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[2021] ZAKZDHC 13
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Maddocks N.O and Another v South African Reserve Bank and Another (D8203/2019) [2021] ZAKZDHC 13 (1 April 2021)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION : DURBAN
CASE NO: D8203/2019
In the matter
between:
JOHNINE WINSOME
ELISIE MADDOCKS N.O.
FIRST APPLICANT
AMERASAN
PILLAY
N.O.
SECOND APPLICANT
and
SOUTH AFRICAN
RESERVE BANK
FIRST RESPONDENT
NATIONAL
TREASURY
SECOND RESPONDENT
ORDER
The following order
is granted: -
1.
The following
forfeiture orders are declared null and void:
(a)
Notice 515 of
2018 which is annexure “JM6” annexed to the founding
affidavit;
(b)
Notice 527 of
2017 which is annexure “JM9” annexed to the founding
affidavit;
(c)
Notice 514 of
2018 which is annexure “JM11” annexed to the founding
affidavit.
2.
The second
respondent is directed to pay the amounts set forth in the
aforementioned forfeiture orders together with interest thereon
into
the applicants’ banking account, particulars of which are as
follows-
Name of account:
First Financial Business Rescue and Insolvency Practitioners
Bank:
Nedbank
Branch
Code: 164826
Account number:
[….].
3.
The costs of
this application shall be paid by the respondents, jointly and
severally, including the costs of two counsel where
employed.
JUDGMENT
Delivered on:
Thursday, 01 April 2021
OLSEN J
[1]
The applicants in this matter are the joint liquidators of two
companies, Sun Candle
Products (Pty) Limited and Xinming Mountain
Textile (Pty) Limited. Winding-up orders in respect of these
companies were made
by this court, provisionally on 17 February 2017
and finally on 10 March 2017. The
concursus creditorum
in
respect of each company is taken to have been established on 13
February 2017 when the applications were lodged with this court.
In each of those cases the orders were made under the Companies Act,
1973 on the application of a creditor, Pathema CC.
[2]
On 10 September 2015 (ie well before the winding-up commenced) the
South African Reserve
Bank, which is the first respondent in these
proceedings, issued “blocking orders” in respect of the
amounts standing
to the credit of each of the companies in various
South African banks. (Where I use the words “bank”
or “banks”
I mean the commercial banks at which the
accounts were held by the companies. The Reserve Bank will be
referred to as such.) Such
orders had the effect that “no
person may withdraw or cause the withdrawal of funds together with
interest thereon and/or
accrual thereto in accounts held” at
the banks. (I quote from the notifications sent to the banks.)
[3]
By notices published in the Government Gazette under the hand of a
deputy governor
of the Reserve Bank, a Mr Naidoo, after the
winding-up of the two companies had commenced, the Reserve Bank
declared the monies
in the bank accounts of the two companies which
had been blocked to be forfeited, and directed that the monies should
be disposed
of (by the banks concerned) by deposit into the national
revenue fund. For that reason, and because the liquidators want
the money back, the National Treasury is cited as the second
respondent in these proceedings.
[4]
The applicants seek orders declaring the forfeiture orders made by
the Reserve Bank
null and void and directing the National Treasury to
pay the amounts in question to the applicants in their capacities as
joint
liquidators of the companies.
[5]
The contentions of the applicants are in relevant part summarised as
follows in the
founding affidavit.
‘
I
submit:-
(a)
that by virtue of the winding-up and the
establishment of the
concursus
creditorum
on 13 February 2017, the
monies held in the bank accounts to the credit of Sun Candle and
Xinming fall into the insolvent estates
and are subject to the
provisions of s 391 and s 342 of the (old) Companies Act;
(b)
that the applicants in their capacity as
liquidators are under a statutory duty to take possession of these
assets;
(c)
that the first respondent does not have any
superior right to these funds in preference to the rights of proved
creditors …;
(d)
that the first respondent mistakenly
believes that it is not bound by the aforementioned provisions [of]
the Companies Act in that
it can act in disregard of the statutory
duties of the applicants.’
THE ORIGIN OF THE
RESERVE BANK’S POWERS
[6]
The powers which the Reserve Bank exercised (or purported to
exercise) are derived
from the
Currency and Exchanges Act 9 of 1933
and the regulations made thereunder. Little of any consequence
of the original Act remains in force besides s 9 which is
headed
“Regulations regarding Currency, Banking or the Exchanges”.
