CASE NO: 44835/08 

IN THE MATTER BETWEEN
OILWELL (PTY) LIMITED 				APPLICANT
AND
PROTEC INTERNATIONAL LIMITED 			1st RESPONDENT
PROTEC AUTO CARE LIMITED				 2nd RESPONDENT
REGISTRAR OF TRADE MARKS 			3rd RESPONDENT
JUDGMENT
PRINSLOO. J
[1] In this application, essentially for certain declaratory relief, Mr Dunn SC, assisted by Ms Joubert, appeared for the applicant and Mr Ellis SC appeared for the first and second respondents. The third respondent did not take an active part in the proceedings.
Background and Brief Synopsis
[2] The applicant, a South African company, was previously the proprietor of various trade mark registrations and applications for the mark PROTEC ("the PROTEC marks") in South Africa and abroad.
[3] During 1985, the applicant commenced manufacturing and selling auto motive engine fuel additives (such as lubricants, fuel line cleaners and oil boosters) under the trade mark PROTEC. The products were sold world-wide and, in time, various distributors were appointed in other countries. The applicant registered its PROTEC trade mark in various European countries, as well as in South Africa and the USA.
[4] In 1997, an agreement ("the 1997 Incorporation Agreement") was entered into between four individuals. They were Anthony Elgar Saville ("Saville"), Vernon Meier, Michael Robert Smith and Werner Urban. Saville and Meier were directors of the applicant and Smith and Urban were previous distributors of the PROTEC products in Europe.
It appears that Saville, at all relevant times, was resident in California in the United States of America. Meier stayed in South Africa, Smith in the United Kingdom and Urban in Germany.
[5] The underlying motive for entering into this 1997 Incorporation Agreement appears from the preamble:
"Having evaluated the world-wide marketing and sales possibilities for this product, the parties have decided to form a new joint company between them and it is their intention to pool relevant and necessary assets and resources to develop further the sales potential of this product." "The product" means the range of engine additive products referred to.
[6] The "new joint company" was duly incorporated as PROTEC International Ltd (the first respondent) and it was at all relevant times registered in Guernsey.
[7] In order to define the assets of the new joint company (the first respondent) the parties, in clause 4.1 of the 1997 Incorporation Agreement, agreed "to transfer their shareholdings in any Controlled Company (as appropriate) and shall procure that any Controlled Company shall transfer or assign their or its entire assets and business relating to the Product carried on respectively by them prior to the date of signature of this Agreement to the Joint Company". A "controlled company" is a company in which any of the parties holds a majority shareholding or exercises substantial control over its business activity or assets.
Clause 4.2 is designed to define more closely the assets which each of the parties would transfer to the new joint company. It also specifies assets which are excluded from the obligation and which do not have to be transferred.
Clause 4.2 is designed to define more closely the assets which each of the parties would transfer to the new joint company. It also specifies assets which are excluded from the obligation and which do not have to be transferred.
In the case of Smith and Urban, for example, they had to transfer "the user rights in relation to the Trade Mark pursuant to assignment of the exclusive licence previously granted in favour of MLF Knowles". They also had to transfer their shareholdings in some of the distributors of the product.
"The Trade Mark" is defined as "the trade mark 'PROTEC or colourably similar marks registered or in the course of registration in any jurisdiction or supranationally in the name of any party or any controlled company including all user rights in respect of the Trade Mark".
In the case of Saville and Meier they, for example, had to transfer "all intellectual property rights of whatsoever nature in the trade mark owned by Oilwell (Pty) Ltd" and "the distribution arrangements and all rights in the trade mark held by PROTEC USA Incorporated throughout North, Central and South America".
[8] Perhaps of some significance for purposes of this application, clause 4.3 reads as follows:
"The parties acknowledge that the matters envisaged in clause 4.2 may (as appropriate) be conditional on requisite consents and approvals being obtained from relevant national Revenue and other authorities and each agrees promptly to apply for and to use his best endeavours to obtain all such consents and approvals. However nothing herein shall require any party to effect any such transfer where this may be illegal under any applicable national law."
("Clause 4.3 of the 1997 Incorporation Agreement.")
It should be noted that these, rather cryptically described "consents and approvals", would be applied for and obtained by the four parties to the agreement. No obligation in this regard was placed on the first respondent or, for that matter, on the second respondent.
[9] Clause 11 of the 1997 Incorporation Agreement provides for the considerations due to the four gentlemen in exchange for the transfers they had undertaken to make to the joint company: Saville would get 25% of the shares of the joint company "to be held by Additive Distributors Ltd" as beneficial owner thereof, Smith would get 25%, Urban would get 25% and Meier would also get 25% "to be held by Additive Distributors Ltd as beneficial owner thereof ..." The new joint company (first respondent) would issue appropriate share certificates.

