurred the sort of marketing expenditure provided
for in paragraphs (a) to (o) of sub-section (4), and sub-section (3) provides that the

marketing allowance would be an amount equal to seventy-five percent of the
marketing expenditure.
[14] This brings me to sub-section (4) and in particular to paragraph (f)
thereof.   It reads as follows:
“(4)
For the purposes of subsection (3) the marketing expenditure
on which the marketing allowance is to be calculated shall be
so much of the expenditure incurred by the exporter during the
year of assessment and allowed to be deducted from his
income under sections 11 and 17 as is proved to the
satisfaction of the Commissioner to have been incurred
directly -
............
............
(6)
... in respect of commission or other remuneration for
orders for goods exported to any export country or the
clearing or forwarding of any such goods in such country
and, in the case of an exporter who carries on any trade
defined or recognised under subsection (4B) as an export
service industry, any commission or other remuneration
for orders for services or goods obtained in the course of
such trade from persons based in an export country.”
(My italics)
[15] This means that to qualify for the exporter’s marketing allowance, the

marketing expenditure must be proved to be:
“ ... so much of the expenditure ... as is ... incurred directly ...
in respect of ... commission or other remuneration for orders
for services ... obtained ... from persons based in an export
country.”
[16] Grammatically and logically one must insert the words “the
procurement of” after the words “commission or other remuneration for” in
subparagraph (f).   It is clear that, as in the case of the export of goods, the
legislature intended to encourage the export of services by a South African taxpayer
in order to stimulate an inflow into the Republic of foreign currency, paid by the user
of such services.   Subsection 11 bis (4B) (a) says this in so many words.
[17] It follows that the situation envisaged by the legislator which would
qualify for the benefits under section 11 bis (4) (f), is one where the provider of
services in South Africa, ie the taxpayer,  pays commission to an agent, to
remunerate the agent for procuring orders for the services of the South African
taxpayer in question, from persons based in a foreign country.

[18] Only if one reads the subsection in this way does it become
reconcilable with the other provisions of section 11 bis (4), where a marketing
allowance is recognised for expenditure incurred by the exporter for research into or
obtaining information (including the remuneration of consultants, agents or
representatives) in respect of the marketing of goods in any export country or for the
rendering of services to persons based in an export country (subparagraph (a));  in
advertising in an export country or in soliciting orders in, or participating in trade fairs
in export countries (subparagraph (b)), etc.
[19] The position is thus that subparagraph (f) envisages that the South
African exporter of a particular service employs an agent to procure orders from
users of that service in an export country.   The users pay the service provider for the
services provided;  the agent is entitled to a commission for the procurement of the
order for the services provided by the South African exporter.
[20] The words “or other remuneration” must be read in the context of the
situation described above.   It extends the concept of “commission”.   Perhaps the

intermediary who procures the orders for the exporter’s service is not an agent of
whom it can be said that he earned a commission.   He may be a broker or an
intermediary, who does not work for a commission but for another form of
remuneration, eg a salary.   Clearly it was the legislature’s intention that whether it is
commission that is paid or any other form of remuneration, the amount thus paid by
the exporter qualifies for tax deduction.
[21] I am, therefore, in respectful agreement with the view taken of the
meaning of the word “commission” in the context of section 11 bis (4) (f) by Corbett
CJ in Commissioner for Inland Revenue v Wandrag Asbestos (Pty) Ltd 1995 (2)
SA 197 (A) (“Wandrag”).   In delivering a minority judgment the learned Chief Justice
pointed out at p 214 B that the word “commission” is not a term of legal art.   He also
referred to the Oxford English Dictionary where “commission” is defined as
“A remuneration for services or work done as an agent, in the form of a
percentage on the amount involved in the transactions; a pro rata
remuneration to an agent or factor.”
[22] The learned Chief Justice dealt also with the phrase in section

11 bis (4) (f) which is also now under consideration, but in the context of the export
of goods.   He said (at 214 E) that the words “commission or other remuneration for
orders for goods exported to any export country” are cryptic, but that their meaning
is reasonably clear.   He then stated :
“What the Legislature had in mind, in my view, was expenditure incurred in
the payment of, or an obligation to pay, commission or other remuneration
to a person for services rendered in obtaining orders for goods which in
terms of the order are exported to any export country. ... A simple, but
typical, case satisfying the requirements of section 11 (bis) (4) (f) would be
where A, an exporter, has paid R 1 000 to agent B for obtaining an order in
terms of which a quantity of A’s goods are sold to a purchaser in an export
country.”
[23] Because the judgment of the learned Chief Justice was a minority
one, it is necessary to analyse the facts of the case and the ratio of the majority
judgment in order to ascertain whether the view put forward in paragraphs [17] to [20]
is correct.   The facts in Wandrag were the following:  Wandrag was a mining
concern, mining and producing asbestos at Kuruman.   Towards the end of 1967,