[7]
In relevant part s 9 of the Act reads as follows.
‘
(1)
The [President] 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
[President] 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-
(aa)
which are suspected by the Treasury on reasonable grounds to be
involved in an
offence or such suspected offence against any
regulation referred to in the
section, or in respect of which such offence has been committed or so
suspected to have been committed;
(bb)
which are in the possession of the offender, suspected offender or
any other person or have been
obtained by any such person or are due
to any such person and which would not have been in such possession
or so obtained or due
if such offence or suspected offence had not
been committed; or
(cc)
by which the offender, suspected offender or any other person have
been benefited or enriched
as a result of such offence or suspected
offence;
provided that, in the case of any
person other than the offender or suspected
offender …
(ii)
in general, any matter which the [President] deems necessary for the
fulfilment of the objectives and
purposes referred to in sub-paragraph (i), including the blocking,
attachment, interdicting, forfeiture
and disposal referred to in
sub-paragraph (i) by the Treasury of any other money or goods
belonging to the offender, suspected
offender or any other person in
order to recover an amount equal to the value of the money or goods
recoverable in terms of the
regulations referred to in sub-paragraph
(i), but which can for any reason not be so recovered.
(c)
Any regulation contemplated in paragraph (a) may authorise any person
who is vested
with any power or who shall fulfil any duty in terms of
the regulation, to delegate such power or assign such duty, as the
case
may be, to any other person.
…
(f)
For the purposes of this sub-section
“Treasury” means the Minister of Finance or
an officer in
the department of finance who, by virtue of the division of work in
that
department, deals with that matter on the authority of the Minister.
(g)
The period referred to in paragraph (b) (i)
shall be a period not exceeding 36 months
or such
longer period-
…
(3)
The [President] may, by any such regulations, suspend in whole or in
part this Act
or any other Act of Parliament or any other law
relating to or affecting or having any bearing upon currency, banking
or exchanges,
and any such act or law which is in conflict or
inconsistent with any such regulation shall be deemed to be suspended
in so far
as it is in conflict or inconsistent with any such
regulation.’
[8]
A neat summary of the origins of the
Currency and Exchanges Act is
to
be found in the majority judgment in
SA Reserve Bank v
Shuttleworth
2015 (5) SA 146
(CC). A perspective on the
constitutionality of the Act (and for that matter, consequentially
the regulations) is to be found
in the minority judgment of Froneman
J in
Shuttleworth
and in an article by Professor Cora Hoexter
entltled “
South African Reserve Bank v Shuttleworth:
A
Constitutional Lawyer’s Nightmare” (2016 8 CCR 333).
In the present matter there is no challenge to the constitutionality
of the Act or the regulations. It is important to note,
however, that there has not been an exercise of the power to make
a
regulation under s 9(3) of the Act suspending the statutory and other
law of this country dealing with insolvency in general,
and the
insolvency of companies in particular.
[9]
Regulation 22A permits,
inter alia
, the attachment of monies
standing to the credit of any person “in respect of which a
contravention of any provision of these
regulations has being
committed or in respect of which an act or omission has been
committed which the Treasury on reasonable grounds
suspects to
constitute any such contravention, or, in the case of such money or
any part thereof which has been deposited in any
account, an equal
amount of money which is kept in credit in that account”.
As an alternative to attachment, the Treasury
may make a blocking
order with respect to money standing to the credit of the person’s
account, such as was done in this
case. A similar blocking
order may be made in terms of Regulation 22C, with regard to any
money at all of the person concerned,
where, as I understand the
regulation, the available money in respect of which a contravention
of the regulations has been committed
falls short of the total amount
required to be blocked in order to compensate (I use the word
“compensate” loosely)
the State for the misconduct in
question.
[10]
Regulation 22B provides for the forfeiture and disposal of money
attached, or money with respect
to which blocking orders has been
made. The Treasury is empowered to “issue an order in
writing in which it forfeits
to the State” the money in
question (including any money accrued therefrom). The
regulation requires that money to
be deposited into the National
Revenue Fund.
[11]
In terms of Rule 2 of the Orders and Rules under the Exchange Control
Regulations published in
GNR.1112 of 1 December 1961, the South
African Reserve Bank is appointed by the Minister of Finance to carry
out
inter alia
the powers and functions assigned to the
Treasury under Regulations 22A, 22B and 22C.