The new joint company would be financed from the reserves generated in the course of the Business which means the manufacture, purchase, marketing, promotion and sales of the Product throughout the world to be undertaken by the Joint Company.
[10] Pursuant to the 1997 Incorporation Agreement, and to give full effect thereto, the "1998 Assignment Agreement" was entered into on 4 July 1998, more than a decade before this application was launched in September 2008.
The assignment of the trade mark to the first respondent was the subject of the 1998 Assignment Agreement.
The joint "Assignor" consisted of the four gentlemen who were parties to the 1997 Incorporation Agreement as well as the applicant company, another company known as Oilwell Manufacturing (Pty) Ltd, PROTEC USA Incorporated of California and Euro-Oil Ltd of West Midlands, England.
"The Assignee" was the first respondent with registered office in St Peter Port, Guernsey. Channel Islands.
[11] The 1997 Incorporation Agreement is also mentioned, as is the intention to give effect thereto.
	[12] In the preamble it is certified that the Assignor "is the proprietor and beneficial owner of the registered trade marks particulars of which are set out in part I of the schedule hereto". It is also certified that the Assignor has applied to register trade marks set out in part II and there is a reference to community trade marks described in part III.
Part I lists no less than thirteen PROTEC marks registered in Germany, Switzerland, Austria, France, Italy, the USA, South Africa, Indonesia, Israel, the UK and Argentina. The applicant, Oilwell (Pty) Ltd, is listed as the proprietor of most of them but there are other proprietors too, including PROTEC USA Incorporated and Euro-Oil Ltd. The registration dates range from 1987 to 1995.

[13] Of the thirteen PROTEC marks, only one is a South African trade mark. The applicant is the proprietor, and the mark is "PRO TEC LOGO". The number is 87/10281 and it was registered on 15 December 1987. This is the only mark which features in the notice of motion, to which I shall refer later. The marks listed in part II are Australian and German marks with foreign proprietors and I do not consider it necessary to deal with the community trade marks mentioned in part III.
[14]    The actual assignment is described as follows:
"In pursuance to the said agreement the Assignor does hereby assign and transfer with full title guarantee all right, title and interest in the Trade Marks, including all statutory and common law rights attaching thereto and the right to sue for past infringements and to retain any damages obtained as a result of such action, to the Assignee.
The Assignor confirms that this assignment is made with the goodwill attaching to the Trade Marks and the goodwill of the business in which the Trade Marks have been used by the Assignor."
[15]    The Assignor also gives the following guarantee:
"The Assignor warrants to the Assignee as follows in respect of each of the registered Trade Marks:
1.	that all renewal fees due in respect of the registrations have been paid;

	that save in respect of the Licence the Assignor has not given any other person any permission to use any of them."
(Emphasis added.) ("The warranty in the 1998 Assignment Agreement").
[16]    The 1998 Assignment Agreement is silent on the "requisite consents and approvals" mentioned in clause 4.3 of the 1997 Incorporation Agreement.
[17] By all accounts, the 1997 Incorporation Agreement and the 1998 Assignment Agreement were duly implemented in all respects, and the first respondent, as proprietor of the trade marks continued to conduct the business for almost ten years, until, in August 2007, it assigned the trade marks to the second respondent. Until shortly before the commencement of these proceedings, the South African registration (no 1987/10281
[18] It seems that a considerable amount of enmity was generated between the applicant on the one side (in effect, Saville) and the first and second respondents before this application was launched by the applicant.
In the founding affidavit, Saville glibly, and in passing, refers to the "demise of the relationship between the applicant and the first respondent" but the deponent to the answering affidavit on behalf of the first and second respondents, Mr William Thomas Stout, a director of both the companies, is far more outspoken. He says the following:

"7.2 After the assignment of the various trade mark rights included in annexure AS4 (note: this is the 1998 Assignment Agreement) to the founding papers, Saville and his cohorts embarked on a

7. 3 Furthermore, Saville has a raft of court orders against himself personally in the United States of America and I annex hereto marked ... a bundle of such orders granted by various American courts. Saville has also repeatedly been found in contempt of court in America and has also been declared bankrupt in that jurisdiction.

[19] The "opportunistic attempt by Saville to regain intellectual property which was legitimately transferred to PROTEC" is the present application, to which I shall shortly refer in greater detail.

