IN THE HIGH COURT OF SOUTH AFRICA
(TRANSVAAL PROVINCIAL DIVISION)

Date:  2009-02-19
Case Number:  50711/08  
REPORTABLE

In the matter between:

MZILIKAZI GODFREY KHUMALO                                             First Applicant
MAWENZI RESOURCES AND FINANCE COMPANY
(PTY) LTD                                                                               Second Applicant

and

THE SOUTH AFRICAN RESERVE BANK                             First Respondent
THE MINISTER OF FINANCE                                           Second Respondent

JUDGMENT

SOUTHWOOD J

[1]	This application is concerned with the validity of a Notice of Attachment 	(‘the notice’) 	issued by a designated official of the South African 	Reserve Bank (‘SARB’) (the first respondent) in terms of Regulation 	22C(1) of the Exchange Control Regulations (‘the regulations’) made 	under section 9 of the Currency and Exchanges Act, 9 of 1933 (‘the 	Act’).  On 12 	August 2008 the SARB official issued the notice and on 	2 September 2008 it was served on the applicants.  In terms of the 	notice a large number of assets, mainly shares in companies controlled 	by the first applicant were attached, apparently with a view to declaring 	them forfeit in terms of Regulation 22B of the regulations.  The 	applicants seek to have the notice set aside.

[2]	On 29 October 2008 the applicants launched an urgent application 	seeking a declaration that the notice is invalid, an order interdicting the 	SARB from implementing or giving effect to the notice and an order 	directing that the applicants may continue to exercise their rights of 	ownership in respect of the assets pending the finalisation of the 	application for final relief:  i.e. orders declaring regulations 22B-22D 	unconstitutional and therefore invalid alternatively an order reviewing 	and setting aside the notice and ancillary relief.  After papers were filed 	the matter came before Murphy J who, in terms of section 13(1)(b) of 	the Supreme Court Act, 59 of 1959, referred the matter to a full court 	and intimated to the parties’ representatives that the full court would 	deal with the 	constitutional issues raised in the application after there 	had been compliance with Rule 16A of the Uniform Rules.  Notice was 	duly given in accordance with Rule 16A and no-one has sought to be 	admitted as animus curiae in the application.

[3]	In the founding affidavit the applicants rely on numerous grounds for 	attacking the validity of the provisions of Regulations 22B-D.  With 	specific reference to Regulation 22C(1) they contend that it is ultra 	vires and that the SARB’s reliance on the regulation was misconceived 	and that the jurisdictional facts for the regulation to be utilised were not 	present.  With regard to regulations 22B-D they contend, for many 	reasons, that the regulations are inconsistent with the Constitution and 	are therefore invalid.  The parties filed heads of argument dealing with 	all these issues but at the hearing the argument was, for the most part, 	confined to whether regulation 22C(1) is ultra vires the Act and whether 	the applicants’ application in terms of Regulation 22D would succeed 	for the reasons referred to.  Notwithstanding the formulation of the 	relief in the notice of motion and the formulation of the causa in the 	founding affidavit the parties agreed that the relevant facts are before 	this court, that there are no real disputes of fact and that if the court 	were to uphold the applicants’ contentions regarding ultra vires and/or 	the Regulation 22D review, the court should simply grant a final order 	declaring the notice invalid.  That is obviously the real relief which the 	applicants seek in this application.  In my view that is the appropriate 	course for this court to follow.  If the court were to find that the notice is 	invalid on either ground it would serve no useful purpose to grant 	interim relief – see Fourie v Olivier 1971 (3) 274 (T) at 284G-285H.

[4]	In the view I take of the matter it is not necessary to deal with any other 	argument than the ultra vires argument as I consider that it is well-	founded.  

[5]	The ultra vires argument is very simple.  Section 9 of the Act provides 	that regulations may be made inter alia for the attachment of money 	and goods and expressly provides that an attachment shall be for a 	period not exceeding 36 months (subject to a qualification not 	presently relevant).  Regulation 22C(1) provides for the attachment of 	money and goods and is silent as to whether the attachment is to be 	for a limited period.  The applicants contend that the regulation is 	therefore ultra vires and invalid.  SARB’s answer is that properly 	interpreted that is what the regulation provides:  that the attachment 	can last for no more than the period stipulated in the regulations and 	the Act.  SARB also argues that the court must read in the missing 	qualification to achieve this.  SARB did deal with the alternative 	argument in its answering affidavit and the words to be read were not 	identified.