[12]
There is no challenge in this litigation to the proposition that the
Reserve Bank had adequate
grounds to issue the blocking orders
relating to the accounts of the companies in question; or, the
intervention of insolvency
aside, adequate grounds for the making of
forfeiture orders. As the liquidators point out in their
papers, for want of knowledge
there was no basis upon which they
could challenge the existence of the requisite grounds for the
exercise of those powers.
Their case is that, liquidation
having intervened, the Reserve Bank no longer had the power to make
the forfeiture orders.
JURISDICTION
[13]
Both respondents have objected to the jurisdiction of this court.
They have seized upon
a contention made in reply by the applicants,
that they can seek relief in these proceedings otherwise than under
the
Promotion of Administrative Justice Act, No 3 of 2000
. The
respondents have protested that the decisions in this case which are
sought to be declared unlawful were made by a person
or persons, and
an organ of State, domiciled in Gauteng. I must confess to regarding
this argument with some (legal) distaste.
The remit of national
government extends to the whole of the country, and may affect the
rights and interests of a person anywhere
in the country. I do
not regard it as proper, in the light of ss 34 and 9(1) of the
Constitution, that some should have to
carry the burden, not shared
by those who reside at the seat of government, of litigating against
the state in a court other than
the one where they reside. There is
no need to say any more about that, or to consider it with reference
to any authority which
may have a bearing on the matter. The
problem is recognised in PAJA. In terms of s 1, a court will
have jurisdiction
if it is one “within whose area of
jurisdiction the administrative action occurred or the administrator
has his or her or
its principal place of administration or the party
whose rights have been affected is domiciled or ordinarily resident
or the adverse
effect of the administrative action was, is or will be
experienced”.
[14]
The respondents have contended throughout that the making of a
forfeiture order is administrative
action, and therefore reviewable
only under PAJA. As I understood the case for the applicants,
it was originally contended
that whilst the making of a forfeiture
order is ordinarily administrative action, if the power ceases to
exist, a purported exercise
of it is no longer administrative action,
but merely unlawful conduct. In my view there was no merit in
this argument, and
as I understood Mr
Moosa
SC, who appeared
for the applicants, in the end he conceded this. In these
proceedings the applicants contend that the administrative
action
taken is unlawful. That falls within the provisions of s
6(2)(f) and (i) of PAJA.
[15]
It has also been argued on behalf of the second respondent that the
forfeiture orders are valid
until and unless they are set aside, and
that in these proceedings the applicants do not claim to review the
making of the forfeiture
orders; with the result that there can be no
claim to repayment of the monies in question. In my view there
is no merit in
this argument. Whatever amendments may have been
made, or were intended to be made, to the order sought, the essence
of the
order originally sought in the notice of motion is that the
forfeiture orders should be declared null and void and set aside.
The absence of the word “review” in that order does not
seem to me to be significant at all. A request for
administrative
action to be declared null and void on the basis of
illegality and set aside is a request to review it, in the ordinary
sense of
that word.
[16]
The above aside, the position is that these companies have been
wound-up by orders of this court,
and the winding-up is taking place
under the auspices of the Master of this court. The forfeiture
order, and the consequent
transfer of the monies to the National
Revenue Fund, constitute a considerable obstacle to the performance
by the applicants of
their statutory duties as liquidators, upon the
assumption that what was done was not done in accordance with law.
I do not
think that the jurisdiction of this court with regard to
companies wound-up by this court is any different to that which would
have existed if this had been a case of sequestration under the
Insolvency Act, 1936
. Counsel have referred me in this regard to
Goode, Durrant & Murray Ltd and Another v Lawrence
1961
(4) SA 329
(W) at 331 A where the following appears.
‘
It
follows, the moment that an order for sequestration is granted, that
the Court granting the order is vested with jurisdiction
in regard to
everything that follows upon the order; all applications to Court and
the Master’s control of that estate is
absolute and even
rehabilitation must be in that forum.’
I have not been
referred to authority going any other way.
[17]
I am accordingly satisfied that this court has jurisdiction, and
perhaps indeed also upon the
basis that if it is shown that the
removal of the monies from the bank accounts was a wrong, then it was
committed here, where
access to the money was put beyond the reach of
the liquidators.