[21] In a replying affidavit, Saville does not dispute these allegations, but he states that the parties and their various companies have been involved in litigation regarding the PROTEC mark in many jurisdictions around the world. Some cases he won and some he lost. His conduct, held against him by the first respondent and some of the foreign courts, was the result of the fact that he still believed that he was the owner of the relevant intellectual property. Details of this "belief manifested themselves in the launching of the present application.

[22] Before turning to the relief claimed and the disputes between the parties, I point out that the jurisdiction of this court over the first respondent, a Guernsey company, and the second respondent, a United Kingdom company, has been confirmed by virtue of an attachment of shares owned by the first respondent in a company in Pinetown, and the attachment of the trade mark registration no 1987/10281 PROTEC owned by the second respondent. This was properly done on the authority of court orders issued by this court and the Durban and Coast Local Division. Nothing further turns on this.

The relief claimed, and the disputes between the parties
[23]    Briefly stated, the applicant's case amounts to the following:

	issued in terms of section 9 of the Currency and Exchanges Act, 1933 (Act no 9 of 1933) ("the Exchange Control Regulations") reads as 	follows:
	"10(1) No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury 	may impose -
    	  (a)	...
   	   (b)	...
		      (c)	enter into any transaction whereby capital or any right to capital is directly or indirectly exported 				from the Republic."
2.	The assignment of the trade marks (and, for present purposes, particularly the South African trade mark 1987/10281 PROTEC) in terms of the 1998 Assignment Agreement amounted to such a "transaction whereby capital or any right to capital was directly or indirectly exported from the Republic".
It is common cause that no permission to enter into such transaction was granted by the Treasury as intended by the requirements of regulation 10(1) prior to the transaction being entered into (or thereafter, for that matter).

	         6. 	In the result, the applicant crafted the first two prayers of the notice of motion as follows:

There is also a prayer for costs, in the event of the application being opposed.

2. The application is bad for non-joinder because some of the parties to the 1998 Assignment Agreement, who have an interest in the outcome of this application, have not been joined as parties. They include Saville, Meier, Oilwell Manufacturing (Pty) Ltd, PROTEC USA Incorporated, Urban. Smith, Euro-Oil Ltd and PROTEC International Ltd.

Mr Ellis, correctly in my view, did not press this issue any further during his address. I do not recall Mr Ellis expressly abandoning this argument, but, in my view, the initial non-joinder was adequately cured by the applicant, although belatedly, as I described.
[26] As to the defence of prescription, I, at the outset, considered that this issue had to be decided one way or the other before the merits of the case could receive attention, but I was ultimately persuaded by counsel that I would have to consider the merits, and particularly the question as to whether or not the assignment falls to be declared null and void, before the question of prescription can be properly adjudicated upon. I will revert to this issue at a later stage.
[27]    As to the merits of the application, the defence offered by the respondents is twofold:
1.	the assignment did not amount to a transaction as intended by regulation 10(l)(c), so that there was no contravention of the Exchange Control Regulations and no need to obtain Treasury permission; alternatively

Did the 1998 Assignment Agreement, entered into without prior Treasury approval.

[28]    It is convenient to quote the wording of regulation 10:
'TO(l) No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose-(a)      export from the Republic during any period of twelve months a total quantity of goods which exceeds in value R20,00 or such greater amount as the Treasury may determine, if-
(i)	no payment for such goods has been or is to be received in
the Republic from a person outside the Republic; or
			(ii)	such goods are exported at a price which is less than the
		value thereof; or
(iii) the period within which payment for such goods is to be made exceeds six months from the date of shipment from the Republic or such shorter period as an authorised dealer may determine in respect of such goods;
     (b)	take out of the Republic goods, including personal apparel, household effects, and jewellery which have a value in excess of R600,00 or 	of such greater amount as the Treasury may determine;

3.	For the purposes of this regulation Value' shall mean the value for customs purposes as defined in section 108 of the Customs Act, 1955 (no 55 of 1955)."
[29] It is also of relevance, in my view, to take note of regulation 22 which is the penalty provision:
"22. Every person who contravenes or fails to comply with any provision of these regulations, or contravenes or fails to comply with the terms of any notice, order, permission, exemption or condition made, conferred or imposed thereunder, or who obstructs any person in the execution of any power or function assigned to him by or under these regulations, or who makes any incorrect statement in any declaration made or return rendered for the purposes of these regulations (unless he proves that he did not know, and could not by the exercise of a reasonable degree of care have ascertained, that the statement was incorrect) or refuses or neglects to furnish an yinformation which he is required to furnish under these regulations, shall be guilty of an offence and liable upon conviction to a fine not exceeding R250 000,00 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment: Provided that where he is convicted of an offence against any of these regulations in relation to any security, foreign currency, gold, bank note, cheque, postal order, bill, note, debt, payment or goods, the fine which may be imposed on him shall be a fine not exceeding R250 000,00, or a sum equal to the value of the security, foreign currency, gold, bank note, postal order, bill, note, debt, payment or goods, whichever shall be greater."

