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[2017] ZAGPPHC 866
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Khumalo v South African Reserve Bank and Others (63330/2011) [2017] ZAGPPHC 866 (8 May 2017)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Case
Number: 63330/2011
In
the matter between:
KHUMALO,
MZILIKAZI
GODFREY APPLICANT
And
SOUTH
AFRICAN RESERVE
BANK 1
st
RESPONDENT
THE
MINISTER OF
FINANCE 2
nd
RESPONDENT
THE
DEPUTY GOVERNOR OF THE
SOUTH
AFRICAN RESERVE
BANK 3
rd
RESPONDENT
ASSISTANT
GENERAL MANAGER AND
HEAD
OF INVESTIGATIONS DIVISION OF THE
CONTROL
DEPARTMENT OF THE
SOUTH
AFRICAN RESERVE
BANK 4
th
RESPONDENT
A
D
MMINELE 5
th
RESPONDENT
SIMANE
SECURITIES (PTY)
LTD 6
th
RESPONDENT
MAWELA
PROPERTIES (PTY)
LTD 7
th
RESPONDENT
T
VAN DEN HEEVER N.O., in his capacity
as
liquidator of MAWENZI RESOURCES
(PTY)
LTD (IN
LIQUIDATION) 8
th
RESPONDENT
T
VAN DEN HEEVER N.O., in his capacity
as
liquidator of METALLON CORPORATION
(PTY)
LTD (IN
LIQUIDATION) 9
th
RESPONDENT
LEBOGANG
MORAKE N.O., in his capacity
as
liquidator of BONNEVIE PROJECTS
(PTY)
LTD (IN
LIQUIDATION) 10
th
RESPONDENT
SEAN
CHRISTENSEN N.O., in his capacity
as
liquidator METALLON HOTELS AND LEISURE
HOLDINGS
(PTY) LTD (IN
LIQUIDATION) 11
th
RESPONDENT
THE
PRESIDENT OF THE REPUBLIC
OF
SOUTH
AFRICA 12
th
RESPONDENT
JUDGMENT
Fabricius
J,
1.
In
this application the Applicant sought the following relief:
1.
"Reviewing and setting aside the decision taken to attach the
Applicant's goods/money which led to a notice of attachment
dated
12th August 2008 in terms of
Regulation 22C (1) of the Exchange
Control Regulations
made under
Section 9
of the
Currency and Exchanges Act No. 9 of 1933
,
as amended,
as promulgated by
Government Notice R. 1111 of 1961-12-01
as amended from time to time thereafter, being served on the
Applicant on 2 September 2008 and the attachment having been
effected.
2.
Declaring the notice of attachment dated 12th August 2008 made in
terms of
Regulation 22C of the Exchange Control Regulations
in terms of
Section 9
of the
Currency and
Exchanges Act 9 of 1933
,
as amended, as promulgated by
Government Notice R. 1111 of 1961-12-01
as amended from
time to time thereafter to be invalid.
3.
Reviewing and setting aside the decision/s taken to forfeit to the
State the money and/or goods as evidenced by the notice and
order of
forfeiture published in the
Government Gazette Notice 521 of
2011
dated the 5
th
of August 2011, signed by the
Third Respondent on 2
nd
August 2011.
4.
Declaring the notice and order of forfeiture published in the
Government
Gazette, Notice 521 of 2001
dated 5" August 2011, to be invalid.
5.
Declaring that
Regulation 22A, 228, 22C of the Exchange Control
Regulations 1961
(as promulgated by
Government
Notice R.1111
),
as amended, made in terms of
Section
9 of the Currency Exchange Ac 1933
(Act 9 of
1933)
to be unconstitutional.
6.
Costs of suit."
2.
At
the hearing, Mr Puckrin SC on behalf of the Applicant abandoned the
relief sought as per Prayers 1 and 2. The dispute that remained
therefore was whether the relevant forfeiture order ought to be
reviewed and set aside as being invalid and whether or not the
mentioned
Regulations
of the
Exchange Control
Regulations
were
unconstitutional.
3.
The
Respondent had been involved in various transactions which according
to the Reserve Bank amounted to contraventions of various
Exchange
Control
Regulations
>.
