Shuttleworth v South African Reserve Bank and Others (30709/2010) [2013] ZAGPPHC 200; [2013] 3 All SA 625 (GNP) (18 July 2013)

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[2013] ZAGPPHC 200
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Shuttleworth v South African Reserve Bank and Others (30709/2010) [2013] ZAGPPHC 200; [2013] 3 All SA 625 (GNP); 76 SATC 160 (18 July 2013)

REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT)
CASE
NO. 30709/2010
DATE:18/07/2013
In
the matter between:
MARK
RICHARD
SHUTTLEWORTH
.....................................................................
Applicant
and
SOUTH
AFRICAN RESERVE
BANK
........................................................
First
Respondent
MINISTER
OF
FINANCE
.......................................................................
Second
Respondent
PRESIDENT
OF THE REPUBLIC OF SOUTH AFRICA
…...................
Third
Respondent
JUDGMENT
Heard
on: 10-12 June 2013
Judgment
handed down: 18 July 2013
LEGODI
J
[1]
The decisions of the first respondent namely, the South African
Reserve Bank taken on the 13 October 2009 and 1 December 2009
to
impose 10%
[1]
The decisions of the first respondent namely, the South African
Reserve Bank taken on the 13 October 2009 and 1 December 2009
to
impose 10% levy on the applicant’s last remaining blocked loan
account assets to the value of amount of R2 504 748 935
became the
subject of a dispute before me. The total amount of the 10% levy was
calculated by the first respondent as R250 474
893.50.
[2]
The applicant, a South African who in 2001 emigrated from South
Africa to England (British Isles), submitted an application
on the 29
August 2009 to the first respondent through Standard Bank of South
Africa to take his remaining blocked loan assets out
of the Republic
of South Africa.
[3]
It was not the first time that the applicant had to pay 10% levy for
wanting to take his assets out of the Republic of South
Africa.
However, in 2009 he paid the sum of R250 474 893.50 out of protest,
the applicant having been advised that the levy of
10% exit on his
blocked assets was unlawful and unconstitutional.
[4]
Because of a rule to submit an application to transfer blocked assets
out of the Republic of South Africa via authorized dealers,
mainly
banks, the applicant submitted his application via Standard Bank of
South Africa. When he did so, he also instructed Standard
Bank to
place before the first respondent a document that he had prepared
containing certain representations regarding his application.
5.
Standard Bank of South Africa however, omitted to place before the
first respondent’s written representations prepared
by the
applicant. On the 13 October 2009, the first respondent having
approved the application to transfer out of South Africa
the
remaining applicant’s blocked assets it further imposed a 10%
levy as indicated in paragraph 1 above.
[6]
When the applicant discovered that his representations were not laid
before the first respondent, he instructed the Standard
Bank South
Africa Ltd to place them before the first respondent and to ask the
first respondent to reconsider its decision regarding
the imposition
of 10% levy. The first respondent having considered the
representations, it reaffirmed its earlier decision taken
on the 13
October 2009. In other words, it refused to uplift the 10% levy in
the sum of R250 474 893.50. This second decision was
apparently
conveyed to the applicant on the 1 December 2009.
[7]
Subsequent thereto, the applicant requested the reasons for the
decision to impose the 10% levy. The first respondent amongst
others
responded to the request by stating that according to the Minister’s
budget speech of the 26 February 2009 emigrant’s
blocked assets
were to be unwound and also that amounts up to R750 000 inclusive of
amounts already exited, will be eligible for
exiting without charge.
Holders of blocked assets wishing to exit more than R750 000
inclusive of amounts already exited must apply
to the Exchange
Control Department of the South African Reserve Bank to do so.
Approval will be subject to the exiting schedule
and an exit charge
of 10 per cent of the amount.
[8]
The first respondent in its letter of the 8 February 2010 indicated
that for its decision of the 13 October 2009 and refusal
to review
it, it was relying on the Minister’s decision and public
announcement of the 26 February 2003 and that the applicant’s

application was dealt with in accordance with the Minister’s
decision as embodied in Circular No.380 of 26 February 2003.
[9]
At the risk of repeating myself, the public announcement read as
follows:
"Emigrant
blocked assets are to be unwounded. Amounts up to R750 000 (inclusive
of amounts already exited) will be eligible
for exiting without
change. Holders of blocked assets wishing to exit more than R750 000
(inclusive of amounts already exited)
must apply to the Exchange
Control Department of the South African Reserve Bank to do so.
Approval will be subject to an existing
schedule and an exit charge
of 10 per cent of the amount”.
[10]
Based on all of the above, and in particular the decisions to impose
the 10% levy on his remaining ‘blocked loan account
assets,1 as
it is referred to, the applicant instituted the present proceedings
during 2010 in terms of which a relief is sought
as follows:
"1.
Reviewing and setting aside the decisions of the first respondent
taken on or about 16 October 2009 and 1 December 2009
to impose a 10%
levy payment into the first respondent’s Blocked Rand Levy
Account as a condition on the applicant’s
transfer of his
remaining blocked assets out of the Republic,
1A
Substituting the decisions of the first respondent on or about 16
October 2009 and 1 December 2009 with an unconditional decision
to
authorize the applicant to transfer 90% of his remaining blocked
assets out of the Republic.
1B
Directing the first respondent, alternatively the second respondent
to repay the applicant the amount of R250, 474,893.50.
1C
Directing the first respondent, alternatively the second respondent
to pay the applicant interest on the amount of R250, 474,
893.50 at
the prescribed rate from date of demand to date of payment.
1D
To the extent necessary, condoning the applicants failure to have
served a notice on the respondents in terms of section 3(2)(a)
of the
Legal Proceedings against Certain Organs of State Act 40 of 2002.
2.
Declaring that the words “and an exit charge of 10% of the
amount” in
2.1
Exchange Control Circular No D.375 of 26 February 2003,
2.2
Exchange Control Circular No D. 380 of 26 February 2003, and
2.3
Section B,2€(iii)€ of the Exchange Control Rulings were at
all material times inconsistent with the Constitution and
invalid.
3.
Declaring that section 9 of the Currency and Exchanges Act 9 of 1933
("the Act") is inconsistent with the Constitution
and
invalid.
4.
In the alternative to prayer 3 above,
4.1
declaring that paragraphs (a), (c) and (f) of subsection (2) of
section 9 of the Act are inconsistent with the Constitution
and
invalid,
4.2
declaring that subsection (3) of section 9 of the Act is inconsistent
with the Constitution and invalid, and
4.3
declaring that subsection (5) of section 9 of the Act is inconsistent
with the Constitution and invalid.
5.
Declaring that the Exchange Control Regulations are inconsistent with
the Constitution
and
invalid.
6.
In the alternative to prayer 5 above,
6.1
declaring that paragraph (a) to (c) of Regulation 3(1) of the
Exchange Control Regulations are inconsistent with the Constitution

and invalid,
6.2
declaring that Regulation 3(3) of the Exchange Control Regulations is
inconsistent with the Constitution and invalid,
6.3
declaring that the words “(3) or” in Regulation 3(5) of
the Exchange Control Regulations are inconsistent with the

Constitution and invalid,
6.4
declaring that Regulation 10(1)(b) of the Exchange Control
Regulations is inconsistent with the Constitution and invalid,
6.5
declaring that Regulation 18 of the Exchange Control Regulations is
inconsistent with the Constitution and invalid,
6.6
declaring that Regulation 19(1) of the Exchange Control Regulations
is inconsistent with the Constitution and invalid,
6.7
declaring that the words “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” in
Regulation 22 of the Exchange Control Regulations and the omission
in
that regulation of the words Intentionally or negligently”
immediately after the words “every person who”
are
inconsistent with the Constitution and invalid.
7.
Declaring that the Orders and Rules under the Exchange and Control
Regulations are inconsistent with the Constitution and invalid,
8.
In the alternative to prayer y above, declaring that Order and Rule
(10)(a) of the Orders and Rules under the Exchange Control