[30] The regulations contain definitions for, for example, "bond", "financial assistance", "foreign currency", "gold", "goods", "money" and "security".
[31] With reference to the provisions of regulation 10(l)(c), on which the application is based, there are no definitions for "transaction", "capital" or "exported".
[32] According to submissions made by counsel for the respondents, there is no reference, anywhere in the regulations, to intellectual property. I accept the submissions to be correct.
[33] The long title of the Currency and Exchanges Act no 9 of 1933, in terms of which the regulations were promulgated, reads as follows: "To amend the law relating to legal tender, currency, exchanges and banking."
There does not appear to be a formal preamble to this Act.
What is plain, is that there is nothing in the long title which appears to remotely have a bearing on intellectual property.

I find it convenient to summarise details of this judgment by referring to the headnote, and the relevant passages from the main text as listed in the headnote.

The learned judge went on to find, at 431I-J, that an agreement in terms of which shares were issued and allotted to a person or entity outside the Republic was one whereby capital was exported, whether directly or indirectly, from the Republic and, as such, contravened regulation 10(l)(c).
I interpose to record the issue before me, does not involve the question whether the allotment of shares contravened regulation 10(l)(c). It purely involves the question whether the assignment of the trade mark by the applicant, a South African company, to the first respondent, a Guernsey company, constituted a contravention of regulation 10(l)(c). I pointed out earlier in this judgment that in terms of the 1997 Incorporation Agreement, shares in the first respondent would be allotted to the four gentlemen who were parties to the 1997 Incorporation Agreement. The shares would not emanate from South Africa or a South African company.
[35] The learned judge held further, at 430H-I and 433C, that the rights in and to the patent applications themselves had a monetary value and were thus "capital". It was also held that the net effect of the agreement was therefore the export of the rights in and to the patent applications, in contravention of regulation 10(l)(c) - at 433D-G.
[36] It was held that the agreement contravened regulation 10(l)(c) on a further basis: allied to the fourth defendant's rights in and to the patent applications was a right to receive royalties. Cession of a right to receive royalties to a foreign entity was, in itself, regarded as a transaction whereby capital, or a right to capital, was exported from the Republic - at 432D-J.
Although the 1998 Assignment Agreement makes no specific mention of royalties, it should be noted that it records that the trade mark is assigned and transferred "with full title guarantee all right, title and interest in the Trade Marks including all statutory and common law rights attaching thereto and the right to sue for past infringements and to retain any damages obtained as a result of such action, to the Assignee". The 1998 Assignment Agreement also stipulates that the assignment is made with the goodwill attaching to the trade marks and the goodwill of the business in which the trade marks have been used by the Assignor.

I interpose again to record that the dispute before me does not concern the cession or transfer of rights in and to patent applications, but only the assignment of trade marks.

[44] It was submitted on behalf of the respondents that in order to determine whether or not the assignment of a patent or a trade mark can constitute an export of capital (for the purpose of regulation 10) one must look at the rights vesting in the patentee by virtue of the patent and then assess whether any of these rights move out of the Republic (are "exported") by virtue of the agreement. It was argued that the nature and effect of a South African patent, and thus its value and consequent possible categorisation as "capital", has a bearing on the operation of section 45(1) of the Patents Act no 57 of 1978 which, under the heading "effect of patent", reads as follows:

[46] It was with this territorial concept in mind, that it was submitted on behalf of the respondents that a patent (and a trade mark) thus entitles the patentee to nothing more than the right to exclude others from a forbidden field, namely the South African market in the claimed invention or the use of the trade mark. The value of a patent is a result of the patentee's control of this forbidden field. Every issue pertaining to the patent or trade mark - from its origin to its expiry - is determined under South African law, with exclusive jurisdiction of a South African court in respect thereof. It was further argued that to the extent that the patent itself is the "capital" in question, it is clear that all rights in and to this capital exist entirely in the Republic of South Africa alone, and are incapable of being exported.
[47] A further submission in this regard was that it is not correct to assume that the assignment of a patent or a trade mark gives any foreigner control over the South African market in an invention or trade mark so that the movement of this control is effectively an export of "capital". That is because the control exists and is exercised in the Republic. The fact that a foreign entity becomes entitled to exercise rights in the Republic, does not mean that these rights have been exported. An analogy offered in this regard on behalf of the respondents was the sale of a home in South Africa to a foreigner. The purchase does not result in the export of capital. The seat of the capital, ie the home, remains in South Africa.