After a
lengthy process the attachment order was issued which is referred to
in Prayer 1 of the Notice of Motion. At a later stage,
and before the
three year period expired (in terms of
Regulation 22C1
),
the forfeiture decision was taken and this led to the present
application which was filed with the Registrar of this Court on 4
November 2011.
The
Applicant had been involved in a previous application in this Court -
details of which can be found in
South African Reserve Bank v
Khumalo and Another 2010
(5) SA 449 SCA
.
In that case the Supreme Court of Appeal found that
Regulation
22C
(1) was not invalid.
4.
The
issue before me is whether or not the Applicant has shown the
necessary
locus
standi
to seek the relief referred to,
and this must be decided
in limine.
See:
Giant Concerts
CC v Rinaldo Investments (Pty) Ltd
2013 (3) BCLR 257
(CC).
5.
A
party to litigation must have a direct and substantial in the right,
which is the subject matter of the litigation, and in the
outcome of
the litigation. If a party does not comply with this requirement, he
lacks legal standing. Whether a litigant's interest
is sufficient to
clothe him or her with standing, involves a consideration of the
facts, the relevant statute in Public Law disputes
and its purpose.
The issue is determined in the light of the factual and legal
context. An own-interest litigant does not acquire
standing from the
merits of its cause of action, but from the
effect
the alleged
offending act will have on its interests or potential interests.
See:
Harms, Civil Procedure In The Supreme Court at A-55 and Jacobs
v Waks
[1991] ZASCA 152
;
1992 (1) SA 521
(A) at 534.
Mr
Puckrin SC conceded that the Applicant herein was an own-interest
litigant. In this context it is important to note that an
own-interest litigant does not acquire standing from the invalidity
of the challenged decision or law, but from the
effect
it will
have on his or her interest or potential interest. The interests that
confirm standing to bring the challenge, and the impact
the decision
or law has on such a litigant, must be demonstrated. It is clear that
a successful challenge to a public decision
can be brought only if
"the right remedy is sought by the right person in the right
proceedings". Furthermore, it is
not in issue that Courts should
not be required to deal with abstract or hypothetical issues, and
should devote its scarce resources
to issues that are properly before
it.
See:
Giant Concens CC v Rinaldo Investments supra at par. 34
.
6.
As
far as a constitutional challenge is concerned, the litigant must
show how the claim of constitutional infringements would have
a
material bearing on him. See:
South African Reserve Bank and
Another v Shuttlewonh and Another
2015
(5) SA
146
(CC)
.
7.
Courts
of law exist for the settlement of concrete controversies and actual
infringements of rights, not to pronounce upon abstract
questions, or
to advise upon differing contentions, however important. A
declaratory order cannot be claimed merely because the
rights of the
claimant have been disputed, but that such a claim must be founded
upon an actual infringement.
See:
Geldenhuys and Neethling v Beuthin
1918 AD 426
at 441.
More
recently it was decided that the following considerations apply:
1.
Courts will not decide issues of academic interest only.
See:
Radio Pretoria v Chairman Independent Communications Authority
of South Africa
2005 (1) SA 47
(SCA)
.
2.
Courts will not make determinations that will have no practical
effect.
See:
Rand Water Board v Rolek Industries (Pty) Ltd
2003 (4) SA 58
(SCA) at
63 H to f
.
3.
A case is moot and therefore not justifiable if it no longer presents
an existing or live controversy which should exist if the
Court is to
avoid giving advisory opinions on abstract propositions of law.
See:
National Coalition for Gay and Lesbian Equality v Minister of
Home
Affairs
2000 (2) SA 1
CC at par. 21
;
4.
As far as the granting of a declaratory order is concerned, the Court
has an undoubted discretion to grant such with due regard
to all
relevant circumstances. At the very least, it must however be
satisfied that the Applicant has an interest in an existing,
future
or contingent right or obligation.
See:
Ex parte Nel
1963 (1) SA 754
(A)
and
Cord/ant
Trading CC v Daimler
Chrysler Financial Services
(Pty) Ltd
2005 (6) SA 205
SCA at 213 E to G
.