Regulations is inconsistent with the Constitution and invalid.
9.
Declaring that the policy of the first respondent of refusing to deal
directly with members of the public in relation to the
exercise of
its delegated powers under the Exchange Control Regulations and
insisting that members of the public communicate with
it through the
intermediation of authorized dealer banks, is inconsistent with the
Constitution and invalid."
[11]
The issues to be determined in this case were at the commencement of
the hearing, identified by counsel on behalf of the applicant
as
follows:
11.1
Was the decision to impose a 10% levy on the applicant a lawful
decision?
11.2
Is the system of Exchange Control constitutionally compliant?
11.3
Are the respondents obliged to repay the applicant the levy amount
including interest?
11.4
Is the appropriate remedy for the unconstitutionality of section 9 of
the Act and the Regulations immediate striking down or
an order of
suspension?
11.5
Is what is referred to as a ‘CLOSED DOOR POLICY’
procedurally right and fair?
[12]
All parties seemed to have agreed that what were identified as above,
were the main issues to be determined in these proceedings,
although
not limited thereto. The first respondent in his answering affidavit
raised another issue that was not pursued strongly
by his counsel.
The issue can be categorized in the form of a question as follows:
“
Are
the present proceedings academic or moot seen in the light of the
decision by the Minister to do away with the 10% levy on the
blocked
assets or funds?”
FOREWORD ON MERITS AND HISTORICAL
BACKGROUND TO EXCHANGE CONTROL SYSTEM
[13]
The Act and its Regulations which have survived decades of years is
the subject of the constitutional challenge before me.
The Act was
assented to on the 7 March1933. The Act is called Currency and
Exchanges Act no. 9 of 1933 (hereinafter referred to
as the Act). It
has its original as the Principal Act from the Currency and Banking
act no. 31 of 1920, which was amended by the
Currency and Banking Act
no. 22 of 1923 and amended by Further Amendment Act no. 26 of 1930.
[14]
The Act was introduced to amend the South African law relating to
legal tenders, currency, exchange and banking. It also deals
with the
system of exchange control. It is said that other people are wrongly
of the view that the system of Exchange Control had
its origin from
the aftermath of the Sharpeville Massacre in 1961. However, Dr Anthon
de Swardt in his dissertation dealing with
the historical background
expressed himself as follows:
“
Since
1939 the legislation has followed the approach that the legislations
forming the basis of the exchange control system must
be of such a
nature that it can be amended quickly and easily. As a result
thereof, and in imitation of the United Kingdom, a principal
Act has
been used as well as regulations that have been issued in terms
thereof. The principle that was therefore applied and is
still
applied in South Africa, is to make provision in a principal Act for
authorization that is granted to a specific person to
issue
regulations. The effect hereof is that the regulations can be issued
during the course of the years while the Parliament
is not in
ordinary session”
[15]
Assuming that Dr de Swardt is correct, his statement should therefore
set the scene for the approach in dealing with the system
of exchange
control and the subject of the dispute before me. For this reason, I
want to believe that the deponent to the first
respondent’s
answering affidavit takes it a step further as articulated in
paragraphs 12, 13, 14, 15 and 16 of the answering
affidavit. They
read as follows:
“
12.
The exchange control system is designed in such a way as to be
flexible in order to deal expeditiously with the often fast-changing

exigencies of the international monetary system. The legislative
component does not contain any substantive rules regarding exchange

control, but rather contains an empowering provision authorizing an
official to issue regulations which contain the applicable

substantive rules relating to exchange control from time to time.
13.
The ability of the system to react quickly and without delay to
changes in the International monetary system, which is achieved
via
the above structure of empowering an official to issue regulations,
has been the central feature of the system in South Africa,
since its
inception in 1933. This feature is of the essence of the system and
is key to its effective functioning.
14.
The nature of the factors which exchange control is intended to
govern, and as a matter of national importance, must succeed
in
governing as such that swift action is absolutely necessary
regardless of whether parliament is in session or not. The very

stability and sustainability of the financial system and economy of
the Republic may be, and indeed has often in the past been,
at stake.
Only swift imposition of appropriate and of necessity ad hoc,
exchange control rules can adequately cater for and deal
with this
risk, ensuring maximum stability and protection for the South African
economy. This flexibility, and ability to change
the applicable
exchange control regime very quickly, are necessary in this
particular sphere. I submit that this constitutes an
important means
whereby our country can adequately safeguard itself, its economy and
the public against the vicissitudes of the
dynamic world market.
15.
The exchange control system is often misunderstood as having its
origins in the Sharpeville crisis of 1961. De Swardt, op cit,
notes
that “it is conspicuous that writers often remark erroneously
that exchange control has been applied since 1961, or
sometimes since
another incorrect date” when in fact it had been applied since
1933. This is not to say that the Sharpeville
crisis did not play an
important part in the formation of the Regulations.
16.
The exchange control system, requiring, as it does, a flexible,
speedy and expert approach to these matters is in my respectful

submission a sui generic area of financial governance. The current
legislative and administrative structure is we 11-suited to
the
requirements of the current South African economy. Indeed, it is
widely acknowledged that the current system of exchange controls

played a significant role in shielding our economy from the full
effects of the recent global financial crisis”.
[16]
Living up to what is stated above, the first respondent established
what is referred to as, The Financial Surveillance Department
in
pursuance of protecting the value of the Rand in the interest of a
balanced and sustainable economic growth in South Africa.
The
Financial Survillance department replaced the Exchange Control
Department.
[17]
The Financial Surveillance Department within the Reserve Bank is
meant to regulate the inflow and outflow of capital in terms
of the
power granted to it. The Financial Surveillance Department serves to:
17.1
ensure the effective functioning of the exchange control system,
thereby preventing the unauthorized outflow of capital from
South
Africa and ensuring that all foreign currency accruals are
repatriated,
17.2
provide a reliable statistical framework of information to both
policy makers and clients, and
17.3
create an understanding of the functions and goods of the exchange
control.
[18]
The Financial Surveillance Department is responsible for the day to
day administration of exchange control in South Africa,
including the
investigation into alleged contraventions of such Regulations. It
monitors changes to exchange control policy norms.
It discusses these
control policies and norms, conveys and communicates them to various
stake holders. It holds regular meetings
with representatives of the
banks or authorized dealers where issues of common interest are
discussed.
[19]
Within the Financial Surveillance Department there is Investigatory
Division which investigates alleged contraventions of
the exchange
control to recoup capital expense of the country’s foreign
currency reserves. It also assists in the prosecution
of offenders.
[20]
The authorized dealers are banks appointed by the Minister of
Finance. These banks act as authorized dealers in foreign exchange

which gives the right to buy and sell foreign exchanges, subject to
conditions and within the limits applied by the Exchange Control

Department. The Exchange Control Department is or was a division
within the first respondent (the Reserve Bank).
[21]
The purpose of the exchange control is characterized as follows:
21.1
to ensure the repatriation into the South African banking system of
all foreign currency acquired by residents of South Africa,
whether
through transactions of a current or capital nature,
21.2
to prevent the loss of such foreign currency resources through the
transfer abroad of real or financial capital assets held
in South
Africa within the receipt of a commensurate consideration for the
transfer of such assets, and
21.3
to control and monitor in an effective manner the movement into and
out of South Africa of financial and real assets/money
and or goods
while at the same time not interfering unduly with the efficient
operation of the commercial industrial financial
systems of the
country.
[22]
The first comprehensive exchange control restrictions in South Africa
were introduced under the Act, just before the advent
of the Second
World War. The events subsequent to the Sharpeville massacre are said
to have put foreign currency reserves of South
Africa in a very
unhealthy peak. The domestic instability in the country is said to
have caused non-residents to start selling
their South African shares
on the Stock Exchange when disinvestments without restrictions were
the order of the day. This is said
to have remitted the proceeds
abroad in foreign currency at the cost of this country as reserved
and by May 1961 it became clear
that further drastic steps had to be
taken to avoid the total down fall of the South African economy.
[23]
As a result, the Exchange Control Department in 1961 implemented
several further circumstances of exchange facilities and
most
importantly the restrictions on governing securities. These
prohibited the transfer from South Africa of the local sale proceeds

of non-resident owned securities. The restriction is said to have
given birth to the concept of the Blocked Rands which is to be

distinct from the emigrants’ blocked funds.
[24]
Over the years, the 1961 restrictions are said to have been applied
until flexibility and amended to meet the demands of the
time as
circumstances required. In 1976 transfer procedure out of the country
is said to have been substantially simplified. For
example,
non-residents owned security became held by the banks in South Africa
were made transferable amongst non-residents. In
or about 1979, the
Exchange Control Department is said to have been prepared to
entertain request of non­residents for permission
to utilize the
Financial Rand for the purpose of taking up shares in connection with
establishing new companies and purchasing
shares in existing
companies in the Rand Monetary Area (now known as Common Monetary
Area). In 1983 the Financial Rand was abolished
and in 1985 it was
reintroduced. Domestic instability was at its highest level. Those
were the difficult times. On the other hand
sanctions took its
height. It became necessary therefore to take a swift action.
Severe
restrictions were imposed on the remittance of any income to
emigrants.
[25]
With the advent of the new South Africa that saw the ending of the
sanctions, the so called Financial Rand system was abolished
as from
13 March 1995. The same month, the control over the movement of
capital owned by non-residents was repealed. Exchange Control
on
capital account transactions of residents was however retained.
[26]
On a gradual approach post 1994, the Minister of Finance moved
towards elimination of exchange controls to suit the prevailing

economic conditions of the country. It became necessary to have a
gradual process of liberalization of exchange control rules bearing

in mind the accepted complexities and pitfalls inherent in capital
account. The sequencing for liberalization of exchange control
was
categorized in six stages, the last one being to release emigrants
blocked funds. These related to capital funds and or assets
of an
emigrant to which restrictions have been applied in that the funds
were not transferable from South Africa and were physically