In the course of their argument, counsel for the applicant also emphasised what they consider to be an important distinction between the wording of regulation 10(l)(c) (already quoted) and the wording of regulation 3(l)(c).
Because regulation 3 will be referred to again later in this judgment, it is convenient to quote the whole of regulation 3(1):
"3(1) Subject to any exemption which may be granted by the Treasury or a person authorised by the Treasury, no person shall, without permission granted by the Treasury or a person authorised by the Treasury and in accordance with such conditions as the Treasury or such authorised person may impose -
	(a)	take or send out of the Republic any bank notes, gold, securities or foreign currency, or transfer any 			securities from the Republic elsewhere; or
	(b)	send, consign or deliver any bank notes, gold, securities or foreign currency to any person for the purpose 			of taking, sending or removing such bank notes, gold, securities or foreign currency out of the Republic; 			or

     (c)	make any payment to, or in favour, or on behalf of a person resident outside the Republic, or place any 			sum to the credit of such person; or
    (d)	draw or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, 		so that a right (whether actual or contingent) on the part of such person or any other person to receive a 			payment in the Republic is created or transferred as consideration -
(i)	for the receiving by such person or any other person of a payment or the acquisition by such person or any other person of property, outside the Republic; or
(ii)	for a right (whether actual or contingent) on the part of such person or any other person to receive a payment or acquire property outside the Republic; or make or receive any payment as such consideration; or
(e)	grant any financial assistance to any person in the Republic, where as security for such financial assistance, the person granting the
financial assistance in turn relies on any security, guarantee,undertaking or financial assistance, directly or indirectly furnished
by-
(i)	any person resident outside the Republic; or
(ii)	an affected person;
(f)	grant any financial assistance to any person in the Republic, where such person-
(i)	is not resident in the Republic; or
ii)	is an affected person."
[48] Regulation 3 was promulgated under the heading: "Restriction on the export of currency, gold, securities, etc, and the import of South African bank notes."
Regulation 10 was promulgated under the heading: "Restriction on export of capital."

[49] The distinction between regulation 3(l)(c), as quoted, and regulation 10(l)(c), as quoted, is. according to counsel for the applicant, that:
"It is the mere entering into the transaction, aimed at a certain consequence (ie the export of the capital from the Republic), which -unless duly consented to - becomes legally punishable. In other words, it is not necessary for the actual export to have taken place before regulation 10(l)(c) ... can be said to have been contravened."

I, with respect, consider this to be a somewhat artificial argument: the transaction prohibited in terms of regulation 10(l)(c) must still be aimed at the export of capital. I fail to see how this perceived difference in wording, such as it is, can meaningfully contribute to the decision as to whether or not the mere assignment of a trade mark constitutes a contravention of regulation 10(l)(c) if it was done without Treasury permission.

I have pointed out that intellectual property is nowhere mentioned in the regulations as a whole. "Capital" is not defined in the regulations. The long title of Act 9 of 1993 pronounces the purpose of the Act "to amend the law relating to legal tender, currency, exchanges and banking".
On a general reading of, for example, regulations 3 and 10, one is left with the impression that they are aimed at controlling the movement of currency, financial instruments, precious metals and the like within a system of authorised currency exchange. Regulation 10(l)(b) also refers to "goods, including personal apparel, household effects and jewellery". The penalty clause, regulation 22, refers to "security, foreign currency, gold, bank note, cheque, postal order, bill, note, debt, payment or goods". "Goods" is only defined as including "any immovable goods or security". I have pointed out that the regulations contain definitions for financial instruments such as "bond", "foreign currency", "gold", "money" and "security". None of these definitions or collections of instruments listed in these regulations come anywhere near dealing with intellectual property.