The Court may decline to
grant a declaratory order if it regards a relevant question raised
before it as hypothetical, abstract
or academic. In essence, it must
be shown that a declaratory order would have a practical effect.
See:
Rumdel Cape v South African Road Agency SAC Ltd /2016] ZASCA 23
(18 March 2016)
.
5.
Where an Applicant relies on the provisions of the
Promotion of
Administrative Justice Act
(“
PAJA
”.),
Act 2 of 2000
,
as the Applicant does in the
present proceedings, it must bring itself within the definition of
administrative action, and must
show that a decision taken adversely
affected its rights and which had a direct, external legal effect.
The decision must have
the capacity to affect legal rights.
See:
Grey's Marine Hout Bay (Pty) Ltd and Others v Minister of
Public Works
and Others
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA)
.
8.
It
is not in issue that in these proceedings the Applicant is an
own-interest litigant and that he relied on
PAJA
in the
context of review proceedings.
9.
In
the Founding Affidavit, and in the context of the forfeiture notice
that was addressed to Applicant and Mawenzi Resources, he
gives
detail with reference to the companies mentioned in the notice of the
status of such companies, which he said have either
been placed in
liquidation, are dormant, are deregistered or do not exist. He also
stated that "a substantial number of assets
attached by the
Reserve Bank do not vest in me or in the Mawenzi". He stated
further that "the fact that the Reserve
Bank has sought to
unilaterally attach these assets on such a broad and all-encompassi
ng basis, in circumstances where the Applicants
(sic) neither own nor
hold an interest in such assets is clearly indicative of the attitude
and manner in which the Reserve Bank
has sought to deal with the
Applicants".
10.
The
relevant attachment notice was addressed to Applicant and Mawenzi
Resources and Finance Company (Pty) Ltd. It also referred
to the
relevant Respondents' right, title and interest in a number of other
companies. It is dated 12 August 2008. An explanatory
memorandum from
the Financial Surveillance Department of the South African Reserve
Bank dated 19 May 2011 was also addressed to
Applicant and a number
of companies, as well as to Mawenzi Resources and Finance Company
(Pty) Ltd. It sets out in great detail
the facts relied on by the
Reserve Bank relating to the potential forfeiture of attached assets
in terms of
Regulation 228
of the
Exchange
Control Regulations
>.
In this memorandum the Reserve
Bank relies on certain allegations of fraud allegedly committed
either by the Applicant or by persons
acting on his behalf. The
actual "Notice and Order of Forfeiture" vis-a-vis the
Applicant and/or Mawenzi Resources and
Finance Company (Pty) Ltd is
published in the
Government Gazette No. 34507
on 5
August 2011. It merely sets out what is being forfeited and contains
no other factual allegations relating to any fraud committed
by the
Applicant or by persons acting on his behalf.
11.
In
Applicant's Supplementary Affidavit filed in terms of
Rule 53 of
the Rules
of this Court dated 13 September 2013 in the context of
the forfeiture order, he gives details of the entities in which he
had no
interest whatsoever.
12.
In
the Answering Affidavit of the First, Third, Fourth and Fifth
Respondents, the point of Applicant's lack of
locus standi
is
pertinently raised. Reference is made to Applicant's own allegations
as to the entities which either did not exist, were in liquidation,
were dormant or were deregistered. Reference was also made to the
previous interdict application during October 2008, where the
Applicant made certain factual allegations regarding his interests in
the various companies/entities that were later the subject
matter of
a forfeiture order. It is clear from this Affidavit and the details
given in respect of all the entitles that were the
subject matter of
the forfeiture order that Applicant, on his own version, had no
interest in any of the assets to which the order
of forfeiture
related. Accordingly, it was said that Applicant had failed to
disclose that he had a direct and substantial interest
in the dispute
whether the notice of attachment and the order of forfeiture were
lawfully and validly issued, and that he had the
requisite
locus
standi
to seek the relief that he sought. It must be remembered
in this context that Applicant is an own-interest litigant and that
the
liquidator of Mawenzi Resources and Finance Company (Pty) Ltd, is
the Eighth Respondent. It certainly seeks no relief in these
proceedings.