controlled by authorized dealers. This was in 2002 when it was
announced.
[27]
Subsequent thereto, during the 2003 Budget Speech, the Minister of
Finance announced that emigrants wishing to export more
than R750 000
would apply to the Exchange Control Department to do so, subject to
the submission of an exiting schedule and subject
to payment of a
charge equal to 10% of the amount sought to be exported. The 10% levy
was applied in respect of the applicant and
this appears to have
prompted the present proceedings. Counsel for the applicant in his
Notes for Argument introduces the issue
as follows:
“
1.4
It is important to stress at the outset that this case is not an
attack on the idea of exchange control. Mr Shuttleworth accepts
that
exchange control serves a valid public purpose and that a system of
exchange control could be validly put in place under our

constitutional scheme. His challenge is to the existing system of
exchange control which
is
contrary to the principles of our constitutional scheme. ”
27.1
I cannot agree more with the first and second parts of the quotation
and this could be the theme in dealing with the issues
identified
herein. But, before that, let me just deal with some few aspects of
the guidelines of the exchange control system. The
Minister of
Finance issues what is referred to as Orders and Rules under the
regulations which contain various orders, rules, exemptions,
forms
and procedural arrangements. The current set is said to have been on
since the 1 December 1961 and that it had been amended
from time to
time. As regards exchange control rulings, the Minister appoints
certain banks to act as authorized dealers in foreign
exchange which
gives them the right to buy and sell foreign exchange transactions or
currencies, subject to conditions and within
the limits applied by
the exchange control department. The authorized dealers are not the
agents of Exchange Control Department,
but, acts on behalf of their
clients.in regard to exchange control issues. They also act on behalf
of their clients in seeking
approvals from the Exchange Control
Department for such clients. The reason for this is said to be a
practical one. The Exchange
Control Department is said to be simply
nowhere near the capacity to handle the large number of applications.
I now turn to deal
with the other issues raised and not necessarily
indicated as in paragraph 11 of this judgment.
ARE THE PRESENT PROCEEDINGS THE
SUBJECT OF A PENDING ACTION?
[28]
Subsequent to the launching of these proceedings and apparently after
the amendment of the notice of motion, the applicant
instituted
action proceedings in terms of which he claims the amount levied on
his capital or blocked loan account assets. This
is said to have been
adopted as a measure to take care of the applicant’s interests.
[29]
The parties apparently came to an arrangement that action proceedings
would be stayed pending finalization of the present proceedings.
At
the start of the hearing of this matter, I enquired from the first
respondent’s counsel whether it was the intention of
the first
respondent to persist with the lis pendis point. The response was
that it has not been abandoned. However, the issue
was never argued.
Similarly, counsel for the second respondent (the Minister of
Finance), who indicated that he was new in the
matter, did not
strongly persist with the argument.
[30]
The point of the matter is that the constitutional challenges and
other issues in these proceeding, if they were to be upheld
in favour
of the applicant, it would in my view, render the pending action
proceedings academic. For this reason, I see no prejudice
if this
court was to deal with the matter on the basis that the claim for
payment or refund of the amount paid as a levy is properly
before me.
Therefore, the fis pendis point ought to be dismissed.
IS
WHAT IS REFERRED TO AS A ‘CLOSED DOOR POLICY’ UNLAWFUL
AND
UNCONSTITUTIONAL? PUT DIFFERENTLY IS RULE 10 (a) UNLAWFUL
AND
UNCONTITUTIONAL?
[31]
The question should be seen in the context of the relief sought in
prayer 9 of the applicant’s amended notice of motion
and quoted
in paragraph 10 of this judgment. The words ‘CLOSED DOOR
POLICY’ came from the applicant. They relate to
a system of
using authorized dealers or bankers to provide information or advice
on exchange control or currency matters governed
by the Regulations
to those who might require such information or advice. They also
relate to approval or permission process in
respect of exchange,
currency and gold transactions so governed, a function that is
assigned to authorized dealers or bankers.
This arrangement is
embodied in Rule 10(a) of the first respondent.
[32]
In other words, for information, advice or assistance as indicated
above, one will have to approach the authorized dealers
or bankers
and not the first respondent directly. The rule is challenged on two
grounds, firstly that it does not have force of
law and secondly,
that it is in conflict with section 1 and section 33 of the
Constitution.
FIRST
LEG OF THE ATTACK ON RULE 10 (a)
[33]
The applicant in essence is saying, in introducing Rule 10(a), the
respondents did not comply with the enabling legislation,
in
particular section 9(5)(a) of the Act which provides as follows:
“
Any
regulations made under this section may provide for the empowering of
such persons as maybe specified to make orders and rules
for any of
the purposes for which the Governor-General is by this section
authorized to make regulations”.
[34]
I understand this to mean that for any person to make order and or
rules, he or she must have been specifically empowered to
do so by
regulation(s). The basis of a challenge by the applicant appears to
be this: The first respondent or second respondent
had no legislative
power to come up with Rule (10) (a) because neither of them is
empowered by regulation to do so.
[35]
In paragraph 4.1 of its answering affidavit, the first respondent
through the deponent states as follows:
“
4.1
Orders and Rules
The
Minister of Finance issues Orders and Rules under the Regulations
which contain various orders, rules, exemptions forms and
procedural
arrangements. The current set was published on the 1 December 1961
and has been amended from time to time. The Orders
and Rules are
voluminous, and in order not to burden these papers, / do not attach
them, but a copy of the current set marked “AE1”
will be
made available to the Applicant at his request and to this Honourable
court at the hearing hereof’.
[36]
The underlining in the quotation is my own emphasis. The relevant
part of regulation 1, dealing with definitions, defines an

“authorized dealer” as meaning, “in respect of any
transaction, in respect of gold, a person authorized by the
Treasury
to deal in gold and in respect of any transaction in respect of
foreign exchange, a person authorized by the Treasury
to deal in
foreign exchange”.
[37]
Regulation 22E deals with delegation of powers and it provides as
follows:
“
22E.(1)
The Minister of Finance may delegate to any person any power or
function conferred upon the Treasury by any provision of
these
regulations or assign to any such person a duty imposed thereunder to
the Treasury
[38]
Regulation 4 deals with BLOCKED ACCOUNTS. Sub-regulation (7) thereof
provides that no sum standing to the credit of a blocked
account
shall be dealt with in any way, except with permission granted by the
Treasury and in accordance with such conditions as
the Treasury or
such authorized person may impose.
[39]
The applicant refers to his assets on which the levy has been imposed
as “blocked loan account assets”. Therefore,
“bankers”
referred to in Rule 10(a) should be seen as “a person
authorized by the Treasury” referred to
in Regulation 4(7).
[40]
A duty is imposed on the Minister in terms of Regulations made under
section 9 of the Act. Such a duty is conferred by means
of
regulations made under the Act and the Minister can further delegate
such duties or powers to “any person” in terms
of
Regulation 22E.
[41]
The making of Orders, Rules and Rulings should therefore be seen in
the context of the Regulations and in particular, the delegated

authority conferred in terms of the Regulations. The Minister does
this without being divested of any power or function or duty

delegated to any person under sub-regulation (1) of regulation 22E
and may at any time withdraw or amend any decision taken by
any such
person in the exercise or performance of the power or function or
duty.
[42]
Providing information or advice on exchange control or currency
matters are matters governed by the Regulations. Similarly,
the
approval or permission in respect of exchange, currency and gold
transactions are also governed in the regulations. When these
roles
are assigned to the banks and Rule 10(a) is introduced to confer
these roles on the “bankers,” it cannot be said
there is
no empowering authority brought about by the Regulations. Therefore,
the first attack on what is referred to as a “CLOSED
DOOR
POLICY/’ must fail. Insofar as the applicant might have wanted
to suggest that section 9 (5) (a) is itself unconstitutional
as
suggested in prayer 4.3 of the amended notice of motion, i am unable
to find the basis for this challenge. The section is quoted
in
paragraph 33 above.
SECOND LEG OF ATTACK ON RULE 10 (a)
[43]
Counsel for the applicant in his NOTES FOR ARGUMENT, characterized
the challenge as follows:
"5.5.1
First, it places a barrier between members of the public and organ of
State quite contrary to the obligations imposed
on the public
administration by section 195 of the Constitution
and
foundational values of accountability, responsiveness and openness in
section 1 of the Constitution.
5.5.2
Second, it imposes on members of the public an agent, not of their
choice and who is obliged to put the interests of the exchange

control department of SARB above all other interest”.
[44]
On the other hand, the view taken is that Rule 10 (a) is in conflict
with section 1 and section 33 of the Constitution. For
convenience
sake, sections 1, 33 and 195 of the Constitution read as follows:
“
1.
Republic of South Africa
The
Republic of South Africa is one, sovereign, democratic state founded
on the following values:
a.
a.
...
b.
Supremacy of the constitution and the rule of law.
c....
33.
Just administrative action
1.
Everyone has the right to administrative action that is lawful,
reasonable and procedurally fair.
2.
Everyone whose rights have been adversely affected by administrative
action has the right to be given written reasons.
3.
National legislation must be enacted to give effect to these rights,
and must
a.
provide for the review of administrative action by a court or, where
appropriate, an independent and impartial tribunal;
b.
impose a duty on the state to give effect to the rights in
subsections (1) and (2); and
195.
Basic values and principles governing public administration
1.
Public administration must be governed by the democratic values and
principles enshrined in the Constitution, including the following