" 1.      geldsom wat bele is om rente te verdien ...
2. aanvanklike noodsaaklike bedrag wat in 'n handelsonderneming gesteek word wat duursame winste moet oplewer ... vermoe, geldelike besitting ... groot som geld ... in die ekonomie, goedere wat nie vir verbruik nie, maar vir produksie van ander goedere bestem is, dit wil se produktief gebruik moet word ..."
In the present context, it seems that the capital would rather relate to the business of selling additives under the protection of the trade mark than to the mere assignment of the trade mark itself.
[52] Against this background, and in the specific context of these Exchange Control Regulations, the whole range of financial instruments and currency items therein identified (to the total exclusion of intellectual property) and the long title of the empowering Act, I have come to the conclusion, and I find, that to interpret regulation 10(1 )(c) as including the assignment of a trade mark, amounts to an approach that is too expensive and broad, and, consequently, an approach that is erroneous.
[53] I am of the view that this conclusion is fortified by the existence of a rule of interpretation of statutes which dictates that where a contravention is visited by a penalty (in the present instance, in terms of regulation 22, a fine of R250 000.00 or five years imprisonment or both) the wording of the prohibition must be narrowly and strictly interpreted.

Aan hierdie sienswyse is herhaaldelik deur ons howe gevolg gegee

"Penal provisions or provisions interfering with the liberty of individuals are as a rule restrictively construed (in the case of ambiguity), in other words, in favour of the accused or individual."
[56] It was submitted to me on behalf of the respondents that there is no law which explicitly requires Treasury approval for a transfer of intellectual property rights from a South African to a foreigner as a condition of the validity of such transfer.
[57] It was also submitted on behalf of the respondents that at common law, and also in terms of the Patents Act, no 57 of 1978, and in terms of other intellectual property laws, intellectual property rights are freely transferable, also in respect of foreigners. See, for example, sections 59 and 60 of the Patents Act and sections 39 and 40 of the Trade Marks Act, no 194 of 1993.

[59] In the opposing affidavit it was also emphasised, as I already mentioned, that in the empowering statute and the regulations under discussion there is no provision requiring approval for international transfers of intellectual property rights. On behalf of the respondents it is emphasised that the regulations have no explicit reference to, or mention of intellectual property rights, even though they are quite lengthy and deal with subject-matters in great detail.

"4.3.2 Disposal of patents, copy-rights, trade marks, franchises and/or intellectual property in general
The disposal of any of the aforegoing requires prior Exchange Control approval. Applications should be supported by the agreement or contract of sale. If not evident therefrom, a clear explanation of how the values were arrived at must accompany the application."

In any event, as it was quite rightly contended on behalf of the respondents, even if it did have legal force, this requirement would not apply in respect of the assignment under debate, which preceded its "enactment" by some eight years, in view of the presumption against retrospectivity.
[61] It was also contended on behalf of the respondents that the drafters of these Exchange Control Regulations never considered intellectual property at all. It was submitted that commercial sense, in any event, suggests the contrary, namely that regulation 10(l)(c) was not intended to apply to intellectual property rights because the commercial impact of such application would obviously be restrictive of trade and industry.
[62] In view of the aforegoing, I have come to the conclusion that the applicant has failed to make out a case for its contention that the 1998 Assignment Agreement, without prior Treasury approval, constituted a contravention of regulation 10(l)(c).

The relief for rectifying the Register of Trade Marks, only involves the South African mark 87/10281, let alone the seven marks listed in part II and part III of the Assignment Agreement schedule.
It is also appropriate, in my view, to quote the wording of paragraph 8.4 of the founding affidavit:
"8.4 The applicant requires a declaratory order so that, on the strength of such an order, applications may also be made to the various relevant foreign trade mark registries to have the recordal of any purported assignment to the First or Second Respondents reversed."

[67] It appears that a question of this nature must be decided by attempting to apply the correct interpretation of the statutory prohibition.

At 261, the learned author puts it as follows:
"The question arises in this context whether the sanction imposed is a sufficient 'punishment' for non-compliance and whether the legislature also wished to provide for invalidity in the case of non-compliance. In answering this question the purpose of the legislation is to be considered as well as the mischief that the legislature wished to remedy. It needs to be asked whether the purpose of the legislation will be achieved by invalidating the action concerned or whether the imposition of the (penal) sanction will suffice in obtaining this purpose. If (the provision is couched in positive form and) no sanction is added if the requirements are not met. the provision will usually be regarded as being directory only."

In the same judgment, at 133F-H, the learned judge said the following:

'If a provision is couched in a negative form it is to be regarded as peremptory rather than as a directory mandate, but this is not conclusive.

If a provision is couched in positive language and there is no sanction added in case the requisites are not carried out, then the presumption is in favour of an intention to make the provision only directory.

"A finding of invalidity may in certain instances lead to greater inconvenience and impropriety than the prohibited act itself."

"... if, on a consideration of the scope and objects of the provision, it is found that its terms would, if strictly carried out, lead to injustice, and even fraud, and if there is no explicit statement that the act is to be void if the terms are not complied with ..."