THE PRINCIPAL
ISSUE: DOES INSOLVENCY LAW APPLY AND WAS IT OFFENDED?
[18]
The argument advanced by Mr
Moosa
SC on behalf of the
applicants is that the provisions of a statute trump the provisions
of a regulation. Each counsel for
the respondents has argued
that this approach is wrong, that the provisions of insolvency law
reside side by side with the currency
regulations, that the two must
be reconciled, with the inevitable result, it is argued, that the
forfeiture orders in question
are lawful. In the result, it is
argued, the insolvent estates of the two companies must be dealt with
on the footing that
the companies have no claim to the monies which
were subject to the blocking orders at the time of the establishment
of the
concursus creditorum
.
[19]
It is argued on behalf of the applicants that the forfeiture orders
had the unlawful effect of
disturbing the
concursus creditorum
.
Reference is made to the classic formulation of the rule by Lord De
Villiers CJ in
Walker v Syfret
1911 AD 141
at 160.
‘
The
effect of a winding-up order is to establish a
concursus
creditorum
, and nothing can thereafter
be allowed to be done by any of the creditors to alter the rights of
the other creditors.’
With regard to this
formulation of the effect of a
concursus creditorum
, and with
regard to other provisions of the Companies Act which featured in
argument, Mr
Maritz
SC, who appears for the Reserve Bank, has
argued that the error perpetrated by the applicants is to regard the
Reserve Bank as a
creditor of the companies. Before dealing
with the argument, I think it is important to note that the effect of
a
concursus creditorum
is somewhat wider, and logically so;
and that the words in the judgment just quoted were not intended, and
should be not misinterpreted,
to confine the protection afforded on
insolvency to what might be called misconduct on the part of
creditors.
[20]
The following appears in the judgment of Innes J in
Walker v
Syfret
at 167.
‘
But
these are not insolvency proceedings, and we have, therefore, to
inquire whether the fact that this was a winding-up and not
a
sequestration makes any difference. The machinery provided for
the liquidation of an insolvent company is necessarily more
elaborate
than that which suffices for the distribution of a bankrupt’s
estate; and the positions of a liquidator and of
a trustee are not in
every respect identical. But the general scheme of the Statute
proceeds in each case upon the same lines.
The liquidator,
although more directly under the orders of the Court, is, like a
trustee, the only person who can deal with the
assets;
any
disposition of the property of the company, save with the sanction of
the court, is null and void;
undue
preferences may be set aside,
and the
property of the company is to be devoted to paying the creditors in
their legal order.
’
(My Emphasis)
I venture to suggest
that the concept of “disposition” which Innes J had in
mind would coincide with the definition
of the word “disposition”
as it subsequently appeared in the
Insolvency Act, 1936
.
‘”
Disposition
”
means
any transfer
or abandonment
of rights to property
and includes a sale, lease, mortgage, pledge, delivery, payment,
release, compromise, donation or any contract therefor, but does
not
include a disposition in compliance with an order of the court’.
(My Emphasis)
Nothing measurably
less than this would meet the purpose of the establishment and
protection of a
concursus creditorum
, which is one of the
foundations of insolvency law.
[21]
Save for a somewhat loose use of the word “vesting” by
the applicants, there was
no dispute between the parties in argument
that on winding-up (as opposed to sequestration) the property of the
company remains
vested in it.
(Section 361(3)
allows the court
to order that all or any part of the property of the company shall
vest in the liquidator, but that was not done
here.) On
winding-up, and prior to the appointment of a provisional liquidator,
the property of the company does not vest
in the Master. It is
deemed to be “in the custody and under the control of the
Master”. (See s 361(1) of
the Companies Act, 1973.)
Once a liquidator is appointed the property continues to vest in the
company. The liquidator’s
duties are to “proceed
forthwith to recover and reduce into possession all the assets and
property of the company”
and the liquidator is obliged to
“apply the same” in satisfaction of the costs of
winding-up, the claims of creditors
and so on. (Section 391 of
the Companies Act, 1973.)
[22]
As I understand Mr
Maritz’s
argument, the Reserve Bank
never became a creditor of the company, notwithstanding the
forfeiture orders, because those orders
generated claims against the
bank, and not against the companies. In my view that approach
is artificial and wrong.
The forfeiture contemplated by
Regulation 22(B) has two elements. The decision in favour of
forfeiture creates a right.