principles:
a.
A high standard of professional ethics must be promoted and
maintained.
b.
Efficient, economic and effective use of resources must be promoted.
c.
Public administration must be development-oriented.
d.
Services must be provided impartially, fairly, equitably and without
bias.
e.
People's needs must be responded to, and the public must be
encouraged to participate in policy-making.
f.
Public administration must be accountable.
g.
Transparency must be fostered by providing the public with timely,
accessible and accurate information.
h.
Good human-resource management and career-development practices, to
maximize human potential, must be cultivated.
I.
Public administration must be broadly representative of the South
African people, with employment and personnel management practices

based on ability, objectivity, fairness, and the need to redress the
imbalances of the past to achieve broad representation.
2.
The above principles apply to
a.
administration in every sphere of government;
b.
organs of state; and
c.
public enterprises.
3.
National legislation must ensure the promotion of the values and
principles listed in subsection (1).
4.
The appointment in public administration of a number of persons on
policy considerations is not precluded, but national legislation
must
regulate these appointments in the public service.
5.
Legislation regulating public administration may differentiate
between different sectors, administrations or institutions".
[45] The need and essence of using the
authorized dealers in exchange control matters, and how they are used
are articulated in
paragraphs 4.2.1 to 5.3 of the first respondent’s
answering affidavit as follows:
“
4.2 Exchange Control Rulings
4.2.1
The Minister of Finance appoints certain banks to act as “authorized
dealers” in foreign exchange which gives
them the right to buy
and sell foreign exchange
subject
to conditions and within the limits applied by the Exchange Control
Department. The authorized dealers are not agents of
the Exchange
Control Department, but act on behalf of their clients in regard to
exchange control issues. They also act on behalf
of their clients in
seeking approvals from the Exchange Control Department for such
clients. As appears more fully below, the reason
for this is a
practical one - the Exchange Control Department simply has nowhere
near the capacity to handle the large number of
applications. This
arrangement allows the vast majority of foreign transfers to be
handled by authorized dealers. I will revert
to this more fully below
in relation to the Applicant’s attack upon this aspect of the
system which is, in fact, completely
innocuous and a simple practical
measure.
4.2.2
The Exchange Control Department issues the Exchange Control Rulings
(the “Rulings’) to the authorized dealers.
The Rulings
are voluminous, and in order not to burden these papers I do not
attach them here, but a copy of the current set marked
“AE2”
will be made available to the Applicant at his request and to this
Honourable Court at the hearing hereof. These
Rulings contain
administrative measures as well as the permissions, conditions and
limits applicable to transactions in foreign
exchange which may be
undertaken by authorized dealers. The Rulings are amended from time
to time by way of exchange control circulars.
The Rulings and
circulars are made available to all authorized dealers and the
contents thereof may be made available to the public.
4.2.3
Applications for permission to carry out foreign exchange
transactions received by authorized dealers from their clients are

dealt with by them if the applications falls within the parameters
outlined in the Rulings and circulars, without reference to
the
Exchange Control Department. When, however, an application falls
outside the ambit of the Rulings, the application must be
referred to
the Exchange Control Department, by the authorized dealer on behalf
of its client. The application is then dealt with
by the Exchange
Control Department, as set out below.
4.3
The Exchange control manual
The
exchange control manual was first issued in October 1990 by the
Exchange Control Department to assist authorized dealers in
foreign
exchange, their clients and other interested parties, by providing a
general understanding of the purpose, scope and operation
of the
exchange control system. The manual is a general guideline for the
public
and does not replace or supersede the Regulations, Orders and Rules,
the Rulings or the policies applied by the Exchange
Control
Department. This Department continuously updates the manual to
reflect current policy, guidelines and norms. The exchange
control
manual has been published inter alia on the South African Reserve
Bank’s website and is made available to all authorized
parties.
The Exchange Control Manual is voluminous, and in order not to burden
these papers I do not attack it here, but a copy
thereof marked “AE3”
will be made available to the Applicant at his request and to this
Honourable Court at the hearing
hereof.
5. Applications to the Exchange
Control Department
5.1
The majority of applications for permission to carry out foreign
exchange transactions fall within the scope of the Rulings
and are
dealt with by the authorized dealers. For example, in 2010 a total of
10 147 090 foreign exchange transactions took place
of which the
Exchange Control Department only received approximately 54 000
applications from all authorized dealers.
5.2
The majority of the applications by clients of authorized dealers
which fall outside the scope of the Rulings and which are
referred to
Finsurv for adjudication, fall outside the scope of the Rulings as a
result of some or other specific or peculiar characteristic
of the
transaction which merits individual consideration or for which no
permission is provided.
5.3
Each of these applications by clients of authorized dealers which are
referred to Finsurv, is therefore dealt with on its own
merits, and
within the parameters of the applicable exchange control policy and
norms.
5.4
The decision of Finsurv, including any conditions applicable
furnished in writing to the authorized dealer and then conveyed
by it
to the particular Applicant. The authorized dealer has the
responsibility of ensuring that the execution of the transaction

complies with any terms and conditions laid down by Finsurv. Should
approval of an application be refused, resubmission is possible,

whereupon a more senior official will review the application. In
certain instances Finsun/ will grant an interview with the Applicant

and the authorized dealer where the application of the policy and
norms would be explained. ”
[46]
True, as regards section 33 of the Constitution everyone has the
right to administrative action that is lawful, reasonable
and
procedurally fair. The constitutional obligation that is placed on
the Public Administration in terms of section 195 ought
to be
executed effectively and efficiently. When Public Administration does
not have the capacity or the expertise, it cannot be
excused from
this constitutional imperative. I did not hear the applicant to be
saying the authorized dealers are generally not
efficient and
effective, except for one incident when the authorized dealer which
dealt with the applicant’s case omitted
or neglected to place
his representations before the first respondent. The authorized
dealers, that is, the banks, by the nature
of their business, it must
be accepted that they have the necessary skills, expertise and the
capacity to give an advice or opinion
on currency, banking and
exchange control and also to consider certain applications.
[47]
The truth of the matter and the difficulties the first respondent
appears to be facing is the volume of applications for permission
to
carry out foreign exchange transactions. For example, in 2010, a
total of 10 147 090 foreign exchange transactions are said
to have
taken place of which the Exchange Control Department only received
approximately 54 000 applications from all authorized
dealers. These
were apparently applications which the authorized dealers could not
deal with for whatever reasons. Those are the
applications by clients
of authorized dealers which fall outside the scope of the Rulings and
which are referred to the Financial
Surveillance Department of the
first respondent for adjudication.
[48]
From all of these, it does not look like the respondents have
relegated their constitutional obligation in terms of section
195 of
the Constitution in its entirety to the authorized dealers, neither
did the applicant show the shifting of responsibilities
by the
respondents so as to amount to unfair administrative action. Put
simply, the applicant did not show facts upon which he
alleges that
his constitutional rights to a lawful, reasonable and procedurally
fair administration action have been infringed.
The banks appear to
be efficient and effective in the execution of the responsibilities
and duties delegated to them.
[49]
The fact that the first respondent requires the authorized dealers to
put first the interests of the exchange control department
of the
first respondent, with no facts showing prejudice to people like the
applicant, would not without more, render the decision
offensive and
contrary to the spirit of the Constitution as set out in section 33.
The majority of applications on exchange control
matters to the
authorized dealers are said to be by the clients of the said
authorized dealers. Therefore, one would expect of
the authorized
dealers to act in the best interest of their clients and at the same
time, ensuring the Rules and guidelines set
out by the first
respondent or second respondent on exchange control matters are
complied with. There is also no suggestion that
the authorized
dealers are not conducting themselves in an impartial way when
dealing with clients regarding exchange control matters,
banking and
or currency. I am therefore not satisfied that the so called “CLOSED
DOOR POLICY” is unlawful and unconstitutionally
unfair. This
finding addresses the relief sought in prayer 9 of the applicant’
notice of motion; and it also disposes of
the issue raised in
paragraph 11.1 of this judgment. I now turn to deal with the next
question which was not specifically raised
or identified in paragraph
11 of this judgment.
WERE THE DECISIONS SOUGHT TO BE
REVIEWED TAKEN BY THE FIRST RESPONDENT?
[50]
As I said, this was not initially one of the issues identified by the
parties at the start of the hearing. The issue was raised
in the
course of the argument. The suggestion from the respondents’
side was that when the first respondent imposed a levy
on the
applicant, it was not taking a decision, but, rather that it was
merely implementing the decision already taken by the Minister