"The question arises in this context whether the sanction imposed is a sufficient 'punishment' for non-compliance and whether the legislature also wished to provide for invalidity in the case of non-compliance."

"The Assignor warrants to the Assignee ... that the Assignor is unaware of any infringement of the registration of any of them or of any reason why any registration may be capable of being expunged from any Register of Trade Marks for any reason whatsoever ..."
To aggravate the grave injustice which, in my view, would flow from a declaration of invalidity, it appears that there is no duty on the applicant to tender any form of restitution in exchange for the return of the intellectual property - see

"Subject to any exemption which may be granted by the Treasury or a person authorised by the Treasury, no person shall, without permission granted by the Treasury or a person authorised by the Treasury and in accordance with such conditions as the Treasury or such authorised person may impose -

(e) make a loan or grant credit to any person in the Republic, or guarantee such loan or credit, where, as security for the repayment of the loan or credit, the lender or guarantor relies on any security.
guarantee or undertaking, explicit or implied, furnished by a person or personsresident outside the Republic."
Of course, contravention of this regulation is also subject to the penalty provision in regulation 22.
The issue before the learned judge was also whether or not contravention of this regulation rendered the underlying agreement null and void.

"As 'n strafbepaling of soortgelyke sanksie ten opsigte van 'n oortreding van die statutere bepaling bygevoeg word, dan ontstaan natuurlik die vraag of die wetgewer dalk volstaan het met die oplegging van die straf of sanksie dan wel daarbcnewens bedoel het dat die handeling self as nietig beskou moet word."

"Nog 'n belangrike oorweging wat hier ter sprake kom is die feit dat nietigheid soms groter ongerief en meer onwenslike gevolge ('greater inconveniences and impropriety' - soos die gewysdes dit stel) kan veroorsaak as die verbode handeling self."
KRIEK, J then applied these principles to the regulations in question generally, and to regulation 3(1 )(e) in particular. He listed a number of relevant considerations at 583A-584H. He noted that the regulations do not provide expressly that such an agreement is null and void so that its fate consequently depends upon what the legislature intended it to be. He noted that the regulation is couched in imperative terms - without the necessary permission or exemption "no person shall ... make a loan or grant credit ..." He noted the substantial nature of the penalty (in those days only RIO 000,00 or five years imprisonment or both) and pointed out that the penalty prescribed by regulation 22 applies to all contraventions of these regulations and that the offence of contravening regulation 3(1 )(e) does not appear to be one of the most serious of these contraventions. He also noted as a relevant factor that such an agreement is not altogether prohibited but can validly be concluded provided permission or exemption is granted.

The learned judge also pointed out that the object of the regulations is -
"... to control foreign exchange in the public interest, not to grant a selective moratorium to a particular class of defaulting debtors."

KRIEK, J then pointed out, from 584H-585C, that he regarded the case in question as an instance of such "greater inconveniences and impropriety" resulting from holding the agreement in question to be null and void. He concluded by holding that
"I am persuaded that in relation to regulation 3(1 )(e) 'the law is content with a penalty laid down against those who contravene it'. To hold otherwise would be 'to grant a selective moratorium to a particular class of defaulting debtors' which the legislature could not have intended to do."

With respect, I prefer the approach of KRIEK, J for the reasons mentioned.

"Subject to any exemption which may be granted by the Treasury or a person authorised by the Treasury, no person shall, without permission granted by the Treasury or a person authorised by the Treasury and in accordance with such conditions as the Treasury or such authorised person may impose -
	(a)	...
	(b)	...
          (c)    make any payment to. or in favour, or on behalf of a person resident outside the Republic, or place any 			sum to the credit of such person."
[76] The chief issue raised in the appeal was summarised as follows by the learned judge at 787D-F:

In the previous decade, these two questions had arisen in a number of actions for money claims heard in provincial divisions in the country and the resultant decisions had not all been harmonious.

About this defence, the learned judge of appeal said the following at 795F-J:

The learned judge of appeal comes to the following conclusion at 796B-C:
"I am consequently of the opinion that it is open to the Court, unfettered as it is by any decision of its own, to conclude, as I do, that the obtaining of Treasury exemption or permission in terms of regulation 3(l)(c) is neither a prerequisite to the institution of an action by the plaintiff in a case such as the present, nor does its absence constitute a valid defence to the plaintiffs claim."