The mode of satisfaction of that
right, which is “seizure”, may be different from ordinary
process, but it is nevertheless
a mode of delivery, or a mode of
discharge of an obligation created by the decision that the money in
question should be forfeited
to the State.
[23]
I did not understand there to be any dispute in argument over the
proposition that the banks
owned the money placed in the blocked
accounts by the companies. The assets of the companies were the
claims against the
bank, in each case. The seizure which in
each case followed the forfeiture order did not affect the bank’s
patrimony.
That is because the forfeiture appropriated not the
banks ownership of any money, but the right of the companies in each
case to
claim what was standing to the credit of each account.
(The moneys which had been deposited in the banks by the companies
had long since lost their identities by mixing with the banks’
funds.) All that could be forfeited was the claim of
each of
the companies against each of the banks on the accounts named in the
forfeiture orders. The effect of the forfeiture
orders was that
the Reserve Bank became a creditor of each of the companies, its
claim being to the contractual right each company
had against each of
the affected banks.
[24]
It is arguable that the Reserve Bank was already a creditor at the
time of commencement of the
winding-up. The jurisdictional
facts for forfeiture under Regulation 22B(1) are the same as those
which justify an attachment,
or the issue of blocking order, under
either of Regulations 22A or 22C. Blocking orders were already in
place. Whether the
claims against the banks for the money in
question would be lost to the companies depended on a condition,
namely a decision by
the Reserve Bank that the claim should be
forfeited. It seems that on that reasoning the Reserve Bank
qualified as a creditor
with a conditional claim on the date of
winding-up. Such conditional claims are dealt with in
s 48
of
the
Insolvency Act. The
section deals with the manner of
proving such claims, and dealing with them upon fulfilment of the
condition.
[25]
It is clear that if, as the applicants’ contend, insolvency law
applies to the current
factual matrix, the position of the Reserve
Bank is quite different to the one it contends for: ie that
sequestration or winding-up
has no effect at all on its power not
only to declare a forfeit, but also to acquire property of the
insolvent person or company.
If insolvency law applies, the
liquidators were entitled to take possession of and assert the
companies’ rights to claim
the amounts standing to the credit
of the various bank accounts in which the companies had made
deposits, and to deal with the
proceeds in discharge of their duties
under s 391 of the Companies Act.
[26]
It is the contention of the applicants that, because insolvency law
must be applied, the forfeiture
orders were invalid. I do not
believe that I am called upon to endorse that proposition in full if
I should find for the
applicants. The actual appropriation of
the money – the transfer of it to the National Treasury –
would have
been in conflict with our insolvency law. The issue
as to whether, after the commencement of winding-up, the Reserve Bank
could create a claim by declaring forfeiture, and thus participate in
any distribution made by the liquidators, was not argued
before me,
and there appears to be no need to decide that issue, one way or the
other. Indeed the original notice of motion
contained a prayer
for an order that the respondents’ be directed to file any
claim or claims they may have against the companies
in winding-up
within 20 days of the date of the grant of the principal relief
sought in this application. Although that order
is no longer
sought, the implication is that there may be no dispute about the
rights of the respondents to participate in the
insolvent estates,
although that is not clear.
[27]
The question remains as to whether insolvency law must be applied.
I do not think that
the liquidators are correct in saying that the
answer to that question is to be found in what they present as a
simple proposition,
that Acts of Parliament trump regulations.
In my view one should start with the proposition that laws are to be
regarded
as a coherent whole, with the result that one does not too
easily come to the conclusion that there is an irresolvable conflict
between them which confronts the court with a stark choice. I
agree with the submission made by counsel for both respondents
that
one should look for reconciliation when one considers apparent
conflicts, but disagree that this approach gets the respondents
to
where they would like to be.
[28]
In my view the issue in this case must be approached on the same
basis as was done to resolve
the dispute between the Commissioner,
South African Revenue Services and the liquidators of
Pela Plant
(Pty) Ltd
(in liquidation)
.
The judgment of the
Supreme Court of Appeal in that case (
CSARS vs Van Der Merwe NO
2017 (3) SA 34)
endorsed the judgment of the court
a quo
in that case (this court, coram Annandale AJ). The following
extract from the judgment of Annandale AJ appears in paragraph
9 of
the judgment of the Supreme Court of Appeal.