(second respondent) on the 26 February 2003. For example, in its
letter of the 8 February 2010 and in response to a request for

reasons for the decision in imposing 10% levy on the applicant’s
last blocked loan account assets, the first respondent amongst

others, expressed itself as follows: “Further, we attach hereto
Exchange Control Circular NO. 375 of 2003-02-26 wherein the
Minister
of Finance publicly announced further steps in exchange control
liberalizations with specific reference to emigrants’
funds
wherein it was stated that:
"Emigrant
blocked assets are to be unwound. Amounts up to R750 000 (inclusive
of amounts already exited) will be eligible for
exiting without
charge. Holders of blocked assets wishing to exit more than R750 000
(inclusive of amounts already exited) must
apply to the Exchange
Control Department of the Reserve Bank to do so. Approval will be
subject to an exiting charge of 10 per
cent of the amount”.
[51]
As a brief background, on the 26 February 2003, the Minister of
Finance during his budget speech amongst others, announced
as quoted
in
paragraph
50 above. That was announced to apply with immediate effect from the
26 February 2003.
[52]
On the same day, that is, the 26 February 2003, two documents
referred to as circulars were issued. First, the Exchange Control

Circular No D.375 of 26 February 2003 and the then Exchange Control
Circular No D380 of 26 February 2003. In both these circulars
10%,
exit charge or levy on blocked assets was announced.
[53]
In the present dispute, twice the first respondent considered the
application for permission to exit the remaining blocked
assets of
the applicant. First, when the application for permission to take out
of the country his remaining blocked assets was
not accompanied by
his representations. Second, when the decision to reconsider his
representations was taken after having considered
such
representations. In both instances, the first respondent granted the
permission to exit the applicant’s remaining blocked
assets on
condition that he pays 10% levy. There can be no doubt that the first
respondent took the two decisions sought to be
reviewed as indicated
in the notice of motion. However, what remains to be determined is
whether the decision to impose the 10%
levy was the decision of the
first respondent. Put differently, whether the first respondent had a
choice not to impose the 10%
levy? I deal with the issue in
paragraphs 88 to 96 of this judgment. I now turn to deal with the
first issue that was identified
in paragraph 11.1 of this judgment.
WAS THE DECISION TO IMPOSE A 10% LEVY
ON THE APPLICANT A LAWFUL DECISION?
[54]
Three legs to this issue were emphasized, first, what the applicant’s
counsel referred to as, the fundamental predicament,
second, the no
law of general application, and lastly the rigid and inflexible
application of policy. These constitute the crux
of the contention on
behalf of the applicant against the imposition of the 10% levy.
FUNDAMENTAL PREDICAMENT
[55]
In his Note for Argument, counsel for the applicant introduced the
challenge as follows:
“
To
the extent that there is any law in the system, it is made by the
President subject to none of the manner and form of provisions
of the
Constitution and without any public participation preceding it. To
the extent that the system depends on the decision being
taken by the
Minister or SARB, none of the decisions meets the standard for valid
administration acts. They are not attuned to
the individual facts of
a given case and they are made without input from those affected by
the decisions".
[56]
For this, it is suggested that participative processes for law making
prescribed by the Constitution were not followed. Secondly,
the
suggestion is that the administrative machinery to make decisions in
individual cases which must comply with the demands of
administrative
justice was not followed. I think this leg of the contention will be
properly tackled when the two other legs are
considered.
NO LAW OF GENERAL APPLICATION
[57]
Counsel for the applicant moved from the premise that the necessary
starting point of this leg is, to determine the source
of the power
to impose the levy. True, this is what our law says. Correctly so,
this is conceded by the respondents. The question
is whether the
imposition of the levy was lawful? If it was not lawful, it must be
because the exit levy did not comply with a
substantive provision of
the law, including the relevant provisions of the Constitution. The
definite and source of public power
in law is either in the
Constitution or in national legislation. This is fundamental to the
principle of legality
1
.
[58]
The applicant says the respondents’ purported power to impose
the levy of 10% on blocked assets is founded on Exchange
Control
Circulars D. 375 and D. 380 issued on the 26 February 2003. I
referred to circulars in paragraphs 8 and 52 of this judgment
read
together with paragraphs 98 to 105 hereunder.
[59]
However, the respondents do not see the circulars aforesaid as their
source of power to impose the levy. They see their source
of power in
section 9(1) of the Act and Regulation 10(1) (c). They respectively
read as follows:
“
9.
Regulations regarding currency, banking or the exchanges
(1)
The Governor-General may make regulations in regard to any matter
directly or indirectly relating or affecting or having any
bearing
upon currency, banking or exchanges".
RESTRICTION
ON EXPORT OF CAPITAL
10.
(1) No person shall except with permission granted by the Treasury
and in
accordance
with the conditions as the Treasury may impose -
(a)
(i)
(ii)
(iii)
(b)
(c)
enter into any transaction whereby capital or any right to capital is
directly or indirectly exported from the Republic. ”
[60]
In other words, the respondents are saying that Regulation 10(1) (c)
is a product of section 9(1) of the Act. The 10% levy
is a condition
imposed for permission to expatriate the applicant’s blocked
assets out of the country. It is a condition
imposed in terms of
regulation 10 (1) (c). On the other hand, the applicant sought to
attack this approach on three grounds. Firstly,
that Regulation 10(1)
(c) is invalid as it did not comply with the provisions of section
9(4) of the Act. Secondly, the approach
is attacked on the basis of
lack of guidelines in the legislation or Regulation 10(1) (c). This
is said to render Regulation 10(1)
(c) invalid. Lastly, as I
understood counsel for the applicant to be saying, the imposition of
condition to impose 10% was not
followed by participative process. I
deal with each of the challenges hereunder.
IS
THE PROVISIONS OF SECTION 9(4) APPLICABLE TO REGULATION 10
(1)(C)?
[61]
Section 9(4) read as follows:
“
The
Minister of Finance shall cause a copy of every regulation made under
this section to be laid upon the Table of both Houses
of Parliament
within fourteen days after the first publication thereof in the
Gazette, if Parliament is in ordinary session during
the whole of
that period, and if Parliament is not in ordinary session during the
whole of that period, then within fourteen days
after the beginning
of the next ordinary session of Parliament, and if any such
regulation is calculated to raise any revenue,
he shall cause to be
attached to the copy so laid upon the Table a statement of the
revenue which he estimate will be raised thereby
during the period of
twelve months after the coming into operation thereof. Every such
regulation calculated to raise any revenue
shall cease to have the
force of law from a date on the Table unless before that date it has
been approved by resolution of both
Houses of Parliament”.
[62]
The underlining in the quotation is my own emphasis. One of the
criticism for relying on Regulation 10(1) (c) as challengeable
is
that, the regulation is invalid for non- compliance with the
provisions of section 9(4). Such requirements are self-explanatory
in
subsection (4) as quoted above.
1And
if any such regulation is calculated to raise any revenue’ in
subsection (4), seems to refer to the making or promulgation
of
regulations that are intended to raise revenue or tax. Section 9 (1)
quoted in paragraph 59 above, deals with the making of
regulations
regarding currency, banking or the exchange. I do not think that
there is a question about what the intention of the
legislature in
subsection (4) is.
[63]
If regulation 10(1) (c) is intended or ‘calculated to raise
revenue’, for non- compliance with section 9(4), it
would bring
to an end the Respondents’
defences.
The question again: Is section 9(4) applicable to regulation 10(1)
(c)? One needs to examine regulation 10(1) (c) closely.
[64]
The heading in regulation 10 in my view, speaks for itself. That is,
RESTRICTION ON EXPORTS OF CAPITAL. Just on the heading
alone,
regulation 10 seems to be ‘calculated to restrict export of
capital’, and not ‘calculated to raise revenue’
as
envisaged in section 9(4). To interpret it otherwise, in my view,
defeats one’s sense of logic.
[65]
The first wording of sub-regulation (1) of Regulation 10 speaks for
itself as well. You want to export capital, you apply for
permission
to do so. This is so because ‘no person shall, except with
permission granted by the Treasury enter into any transaction
whereby
capital or any right to capital is directly or indirectly exported
from the Republic’. (See again subregulation 10(1)(c)
quoted in
paragraph 59 of this judgment). The applicant fell under the category
of Regulation 10(1) (c) insofar as it related to
his application to
export his remaining blocked assets,
[66]
Counsel for the President put it more or less this way: “You
cannot say you are raising revenue when you are fined for
speeding”.
Put simply, when speeding is made an offence, that prohibition is not
intended to raise revenue. The prohibition
is intended to ensure that
we do not have unnecessary fatalities on our roads. But, those who
offend are punished by for example,
paying fines. Despite the fact
that the money might be going
into
the same State revenue’ account, the prohibition itself cannot
be construed as having been ‘calculated to raise
revenue’.
[67]
This is what is contemplated in Regulation 10(1) (c). It is a
prohibition to export that is intended or ‘calculated’
to
in regulation 10 (1) (c). Any contravention thereof is an offence in
terms of Regulation 22. But most importantly, as a condition
for the
granting of permission to expatriate blocked assets, one has to look
at the essence of the prohibition and the imposition
of 10% levy.
Using the first respondent’s words: The 10% charge, generally
speaking constituted a disincentive to the exit
of large amount of
capital, thus asserting to maintain the financial stability of the
South African economy’.
[68]
Similarly, the Minister in his answering affidavit deposed to by Mr
E.L. Kganyago alluded to the fact that the policy premise
of the
prohibition and 10% charge on the applicant was a condition to him,
an emigrant, taking his remaining assets out of the
country. The
object was inter alia to limit the adverse consequences of the
outflow of funds on the external balance of payments
necessary to
maintain South Africa’s macro-economic health and to promote
financial growth and stability.
[69]
This will become relevant when dealing with the reviewability of the
respondents’ decision and the constitutional challenges.
It
suffices for now to conclude that there is no basis to find that
section 9(4) is applicable to Regulation 10(1) (c).
LACK OF GUIDELINES ON THE EXCHANGE
CONTROL PROCESS
[70]
I understood the applicant’s counsel to suggest that specific
guidelines regarding the conditions under Regulation 10
(1) (c)
should have been specifically spelled out in the Regulations or in
the enabling legislation.
[71]
To come to this conclusion, one needs to ignore the volatile and
inflexible nature of the currency and economic changes in
all
markets. One needs to ignore the fact that exchange control system
must be of such a nature that it can be amended quickly
and easily.
To this end, what was previously quoted in paragraphs15 and 14 of
this judgment become relevant.
[72]
It would be difficult to predetermine guidelines in a statute or
regulations especially with a system about exchange control,
a market
that fluctuates in almost every day. In any event, it is not like
there are no guidelines in respect of exchange control.
Such
guidelines are often contained in the Orders and Rules, Rulings and
or Circulars. For example, on the 26 February 2003 the
Minister of
Finance announced imposition of 10% levy on blocked assets beyond
R750 000 and R1 500 000 in respect of family trusts.
On the very same
day, the decision was contained and conveyed in two circulars which
also form the subject of the dispute before
me. I am mentioning this
just to illustrate the swiftness at which the guidelines by other
means than in the form of Regulations
or legislation could be
introduced and implemented. When this happens, it cannot in the
nature of the Exchange Control System be
seen as being contrary to
the rule of law. Otherwise, the country will be brought to a
standstill and economic nightmare.
[73]
Before I conclude on the issue, I think it is necessary to mention
that the applicant in raising the issue under discussion
seems to
have relied heavily on what Reagan J of the Constitutional Court said
in the matter of Dawood, Shalabi and Thomas cited
in the preceding
paragraph 135 of this judgment. In that case, constitutionality or
otherwise of section 25 (b) of the Aliens Control
Act 96 of 1991
became the subject of a dispute. Section 25 (b) reads as follows
together with paragraph (a) thereof:
“
(a)
A Regional Committee may on an application mentioned in ss (1) made
by an alien who has been permitted under this Act to temporarily