[6]	The relevant provisions of section 9 of the Act read as follows:

		‘(1)	The Governor-General may make regulations in regard to 			any matter directly or indirectly relating to or affecting or 			having any bearing upon currency, banking or 					exchanges.

		(2)	(a)	Such regulations may provide that the Governor-				General may apply any sanctions therein set forth 				which he thinks fit to impose, whether civil or 					criminal.  

(b)	Any regulation contemplated in paragraph (a) may provide for –

(i)	the blocking, attachment and obtaining of interdicts for a period referred to in paragraph (g) by the Treasury and the forfeiture and disposal by the Treasury of any money or goods referred to or defined in the regulations or determined in terms of the regulations or any money or goods into which such money or goods have been transformed by any person, and …

			(c)	…

			(d)	…

			(e)	…

			(f)	…

(g)	The period referred to in paragraph (b)(i) shall be for a period not exceeding 36 months or such longer period –

	(i)	as ends 12 months after the final judgment 	(including on appeal, if any) in every 	prosecution for any contravention of the 	regulations or any other law in relation to 	the money or goods concerned or in which 	such money or goods are relevant to any 	aspect of such prosecution;  or

(ii)	as may be determined by a competent court in relation to the money or goods concerned on good cause shown by the Treasury.’

	Regulation 22C reads as follows:

		‘RECOVERY OF CERTAIN AMOUNTS BY TREASURY

22C(1)	When the Treasury has, under regulation 22B, forfeited to the State money or goods referred to in paragraph (a), (b) or (c) of regulation 22A(1) and such money and the proceeds of the realisation of such goods, if any, are less than amount equal to an amount –

	(a)	in respect of which a contravention or failure 	to act or omission referred to in 	subparagraph (i) of regulation 22A(1)(a) has 	been committed;

(b)	which was involved in a contravention or 	failure or act or omission referred to in 	subparagraph (ii)(aa) of that regulation;

(c)	which has been obtained by any person or 	is due to him as referred to in subparagraph 	(ii)(bb) of that regulation;

(d)	by which any person has been benefited or 	enriched as referred to in subparagraph 	(ii)(cc) of that regulation,

or when no money or goods have been for forfeited for the State under the said regulation 22B, the Treasury may recover an amount equal to the difference between the last-mentioned amount and the first-mentioned amount of money and proceeds or an amount equal to the last-mentioned amount, as the case may be –

(i)	from the person who committed the 	contravention or failure or act or omission in 	question;

(ii)	from the person who the Treasury on 	reasonable grounds suspects to have 	committed the contravention or failure or act 	or omission in question;

(iii)	from the person benefited or enriched as a 	result of the contravention or failure or act 	or omission in question;

				(iv)	if more persons have committed the 						contravention or failure or act or omission in 					question or if the Treasury on reasonable 					grounds suspects that more persons have 					committed any such contravention or failure 					or act or omission or if more persons have 					been benefited or enriched as a result of the 					contravention or failure or act or omission in 					question, separately and jointly from those 					persons,

by attaching in such manner as it may deem fit any other money, including money in a blocked account referred to in regulation 4, or other goods of the person or persons concerned.

(2)	The Treasury may, if it on reasonable grounds suspects 	that it will be necessary in due course to recover under 	subregulation (1) any amount from the person or the 	persons concerned, at any time on or after the date on 	which money or goods referred to in paragraph (a) of 	regulation 22A(1) have or could have been attached, 	issue or make an order in such manner as it may deem fit 	or by which any person is prohibited –

(a)	to withdraw or cause to be withdrawn any money held in any account or not more than an amount of it determined in its discretion by the Treasury, with due regard to the amount which in the opinion of the Treasury will in due course be recovered, or to appropriate in any manner any credit or balance in that account;

(b)	to deal in any manner as may be determined by the Treasury with any goods as may be determined by the Treasury of the person or persons concerned, 

	without the permission of the Treasury and in accordance with such conditions (if any) as may be imposed by the Treasury.  