‘
The
fundamental principle of insolvency law is that all creditors are
subject to its provisions, save in exceptional cases where
statutes
specifically provide otherwise. This fundamental principle is
given effect to in two ways. Firstly by the
creation of a
concursus creditorum
in terms of which the claims and rights of all creditors of an
insolvent company are determined as at the date of insolvency, with
the result that one creditor is not entitled to improve its position
in relation to others after the date of the
concursus
.
Secondly, by ensuring that every asset belonging to the insolvent
company is properly realised by its liquidator so that
the proceeds
can be distributed amongst the company’s creditors in the order
of preference dictated by insolvency law and
determined as at the
concursus
.
So it is then that section 391 of the old Companies Act obliges a
liquidator to recover “
all the
assets and property”
of the
insolvent company, “
all”
being a word of the widest possible import.
The purpose of the
Insolvency Act
as
recorded in the preamble thereto is “
to consolidate and
amend the law relating to insolvent persons and to their estates”
.
The aim of consolidation suggests that the
Insolvency Act is
intended
to deal comprehensively with what will happen upon insolvency.
It reflects and gives effect to the fundamental principle
of
insolvency law and contains an array of detailed provisions regarding
the ranking of claims and how security claimed in respect
of claims
must be dealt with. [Footnotes omitted; emphasis original.]’
[29]
The Commissioner sought to enforce an embargo against the liquidators
with regard to certain
goods, the property of the company, by virtue
of the provisions of the Customs and Excise Act, 91 of 1964, in the
absence of payment
of duty due in respect of that property.
[30]
In paragraphs 12 to 19 of the judgment Theron JA set out the
provisions of the Customs and Excise
Act which generated what might
be called the claims, and the security for the claims, asserted by
SARS, and then continued as follows
in paragraph 20.
‘
The
important aspect of these provisions is that they are all addressed
to the ordinary situation where goods are brought in to
the country
and attract liability to pay customs duty. They are directed at
the obligation of the importer and others liable
to pay duty, and do
not address the special situation of insolvency. That is not
surprising because that is dealt with in
the
Insolvency Act, a
general statute intended to deal with all cases of insolvency.
In brief, when one looks at the liability to pay customs duty
in the
ordinary course, one looks to the provisions of the Customs Act
alone. When insolvency intervenes one turns to the
Insolvency
Act.’
[31
]
In my view, when one examines the provisions of the
Currency and
Exchanges Act, 1933
, and more importantly the regulations promulgated
thereunder, one sees that, like the provisions of the Customs and
Excise Act
referred to in
CSARS v Van Der Merwe NO
, they do
not address the special situation of insolvency. In my view, as
was done in
CSARS v Van Der Merwe NO
, in order to determine
where, once winding-up intervened, the right resided to make claims
to the amounts standing to the credit
of the various bank accounts
one must have regard to insolvency law.
[32]
In paragraph 26 of the judgment in
CSARS v Van Der Merwe NO
it
was held that “one final reason” to reject the claims by
the Commissioner to what might be called immunity from
the insolvency
law, was the fact that his claims would feature in the order of
preference specifically provided for in the
Insolvency Act. The
Insolvency Act makes
no provision for a preference for claims which
are the product of forfeiture orders under the regulations at issue
in the matter
at hand. In my view that distinguishing feature
does not demand a different finding to the one made in
CSARS v Van
Der Merwe NO
.
[33]
My attention was drawn in argument to the fact that there are other
statutes which contain provisions
which exclude the application of
insolvency law in particular circumstances. One of those is s
10 of the Admiralty Jurisdiction
Regulation Act, 105 of 1983,
referred to in paragraph 22 of the judgment in
CSARS v Van Der
Merwe NO
. The applicants argue that it is significant that
neither the
Currency and Exchanges Act, 1933
nor the regulations
under it, contain any such provision. The argument can in my
view be developed a little further.
For the sake of
convenience, I restate s 9(3) of the Act again here.
‘
[The
President] may, by any such regulations, suspend in whole or in part
this Act or any other Act of Parliament or any other law
relating to
or affecting or having any bearing upon currency, banking or
exchanges, and any such Act or law which is in conflict
or
inconsistent with any such regulation shall be deemed to be suspended
insofar as it is in conflict or inconsistent with any
such
regulation.’