sojourn in the Republic in terms of a permit referred to in section
26 (1) (b) authorise the issue to him or her of a permit in
terms of
this section mutatis mutandis as if he or she may reside permanently
in the Republic.
(b)
Notwithstanding the provisions of paragraph (a) a regional committee
may authorise a permit in terms of this section to any
person who has
been permitted under section 26 (1) to temporarily sojourn in the
Republic, if such person is a person referred
to in ss 4 (b). ”
[74]
Section 25 (a) and (b) refers to a person who has been permitted
under section 26 (1) to temporarily sojourn in the Republic,
and it
also refers to a person whose temporarily residence permit is still
valid and not to a person whose permit has expired.
Section 25 (a)
and (b) was attacked on the basis that it infringes several
constitutional rights such as the right to dignity,
the right of
citizens, the right to remain and reside in South Africa,
the
right to children, the right to family or parental care; and the
right not to be subjected to unfair discrimination.
[75]
The Constitutional Court in Dawood’s matter had the opportunity
to consider the effect of discretionary power conferred
on a
functionary without legislative guidance as to the factors to be
considered in exercising such discretionary power.
[76]
It is an important principle of the rule of the law that rules be
stated in a clear and accessible manner It is because of
this
principle that section 36 requires that limitation of rights may be
justifiable only if they are authorised by a law of general

application. Moreover, if broad discretionary powers contain no
express constraints, those who are affected by the exercise of
the
broad discretionary powers will not know what is relevant to the
exercise of those powers or in what circumstances they are
entitled
to seek relief from an adverse decision. In the absence of any clear
statement to that effect in the legislation, it would
not be obvious
to a potential applicant that the exercise of the discretion
conferred upon a functionary is constrained by the
provisions of the
Bill of Rights and in particular what factors are relevant to the
decisions to be taken. If rights are to be
infringed without redress,
the very purposes of the Constitution are defeated. (See paragraph 47
in Dawood’s matter supra).
[77]
The fact that an exercise of a discretionary power may subsequently
be successfully challenged on administrative grounds, for
example,
that it was
not
reasonable, does not relieve the Legislature of its Constitutional
obligation to promote, protect, and fulfill rights entrenched
in the
Bill of Rights. The Legislature must take care when legislation is
drafted to limit the risk of an unconstitutional exercise
of the
discretionary powers it confers (See paragraph 48 in Dawood’s
matter). It is for the Legislature, in the first place
to identify
the policy considering what would render the decision of a
functionary justifiable. (See paragraph 49 in Dawood’s
matter).
[78]
Absence of provision in a legislative framework providing guidance
as to the circumstances relevant to the exercise of discretion,
would
not promote the spirit, purport and objects of Bill of Rights.
Referring to the assessment of factors to be considered, O’Reagan

J in Dawood’s matter further stated as follows: “nor can
we hold in the present case that it is enough to leave it
to an
official to determine when it will be justifiable to limit the right
in the democratic society contemplated by section 36”.(See

paragraph 50 in Dawood’s matter).
[79]
Discretion plays a crucial role in any legal system. It permits
abstract and general rules to be applied to specific and particular

circumstances in a fair manner. The scope of discretionary power may
vary. At time, they will be broad, particularly where the
factors
relevant to a decision are so numerous and varied that it is
inappropriate or impossible for the Legislature to identify
them in
advance. Discretionary powers may also be broadly formulated where
the factors relevant to the exercise of the discretionary
power are
indisputably clear. A further situation may arise where the decision
maker is possessed of expertise relevant to the
decisions to be made.
Having said all of these in paragraph 53 of the judgment in Dawood’s
case, Q Regan J concluded by saying:
“There is nothing to
suggest that any of these circumstances is present here”.
[80]
The underlining is my own emphasis. What is stated in paragraphs 78
to 79 above makes one to come to the conclusion that the
principles
as set out in paragraphs 73 to 79 of this judgment, is dependent on
the facts of each case. Remember, the issue of lack
of guidelines
regarding the exchange control process was raised as one of the
ground in attacking regulation 10 (1) (c).
[81]
In my view, as correctly stated by the first respondent in paragraph
16 of its answering affidavit, ‘exchange control
system
requires a flexible, speedy, and expert approach to ensure that
proper financial governance prevails’.
[82]
The nature of the exchange control system is such that it requires
and should permit abstract, and several set of rules to
be applied to
a specific and particular circumstances as such circumstances and
changes prevail themselves. It is a system that
would make it
impossible to lay down the rules or set out factors in advance. Most
importantly, the exchange control system is
a system that requires
expertise. It is for this reason, I want to believe, that it is the
Reserve Bank that is delegated and tasked
to deal with matters
relating to the exchange controls, because it has the expertise
although
it might be limited in terms of the capacity. It is for this reason,
I want to believe, that the Reserve Bank is using
the authorised
dealers (the banks) to ensure that it becomes efficient and effective
in matters relating to the exchange controls.
This is done, as see
it, to take care of the lack of capacity mentioned above. The
quotations in paragraphs 14 and 15 of this judgment,
in my view, make
it even more clearer as to why it would not be advisable and possible
to seek to set out guidelines in advance
in regulation 10 (1) (c) or
in section 9 of the Act. Failure to do so, in my view, cannot be seen
as defeating the promotion of
the spirit, purport and objects of the
Bill of Rights as envisaged in Section 39 (2) of the Constitution.
[83]
It must therefore be found that failure to state any guidelines with
reference to conditions in terms of regulation 10 (1)
(c), is
justified. Having regard to the nature and importance of the right
that might be limited under regulation 10 (1) (c) and
the extent of
limitation that is mediated by permissions, the limitations and or
restrictions should be found to be justified in
relation to the
nature, importance and effect of the provision of regulation 10 (1)
(c) regarding the imposition of certain conditions.
LACK OF PARTICIPATIVE PROCESS
[84]
Counsel for the applicant in his Notes for Argument put it this way:
“
The
respondents in this case face predicament. Under our constitutional
scheme, there are two primary mechanizing through which
the state may
regulate the affairs of the citizens. It may make laws through
elected Parliament, which in order to be valid, must
follow the
participative process for the law making prescribed by the
Constitution
The
issue of lack of public participative process seems to relate to the
manner in which the Exchange Control Circulars D.375, D.
380 and
Rulings in question came about. It looks like this point was made on
the assumption that the respondents had applied and
enforced what is
contained in circulars D. 375 and D380 as a source of authority to
impose the 10% levy on the applicant’s
blocked assets.
[85]
The respondents never claimed that they regarded Circulars D375,
D.380 and section B 2 (iii) (e) of Rulings as having force
of law,
but rather that, they acted in terms of Regulation 10(1) (c) and
imposed levy on the applicant’s blocked assets,
based on the
policy decision taken on the 26 February 2003 as announced by the
Minister of Finance during his budget speech. The
decision was
embodied in the two circulars and rulings and was conveyed to the
first respondent and or authorized dealers. The
circulars and rulings
in question are nothing else than a means of communicating the
decisions on policy and guidelines, most of
which, if not all, are
issued under the authority of the Minister.
[86]
If I understood the applicant’s counsel correctly, the view
expressed is that if the Circulars had followed the route
of
legislative or regulatory framework, the process of transparency and
participation by the public would have been met. For example,