		(3)	The provisions of –

			(a)	subregulations (1) and (3) of regulation 22B shall 				apply mutatis mutandis to any money or goods 					referred to in subregulations (1) and (2) of this 					regulation as if such money or goods were money 				or goods referred to in regulation 22A;

			(b)	subregulation (3) of regulation 22A shall apply 					mutatis mutandis to an order issued or made 					under subregulation (2) of this regulation.’

[7]	It is clear that subregulation 22C(3)(a) expressly makes the provisions 	of subregulations 22B(1) and (3) (which deal with forfeiture) applicable 	to money or goods referred to in subregulations 22C(1) and (2) and 	that subregulation 22C(3)(b) expressly makes the time limitation 	applicable to 	subregulation 22C(2) only.  Obviously the maker of the 	regulations pertinently considered the matter and there is no casus 	omissus.  	Subregulation 22C(3)(b) demonstrates a clear intention to 	exclude the operation of the time period referred to in regulation 22A(3) 	and s 9(2)(g) of the Act where an attachment is made under regulation 	22C(1).
 
[8]	Notwithstanding the intention of the Act that any attachment of 	money or goods in terms of the regulations must be of limited duration 	it is not possible to interpret regulation 22C(1) read with regulation 	22C(3) as providing for such an attachment.  The wording of the 	regulation is too clear.  In Suid-Afrikaanse Valutabeheerwetgewing 	the author, Professor Oelofse, trenchantly makes the point as follows:

‘Regulasie 22C(3)(b) vertoon ‘n ernstige gebrek.  Daarvolgens geld die beperking in reg. 22A(3) op die tydsduur van ‘n beslaglegging of “bevriesing” slegs vir geld of goed wat ingevolge reg. 22C(2) “bevries” is, maar nie vir geld of goed waarop ingevolge reg. 22C(1) beslag gelê is.  ‘n Mens het dus die uiters anomaliese situasie dat geld of goed waarop ingevolge reg. 22C(1) beslag gelê is, teoreties vir ‘n onbepaalde tydperk onder beslaglegging kan bly sonder dat dit verbeurd verklaar word.  So ‘n resultaat is egter duidelik ultra vires die magtigende wet.’

[9]	As far as ‘reading-in’ the limitation referred to in section 9(2)(g) of the 	Act is concerned SARB’s counsel did not refer to any authority for a 	reading-in in the present circumstances.  In Minister of Health v New 	Clicks SA (Pty) Ltd 2006 (2) SA 311 (CC) some members of the court 	found that some of the contentious regulations were in conflict with the 	enabling act and that they could be saved by reading in certain words 	(see e.g. paras 13 and 281) but that other regulations were not 	authorised by the enabling act and were accordingly invalid (see e.g. 	paras 416-419).  In my view the author of the regulations clearly 	intended something which was not authorised by the Act and the 	regulation is therefore ultra vires.  The notice issued under that 	regulation is accordingly invalid.

	Order

[10]	I	The notice of attachment issued by the South African Reserve 		Bank on 12 August 2008 in terms of regulation 22C(1) of the 			Exchange Control Regulations, annexure MGK1 to the founding 		affidavit, is declared to be invalid;

II	The first respondent is ordered to pay the costs of the application including the costs consequent upon the employment of two counsel.
__________________________
B.R. SOUTHWOOD
JUDGE OF THE HIGH COURT

I agree

__________________________
J.R. MURPHY
JUDGE OF THE HIGH COURT

I agree

__________________________
T.J. RAULINGA
JUDGE OF THE HIGH COURT
CASE NO:  50711/08  
HEARD ON:  11 February 2009

FOR THE APPLICANTS:  ADV. A.R. BHANA SC
             			     ADV. A. COCKRELL  

INSTRUCTED BY:  Mr D. Bernstein of Rudolph Bernstein & 				    Associates

FOR THE FIRST RESPONDENT:  ADV. G.C. PRETORIUS SC
                                                       ADV. K.W. LÜDERITZ 

INSTRUCTED BY:  Dr. D.H. Botha of Newtons Inc.

DATE OF JUDGMENT:  19 February 2009