Properly construed,
this provision means that where what is sought to be done by
regulation under the
Currency and Exchanges Act may
come into
conflict with, or be inconsistent with what is to be done under any
other law (including any Act of Parliament), that
other Act or law
may be deemed to be suspended by regulation to the extent necessary
to extinguish the conflict or inconsistency
so that the regulations
may prevail. The
Currency and Exchanges Act recognises
that
regulations for the achievement of the objects contemplated by it may
very well come into conflict with or be inconsistent
with other law
ordinarily applicable. The remedy for that was left (rightly or
wrongly) to the President (originally the
Governor General) who was
empowered to declare by regulation that the other Act or law be
suspended to the extent necessary.
That could have been done
here, as was done, for instance, in the Admiralty Jurisdiction
Regulation Act. It was not done.
The fact that it was not
done supports the conclusion that in the circumstances we are
confronted with in this case, the
Currency and Exchanges Act, and
its
regulations, contemplate the application of insolvency law to
determine the rights of the parties.
[34]
The second respondent (the National Treasury) initially argued that
it was not lawful for the
court to order the payment of monies to the
liquidators out of the National Revenue Fund. That argument was
correctly abandoned.
[35]
I find for the applicants, but I should make it clear that I do not
do so upon the basis that
the intervention of the winding-up of the
companies rendered any forfeiture order at all unlawful. I do
so upon the basis
that it rendered unlawful the issue of forfeiture
orders which made it mandatory for the banks to ignore the companies’
claims,
and pay the amounts in question into the National Revenue
Fund. The question as to whether there is room for a creditor’s
claim generated by a forfeiture order made post-liquidation does not
need to be decided.
I grant the
following order, in the amended form requested by the applicants
during argument.
1.
The following
forfeiture orders are declared null and void:
(a)
Notice 515 of
2018 which is annexure “JM6” annexed to the founding
affidavit;
(b)
Notice 527 of
2017 which is annexure “JM9” annexed to the founding
affidavit;
(c)
Notice 514 of
2018 which is annexure “JM11” annexed to the founding
affidavit.
2.
The second
respondent is directed to pay the amounts set forth in the
aforementioned forfeiture orders together with interest thereon
into
the applicants’ banking account, particulars of which are as
follows-
Name of account:
First Financial Business Rescue and Insolvency Practitioners
Bank:
Nedbank
Branch
Code: 164826
Account number:
1062293010.
3.
The costs of
this application shall be paid by the respondents, jointly and
severally, including the costs of two counsel where
employed.
OLSEN J
APPEARANCES
Date of
Hearing:
Tuesday, 01 December 2020
Date of
Judgment:
Thursday, 01 April 2021
Applicants’
Counsel:
Mr OA Moosa SC with Ms D Dheoduth)
Instructed
by:
Maistry and Motsime
Applicants’
Attorneys
Suite 102, 1
st
Floor
Excel House
423 Anton Lembede
Street
Durban…KZN
(Ref:
RM/mg/M461/MAD1/0002)
(Tel:
031 - 3055059)
(Email:
???)
First Respondent’s
Counsel: Mr NGD
Maritz SC
Instructed
by:
Gildenhuys Malatji Inc.
First
Respondent’s Attorneys
Katherine
& West Building
114
West Street
Sandton
(Ref.:
A Mahomed / A Du Toit/01891626)
(Tel:
012 – 428 8835)
(Email:
adutoit@gminc.co.za
)
c/o
Woodhead Bigby Incorporated
92
Armstrong Avenue
La
Lucia…Durban…KZN
(Ref:
RCM/AL.MAT18456)
(Tel:
031 – 360 9776 / 360 9700)
(Email:
russellm@woodhead.co.za
)
Second Respondent’s
Counsel: Mr M Stubbs
Instructed
by:
State Attorney (Pretoria)
Second
Respondent’s Attorneys
Salu
Building
316
Thabo Sehume Street
Pretoria
(Ref:
G268/19/Z32 – Enquiries: Ms Z Zenani)
(Tel:
012 – 309 1575)
(Email:
TNhlanzi@justice.gov.za
Zingisa.Zenani@treasury.gov.za
c/o
State Attorney (Durban)
6
th
Floor, Metropolitan Life Building
391
Anton Lembede Street
Durban…KZN
(Ref:
Zingisa Zenani / 237/194/19/M/P39)
(Tel:
031 – 365 2513)
(Email:
pnthekgei@justice.gov.za
)