"To conclude: the Courts would do better to avoid concerning themselves with the effects of Treasury permission being granted or withheld. It is not really within the province of the Courts to try to weave around the requirement, and in their attempts to do so a great deal of unnecessary hardship has been caused to plaintiffs at the expense of defaulting debtors, which was certainly not intended by the legislature, whose purpose is achieved whenever the permission is given, if at all.

Treasury permission has no bearing on the jurisdiction of a Court and, in fact, does not even constitute a defence to the action - it is merely a limitation on payment, which can be removed by the Treasury at any time, and there is no reason why the plaintiff should have to wait for this before obtaining j udgment."

Given the approach adopted by the learned judge of appeal, I cannot see how that court, had it been faced with the present dispute, would have held that the 1998 Assignment Agreement was null and void ab initio for lack of Treasury approval. In my view, Thompson teaches us that a decision in favour of validity would be the correct one.
Conclusion
[78] The decision as to whether or not the legislature intended the contravention of a statutory prohibition to lead to invalidity (voidness) of the contravening act, is often difficult to decide. This much appears from the authorities quoted earlier in this judgment.
[79] L C Steyn, Die Uitleg van Wette, 5th edition from pi92 discusses this subject under a separate heading "Nietigheid van Handeling in Stryd met Wetsbepaling verrig".
He introduces the subject as follows:
"By bepalings wat die een of ander handeling verbied of wat die wyse voorskryf waarop die een of ander handeling verrig moet word, is dit dikwels nodig om vas te stel of dit die bedoeling van die wetgewer is dat
'n handeling as nietig aangemerk moet word indien dit verrig is in stryd met die verbod, of op 'n ander wyse as die wat voorgeskryf is. Verklaar die wetgewer self uitdruklik dat so 'n handeling van nul en gener waarde is, val daar natuurlik nie verder oor die vraag te redeneer nie, maar nou gebeur dit alte dikwels dat so 'n uitdruklike verklaring nie by 'n wetsvoorskrif bygevoeg word nie. Wat is nou die posisie waar dit ontbreek?"
As I indicated, such a clear provision is also absent in the present instance.
[80] The correct approach seems to be that a court, faced with this question, must look at the merits, particular circumstances and background of each case. The well-known guidelines, which have crystallised from decided judgments and textbooks, ought to be considered and applied, or left aside, depending on what appears to be the just approach for the particular case.

That as a general proposition may be accepted, but it is not a hard and fast ruleuniversally applied. After all, what we have to get at is the intention of the legislature, and, if we are satisfied in any case that the legislature did not intend to render the Act invalid, we should not be justified in holding that it was.'

As far as any rule is concerned, you cannot safely go further than that in each case you must look at the subject-matter; consider the importance of the provision that has been disregarded and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect, decide whether the matter is what is called imperative or only directory.'

'n Volledige opsomming van hierdie oorwegings is nerens te vind nie en kan moeilik verstrek word. In die algemeen sou wel alle interpretasiereels en alle vermoedens en ander aanwysings wat van diens is by die uitleg van wette ook hier ter sake wees. As geldigheid of nietigheid sou lei tot 'n resultaat wat volgens bedoelde reels, vermoedens en aanwysings. nie deur die wetgewer beoog kon gewees het nie. sou ons geldigheid of nietigheid, na gelang van die geval, moes verwerp."
The learned author then goes on, from pp 196-202, to offer no less than thirteen guidelines and rules of interpretation which may possibly be applied.

Prescription
[83] I undertook, earlier in this judgment, to revert to the question of prescription, raised as a defence by the first and second respondents.
[84]    In argument before me, Mr Dunn, quite properly, conceded that, absent a finding of nullity, the claim must be deemed to have become prescribed.
The main thrust of his argument, if I understood it correctly, was that, where the agreement was a nullity, there was no "debt" as intended by section 11(d) of the Prescription Act, Act no 68 of 1969 that could have become prescribed.

[86] In my view, there is much to be said for the submission made by Mr Ellis, so that there is room for a finding that the claim has become prescribed in any event. However, given the concession made by Mr Dunn, and my finding that the 1998 Assignment Agreement is not null and void, I need not go further than to find, as I do, that the applicant's claim has become prescribed.
The order
[87]    I make the following order:
           1. The application is dismissed.
2. The applicant is ordered to pay the costs of the first and second respondents, which will include the costs of senior counsel.
W R C PRINSLOO 

HEARD ON: 16 NOVEMBER 2009
FOR THE APPLICANT: MR E W DUNN SC ASSISTED BY MS I JOUBERT
INSTRUCTED BY: ADAMS & ADAMS, PTA

INSTRUCTED BY: MARK W NIXON