13.
In
the Replying Affidavit, the Applicant states that the Reserve Bank
had in fact conceded that he did not own any of the relevant
assets
that were the subject matter of the forfeiture order, nor that owned
any assets in Mawenzi Resources and Finance Company
( Pty) Ltd. For
that reason the notice to attach the property was improper in that
the attached assets did not belong to him, and
similarly for the same
reason the notice of forfeiture was improper. He stated that in the
absence of the assets belonging to him,
the entire decision-making
mechanism relating to the attachment and the forfeiture of the assets
was a flawed process. He contended
further that he had said all along
and certainly since at least 2008, "and which now seems to be
common cause between the
parties", that the assets did not
belong to him. He did however have
locus standi
in that the
entire proceedings were aimed at himself. He added the following:
"The effect of the attachment and forfeiture
was that none of my
assets were attached, some assets of Mawenzi were attached and assets
of third parties were attached who were
not related to the
application, without any basis in law and fact".
14.
In
argument, Mr N. Maritz SC, on behalf of First, Third, Fourth and
Fifth Respondents referred me to the authorities which I have
mentioned above and submitted with reference to
Giants Concerts
CC supra par. 30
that a litigant may be denied own-interest
standing even though the result could be that an unlawful decision
stood. This was not
illogical, as standing determined solely whether
the particular litigant is entitled to mount the challenge in the
particular proceedings.
It was contended that Applicant's own
Affidavits did not demonstrate how the decisions made by the Reserve
Bank affected his rights
or had the capacity to affect his rights in
a direct and immediate way. Details were given of all the Applicant's
own allegations
relating to the various entities, and it is clear
from this analysis that on Applicant's own version he had no interest
in any
of these entities at all, many having been wound up
subsequently in any event. At the time of the lodging of this
application,
on Applicant's own version, he had no interest in any of
these companies or assets. Accordingly none of his rights could be
adversely
affected by the forfeiture order and he had therefor no
direct and substantial interest in the relief claimed.
15.
It
was also submitted in the context of the constitutional challenge
that Applicant similarly lacked standing. A constitutional
attack on
Regulation 22A
was impermissible as this Court is not required
to deal with hypothetical, abstract issues. Reference was made to the
decision
South African Reserve Bank v Shuttleworth
supra
in
which the Constitutional Court declined to allow a constitutional
attack against
Regulations
having no bearing on the relevant
facts. The attack on
Regulations 228 and 22C
could also not be
entertained inasmuch as Applicant had failed to impugn the
constitutionality of the
Regulations
by review in terms of
PAJA
as he was required to do.
See:
City of Tshwane Metropolitan Municipality v Cable City (Pty)
Ltd 2010 (3)
SA 589 SCA (par. 10)
.
It
was submitted, correctly in my view, that it is impermissible to
by-pass
PAJA
by impugning directly the constitutionality of
administrative action.
See:
BATA Star Fishing (Pty) Ltd v Minister of Environmental Affairs
2004 (4) SA
490 (CC) par. 25
.
During
Mr N. Maritz SC's argument Mr Puckrin SC very properly and fairly
interjected to state that none of the assets listed in
the forfeiture
order belonged to Applicant. Mr N. Maritz SC also pointed out that
the debate regarding the lawfulness of the forfeiture
order was now
moot, in that even if I granted it, it would not reverse anything
done. The decision to issue the forfeiture order
was indeed an
administrative action in terms of
PAJA,
but not, importantly,
vis-a-vis
the Applicant. Mr Puckrin SC on behalf of Applicant
submitted that the case put forward by the Respondents on
locus
standi was
not that simple inasmuch as the Applicant, having
regard to the explanatory memorandum relating to the notice of
attachment was
alleged to have committed fraud. According to
Regulation 22,
in the context of the
Exchange Control
Regulations,
the
Applicant could be guilty of an offence, and in
this context, there was a potential risk to the Applicant of being
found guilty
and being subject to a criminal sanction and procedure
and forfeiture of certain relevant assets. He argued that it was
inherent
in the relevant
Govemment Notice
that a contravention
of the Regulations had been committed which could result in a
potential prosecution. It was in this context
that the rights of the
Applicant lay. This was then also the illegal interest that the
Applicant had in these proceedings and the
relief sought.