comments would have been invited before the legislation and or
regulations were put in place as laws. This point was put forward
as
I see it, on the assumption that the power to impose the 10% levy on
the applicant’s remaining blocked assets was founded
on the
Circulars and or Rulings. Of course it was not. It was instead
founded on the Minister’s decision of the 26 February
2003 to
impose 10% levy on the blocked assets. I deal later in paragraphs 97
to 108 with that decision when dealing with prayer
2 of the
applicant. It suffices for now to mention that insofar as the
applicant might have wanted to suggest that the decisions
by the
first respondent to impose the levy were founded on the Circulars and
or Rulings, the point is misplaced. For this, the
point of lack of
transparency and due process regarding the Circulars and rulings in
question should also fail.
[87]
In any event, it is not like the two Circulars were kept secret upon
having been issued on the 26 February 2003. The Circulars
were made,
issued and communicated pursuant to the speech by the Minister of
Finance who announced imposition of 10% levy with
immediate effect
from the 26 February 2003. The authorized dealers or bankers were
provided with these Circulars or policy guidelines
to ensure that the
decision by the Minister is acted upon and also to ensure that
contents thereof were brought to the attention
of interested parties
through authorized dealers (the banks) so as to advise their clients
as they interact with them. It was therefore
made known to those who
were to be bound by and or implement the guidelines. The applicant
knew about it, complied with it in the
past without reservations, and
only when later he was legally advised of the challengeable grounds,
did he raise an objection.
This had happened when he wanted to
repatriate his last assets out of the country. This then brings me to
another question.
DOES REGULATION 10(1)(C) CONFER A
DISCRETIONARY POWER ON THE
FIRST RESPONDENT REGARDING THE
IMPOSITION OF 10% LEVY?
[88]
This relates to what the applicant regards as ‘the rigid and
inflexible application of the policy’. I did not understand
the
applicant to be strongly attacking the constitutionality of
Regulation 10(1) (c) save insofar as it might be relating to the

issue dealt under paragraphs 61 to 69 of this judgment. What I
understood the applicant's counsel to be arguing was that inasmuch
as
section 9(4) was not complied with in promulgating Regulation 10(1
)(c), the Regulation should be found to be invalid and of
no force.
[89]
Therefore accepting that Regulation 10(1) (c) is properly
promulgated, one needs to look at it closely. What does it provide

for? How a functionary like the first respondent was expected to
apply it at the time the decisions under attack were taken? In

essence, the complaint by the applicant is that it was not properly
applied. Simply put by the applicant’s counsel, ‘the

rigid and inflexible application of a policy is unlawful,' so it was
contended.
[90]
In paragraph 2.34 of the applicant's Notes for Argument it is put as
follows:
"2.34
Implicit in SARB's argument is an acceptance that if on a proper
interpretation of regulation 10(1) (c) the exercise
of discretion is
required, then their case is fatally flawed because no discretion was
exercised".
[91]
Regulation 10(1) (c) introduces three things in it. First, it
prohibits the entering into any transaction whereby capital or
any
right to capital is directly or indirectly exported from the
Republic. Secondly, it allows the granting of permission to export

from the Republic capital or any right thereto. Lastly, it allows the
imposition of certain conditions when permission is granted.
[92]
The first respondent considers the applications for permission as
envisaged in regulation 10(1) (c). It does so, on delegated
authority
of the Minister (the second respondent). There can be no doubt that
when it does so, it exercises discretion whether
or not to grant
permission. If it does grant the permission, it has to decide what
conditions to impose in the granting of such
permission. In the
instant case, it exercised its discretion by granting the permission.
[93]
The sticky question however is, whether in the circumstances of the
case it had discretion not to impose the 10% levy? The
first
respondent's stance is that it did not have such discretion. This
contention must be seen in context.
[94]
The context is simply this: The Minister of Finance on the 26
February 2003 took a decision that became a policy guideline.
The
first respondent was delegated by the Minister. The decision
announced by the Minister on the 26 February 2003 was, and I do
this
at the risk of repetition, articulated as follows:
"The
following dispensation will apply with immediate effect:
The
distinction between the settling in allowance for emigrants and the
private individual foreign investment allowance for residents
is to
fall away and there will now be a common foreign allowance for both
residents and emigrants of R750 000 per person (or R1.5
million in
respect of family units).
Amounts
of up to R750 000 (inclusive of amounts already exited) will be
eligible for exiting without charge.
Holders
of blocked assets wishing to exit more than R750 000 (inclusive of
amounts already exited) must apply to the Exchange Control
Department
of the SA Reserve Bank to do so. Approval will be subject to an
exiting schedule and an exit charge of 10% of that amount.
The same
dispensation will apply for new emigrants”.
[95]
The underlining is my own emphasis. What is quoted above should now
make it clearer what I said in paragraphs 91 to 93 of this
judgment.
Firstly, there can be no doubt about the first respondent’s
discretion to grant or not to grant permission to export
the capital
or any right thereto from the Republic. Secondly, there can be no
doubt that the functions of considering the applications
have
specifically been delegated to the first respondent. Lastly, there
can be no doubt as to how the imposition of the ten percent
levy came
about.
[96]
The question that remains is how do you exercise discretion and
deviate from policy guideline that required of the first respondent

to impose a 10% levy when granting permission to expatriate the
capital out of the Republic? I do not think one can. By doing so,
the
first respondent would have been acting without delegated authority.
Put simply, the first respondent would have been acting
contrary to
the one that had conferred certain powers on him. Consequently, I
find that the first respondent had no discretion
not to impose the
10% levy on the applicant’s blocked assets. This then brings me
to deal with another issue which was also
not specifically raised as
an issue to be determined at the commencement of the hearing.
FAILURE TO BRING REVIEW PROCEEDINGS
AGAINST DECISION OF THE MINISTER AND THE UNCONSTITUTIONALITY OF THE
CIRCULARS AND RULINGS
[97]
I earlier on in paragraphs 84 to 87 referred to Circulars and
Rulings. In his notice of motion, the applicant seeks to review
only
the decisions taken by the first respondent on the 13 October 2009
and 1 December 2009. Clearly therefore, the applicant does
not seek
to review the decision of the Minister taken on the 26 February 2003.
[98]
The contention however was that, the decision by the Minister should
be seen as being attacked on the basis of prayer 2. This
was quoted
in prayer 9 of the notice of motion and for completeness sake it is
repeated herein as follows:
“
2.
Declaring the words “and an exit charge of 10% of the amount
in:
2.1
Exchange Control Circular no. D.375 of 26 February 2003,
2.2
Exchange Control Circular no. D380 of 26 February 2003,
2.3
Section B 2(E) (iii)(e) of the Exchange Control Rulings were at all
material times inconsistent with the Constitution and invalid".
[99]
When the question was raised as to whose decision(s) the applicant
seeks to review, counsel for the applicant indicated that
they are
prepared to proceed on the basis of the prayers in the notice of
motion. The contention as I understood it was that there
was nothing
wrong with the amended notice of motion and that prayer 2 addresses
all challenges that the applicant wished to raise
against the
decision of the Minister.
[100]
Seeking to attack constitutional validity of Circular No. D375 of 26
February 2003, Circular No. D.380 of 26 February 2003
and Section or
Ruling B2 (E) (iii) (e), without directly seeking to review the
decision of the Minister announced on the 26 February
2006, in my
view, poses a problem for the applicant.
[101]
Firstly, the second respondent was brought to court on the basis of a
challenge against the decisions of the first respondent
and the
attack on the alleged constitutional invalidity of the two circulars
and the Ruling aforesaid. The respondents’ contention
in these
proceedings is that, they did not rely on the Circulars or Rulings
when 10% levy was imposed, but rather on the decision
of the
Minister. The second problem is that invalidation of the circulars
and rulings without invalidating the decision of the
Minister, would
not only be prejudicial to the first and second respondents, but will
also be academic as the Minister’ decision
at the time and
during all material times hereto will remain valid.
[102]
The respondents could have come to court on the basis that, it is
well and good to attack the lawfulness or validity or otherwise
of
the Circulars and Rulings only. But, it is another to seek to attack
the decision of the Minister. Therefore, if the decision
of the
Minister was brought to the frail on its alleged unlawfulness, or
unconstitutionality, the respondents could have reacted
thereto
differently. In other words, they would be prejudiced, should such a
decision be allowed to enter into the frail now.
[103]
As I indicated previously in this judgment, the attack on the
Circulars should be considered on the basis that the imposition
of
the 10% levy by
the
first respondent, was founded on the decision of the second
respondent. Therefore, without any challenge to the decision of
the
Minister (the second respondent), it must be assumed that his
decision was correct.
[104]
Perhaps the question should be raised as follows: Is the decision of
the Minister correct and lawful? And if so, on what basis
can the
Circulars and or Rulings founded on that decision be
unconstitutional? The lawfulness, constitutionality or otherwise of