and in order to secure the marketing of its asbestos, Wandrag concluded a contract
with Griqualand Exploration and Finance Co Ltd (“Gefco”), which was also a producer
and seller of asbestos.   Wandrag’s aim in the contract was to make use of Gefco’s
existing facilities both for upgrading Wandrag’s product (Gefco would further fiberise
and blend it with its own fibres) and for marketing the product  overseas.   Having
blended Wandrag’s fibres with its own, Gefco would export the product to overseas
buyers acquired by Gefco through its marketing facilities.   Clause 4 (a) of the
agreement provided that Gefco was entitled to a “selling commission of 15% on the
fob price of the fibre”.   The Commissioner disputed that the 15% “commission”
constituted marketing expenditure within the meaning of that term in section 11 bis
(4) (f), because the “selling commission” so called in the contract was not a true
commission.
[24] The Commissioner argued that the contract was in reality one of
sale, and the “commission” clause was merely a mechanism to calculate the net price
to be paid by Gefco.   Wandrag argued that the contract was one of agency or,

alternatively, a joint venture.
[25] The majority held that the contract was sui generis, but that its
purpose was clear  :  Wandrag was totally dependent upon an export market but
lacked the marketing and processing facilities to obtain such a market.  The
agreement enabled Wandrag to overcome this problem.   The reciprocal benefit it
held for Gefco was that it eliminated potential competitors in the export market (at 206
G-H per Kumleben JA on behalf of the majority).
[26] The majority held that the “commission” payable by Wandrag to
Gefco was commission as envisaged in section 11 bis (4) (f).   Kumleben JA (at 208
F - H) stated as follows:
“It cannot be gainsaid that this payment was, and was intended to be,
remuneration for Gefco for such procurement through its (Gefco’s)
appointed agents and perhaps employees.   It was conceded that had
Wandrag appointed and paid its own foreign agents for this purpose, the
expenditure would have been directly incurred by Wandrag whether or not
they in turn appointed subagents who actually secured the orders.   I can see
no distinction in principle between that situation and the present in which
Gefco was commissioned and paid to undertake this task and it in turn

appointed agents who obtained the orders.   It is true that the agreement as
a whole cannot be classified as one of agency.   But, on the assumption that
the selling commission in clause 4 (a) was the quid pro quo for marketing
Wandrag’s asbestos and for nothing else, one may validly regard this term
of the agreement as one of agency in the sense of a mandate given by
Wandrag (the mandator) to Gefco (the mandatory) in terms of which the
latter undertook to perform the task of procuring orders for export for the
former.”
[27] The view taken in paragraphs [17] to [20] hereof in respect of the
interpretation of section 11 bis (4) (f) is therefore in line with the interpretation given
to it by both the majority and by the learned Chief Justice, ie that the true meaning
of “commission or other remuneration”in section 11 bis (4) (f) represents, in a case
such as the present, an amount paid by the disponent owner to an agent or broker
or other intermediary who obtains, from a third party in an export country, orders for
the services provided by the disponent owner.
[28] The question then becomes a factual one  : can it be said that in the
cases now under consideration the charterers acted as agents, brokers or some
other form of  intermediary for the appellant in the procurement of orders for the

services, provided by the appellant, by users of such services in an export
country?
[29] As was correctly pointed out by the judge a quo, address
commission is paid by the disponent owner to the charterer for the benefit of having
the charterer undertake the port services for which the owner would otherwise have
been responsible.   The “commission” is not reimbursive in the sense of
compensating the charterer for its expenses, firstly because it is not only for
disbursements made by the charterer but also in part for services rendered by it at
the port of discharge, and secondly because, to the extent that it serves to cover
disbursements that the charterer may incur, it is not an exact remuneration.
[30] In a certain sense one can describe the charterer who undertakes
and pays for the port services for which the owner would otherwise have been
responsible as the agent of the disponent owner.  Non constat that the “commission”
paid qualifies for the benefits provided by section 11 bis (4) (f) of the Act.   The
disponent owner who pays address commission to the charterer of the owner’s ship

does not pay such commission to remunerate the charterer for procuring orders for
the services of the disponent owner.   On the contrary, the commission is paid as
remuneration for port services rendered by third parties for the benefit of the
disponent owner.   This commission is not paid as a marketing expenditure incurred
for the procurement of orders for the services rendered by the taxpayer (the
disponent owner), but is an expenditure for the procurement of port services rendered
to the taxpayer.  It follows that  “address commission” does not qualify for the tax
benefits in terms of section 11 bis (4) (f) of the Act.
[31] In the result, the appeal is dismissed with costs, including the costs
of two counsel.
P J J OLIVIER  JA