16.
It
must immediately be said that this was the first time that this
argument on behalf of the Applicant was raised. It was certainly
not
his case in the Founding Affidavit and in fact it appears nowhere in
any Affidavit made by the Applicant. In application proceedings,
the
Affidavits constitute not only the evidence, but also the Pleadings.
The necessary allegations must appear in the Supporting
Affidavits.
The general rule is that in motion proceedings the particular
Applicant must set out the full case in the Founding
Affidavit.
See:
Herbstein and Van Winsen, The Civil Practice Of The High Coutts
In South
Africa, 5
th
Edition Volume 1p. 439
.
Mr
N. Maritz SC also added in reply that it had been held that the
Exchange
Control Regulations
do
not contemplate either a criminal prosecution or a criminal
conviction as a prerequisite to forfeiture.
Mens res
in that
context was not a prerequisite, although it certainly would be in the
context of a criminal trial.
See:
Jacquesson v Minister of Finance
2006 (3) SA 334
SCA par. 9
.
The
forfeiture notice made also no reference to the grounds on which it
was made, and there was no publication of any reasons that
could
affect any Personality Rights of the Applicant. I was also referred
to
Oilwell (Pty) Ltd v Protech International Ltd
and
Others
2011 (4) SA 394
SCA
,
where it was held that
criminalization of contraventions of, or failures to comply with, any
provision of the
Regulations
in
Regulation 22
required
mens rea.
This did not mean that a contravention of the
Regulations required
mens rea:
it only meant that in the
absence of such the relevant parties could not be punished
criminally. In this particular instance, the
perceived threat of
prosecution was not raised in the Affidavits, and the Reserve Bank
was therefore unable to deal with such an
alleged threat on the
facts. Applicant's relevant affairs in the present context had
commenced in 2001, and no threat of prosecution
has ever been shown
or raised anywhere. The setting aside of the forfeiture decision was
in any event irrelevant in the context
of a possible prosecution in
that it was certainly not a prerequisite. The grant of a forfeiture
order was certainly not determinative
of a prosecution prospect.
17.
Mr
Puckrin SC's argument cannot be sustained in the light of the
authorities that I have referred to in the immediately preceding
paragraphs. Added to that, it would not be in the interest of justice
were I too allow this argument to be raised at this stage
of the
proceedings in the complete absence of any reference thereto in any
of the Affidavits of the Applicant. I agree with Mr
N. Maritz SC that
the Reserve Bank would certainly be prejudiced if I had to entertain
this argument, but in any event, it has
no merit. A prosecution for a
contravention of the relevant Regulations can be instituted
irrespective of the existence of a forfeiture
order.
18.
In
the light of the undisputed fact that the Applicant had no interest
in any of the entities referred to in the forfeiture order,
and
having regard to the authorities and considerations that I have dealt
with in par. 6 above, I find that Applicant has no
locus standi
vis-8-vis
the relief that is sought in these proceedings.
The
following order is therefore made:
1. The application Is
dismissed;
2. Applicant Is to pay
the costs of the proceedings, including costs of two Counsel.
__________________
JUDGE
H.J FABRICIUS
JUDGE
OF THE HIGH COURT GAUTENG DIVISION, PRETORIA
Case
number: 63330/ 2011
Counsel
for the Applicant: Adv C. Puckrin SC
Adv
A. Bava SC
Adv
G. Badhela
Instructed
by: Shepstone and Wylie Attorneys
Counsel
for the 1
st
, 3
rd
, 4
th
& 5
th
Respondents: Adv N. Maritz SC
Adv
E. Muller
Instructed
by: Newtons Attorneys
Counsel
for the 2
nd
Respondent: Adv P. Mtshaulana SC
Adv
L. Kutumela
Instructed
by: The State Attorney
Counsel
for the 12
th
Respondent: Adv N. Cassim SC
Adv
A. Platt SC
Instructed
by: The State Attorney
Date
of Hearing: 24 April 2017
Date
of Judgment: 8 May 2017 at 10:00