the Minister’s decision is not an issue before me. The
applicant might want to deal with this issue fully during his action

proceedings against the respondents for a refund.
[105]
In any event, once it is found that the decision to impose a levy is
derived from the empowering section 9(1) and Regulation
10(1) (c),
there is nothing left of the attack on the unconstitutionality of the
Rules, Circulars and Rulings. They did not have
to follow the process
of a Bill and or promulgation of regulations considering the
volatility of the exchange control matters which
requires swift and
quick reaction.
ABSENCE OF PROCEDURAL FAIRNESS
[106]
This is a topic that is specified in the applicant’s Notes for
Argument. The topic is introduced as follows:
“
2.39
A deprivation of property must be proceduraiiy fair. This was the
position even before the advent of the Constitution.
2.40
In the present case, no procedure, fair or otherwise was adopted.
2.41
This was plainly unlawful”
[107]
Section 25(1) and (2) of the Constitution reads as follows:
“
25.
Property._
(1)
No one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation
of property
(2)
Property may be expropriated only in terms of law of general
application-
(a)
for a public purpose or in the public interest; and
(b)
subject to compensation, the amount of which and the time and manner
of payment of which have either been agreed to by those
effected or
decided
or
approved by a court".
[108]
The applicant for his contention seems to be relying on subsection
(1) of section 25 of the Constitution. It is contended
that the
applicant was not given any form of hearing whatsoever, and,
moreover, had to communicate with the first respondent only
in
accordance with the closed door policy.
[109]
The deprivation of the applicant’s property in the form of 10%
levied on his blocked assets, should be seen in the context
of the
prohibition under Regulation 10(1 )(c) Secondly, it should be seen in
the context of facts relevant to the applicant’s
case.
[110]
The applicant’s wealth which he had accumulated or created in
South Africa could be summed up as follows: He emigrated
from the
Republic on the 23 February 2001. The applicant’s assets inside
the Republic were blocked. The bulk of those assets
comprised of two
loans he had made to the HBD Investment Trust and the HBD Business
Trust previously named as the MS Family Trust
and SI Business Trust
respectively. The aggregate value of these blocked loan accounts as
at the time of his emigration was R4
276, 257, 134.00. The first
permission granted to him was on the 20 November 2001. On the 5 March
2008 he again applied for permission
to expatriate R1 500, 000,
000.00 of his blocked assets. The application was granted subject to
the exit levy of 10%.
[111]
As on the 26 June 2009 the value of his blocked loan account assets
still in the Republic was R2 504, 748, 935. Secondly,
by the end of
June 2009 he had decided to transfer all of his blocked loan account
assets out of the Republic. His application
in this regard was
submitted to the first respondent on the 31 August 2009. The
application was approved on or about 13 October
2009 subject to
payment of 10% levy. According to the first respondent’
records, by the 8 February 2010, the applicant had
repatriated R3 739
268 520-00 of his blocked assets out of the country.
[112]
About 10 November 2009, the applicant asked the first respondent to
reconsider its decision to impose the 10% exit fee on
his last
blocked assets. In other words, he asked that the 10% exit fee be
lifted. In the meantime, the applicant paid the 10%
exit levy under
protest. On the 1 December 2009, the applicant was informed that his
application for reconsideration for the uplifting
of the 10% levy was
refused.
[113]
On the 4 December 2009, the applicant made a formal request to the
first respondent to be furnished with reasons for the decision
of the
1 December 2009. On the 8 February 2010, the first respondent
responded to the request for information or reasons. The response

from the first respondent consists of three pages. The two Circulars
were attached to the response. The applicant was also referred
to
what the Minister said during his budget speech on 26 February 2003
regarding the imposition of 10% levy on blocked assets.
[114]
I am mentioning all of the above, to have a better understanding of
the issues raised as the ‘Absence of Procedural
Fairness’.
Most importantly, it is clear that the imposition of 10% levy was
directed at those who had accumulated so much
wealth in the Republic.
When they so wish to disengage investing in the Republic, they were
meant to be hit with the 10% levy as
a form of discouragement. The
idea of such discouragement cannot be said to be bad and an
unconstitutional policy. This might be
one factor on point where
limitation of rights might be necessary to the extent that the
limitation is reasonable and justifiable
as envisaged in section
36(1) of the Constitution. To come to this, the decision of the
Minister ought to be attacked or changed
first and therefore I should
not be understood as making a final determination on the issue. But
imagine what will happen to this
country if the wealthiest men and
women in the country were allowed to take their wealth out of the
country without impunity every
time when the country is in economic
grief or when there is a change of government or leaders in
government. It could have devastating
effect on the country as a
whole.
[115]
Suggestion that ‘he was not given any form of hearing
whatsoever,’ is a statement that has to be considered in

context. FAI is an application document made by or on behalf of the
applicant. It is a document that was meant to be laid before
the
first respondent before it took its decision of the 13 October 2009.
It consists of five pages. It contains motivation for
the permission
to expatriate the remaining blocked assets of the applicant from the
Republic. The document was inadvertently not
laid before the first
respondent when the application was submitted to the first respondent
prior to the decision of the 13 October
2009.
[116]
Post the decisions of the 13 October 2009, the applicant caused the
document to be laid before the first respondent. When
the applicant
so laid the document before the first respondent, the applicant in a
separate
document
sought to challenge the 10% levy as follows: “i was not and am
stm
not
satisfied that the 10%(ten percent) exit fee is a condition or
payment which Exchange Control may lawfully impose and it was
never
my intention to volunteer payment of this 10%(ten per cent)”.
The response thereto is as per a letter of 8 February
2010 in which
the applicant was informed that his request for reconsideration of
the imposition of the 10% levy had been declined.
The latter decision
is said to have been conveyed orally to the applicant on the 1
December 2009.
[117]
For whatever is worth, the basis for the document referred to as FAI
is articulated by the applicant in paragraph 22 of his
founding
affidavit as follows: “22
...In
advance of making the application for the transfer, I sought advice
on the legality of this policy and was advised that the
policy and
the 10% levy were unlawful for the reasons set out in this
application. In the light of this advice, my legal representative
and
a framed the application in Annexure "FAI” so as to
protect my right to challenge any imposition of a 10% exit fee
by the
first respondent”
[118]
However, what is interesting is that, in FA1 there is no mention at
all about 10% levy. This is contrary to what is sought
to be conveyed
in paragraph 22 of the applicant’s founding affidavit and
quoted in part in paragraph 117 above. What I find
even more
interesting is what the applicant said in paragraphs 5 and 18 of
annexure FA1. He expresses himself as follows:
“
5.
The purpose of this application is for permission, for the applicant
to transfer his remaining blocked assets and of the Republic
subject
to whatever conditions or payments SARB may lawfully impose.
18.
The Applicant hereby applies to SARB for permission to transfer
abroad the balance remaining of his blocked loan account assets
after
deduction of any payments which the SARB lawfully imposes in
connection with the transfer of the funds ...”
[119]
The underlining in the quotation is my own emphasis. Applicant was
not required for the first time to pay the 10% levy. He
expected his
remaining block assets to be levied before they were expatriated.
Therefore, failure to give him fair hearing should
be considered in
the context of all of these.
I
am unable to find that the first respondent used what is referred to
as a ‘Closed Door Policy’ unfairly in the circumstances

of the present case. The absence of the procedural fairness on the
facts of the case cannot succeed even if the other points were
to be
upheld in favour of the applicant. What is stated in a separate
document quoted partly in paragraph 116 above is clear that
the
applicant sought to erase what is stated in his five page document
quoted partly in paragraphs 117 and 118 of this judgment.

Effectively, three documents were submitted to the first respondent
before the decision of the 1 December 2009 was taken. First,
it was
Exchange control application on the letter-heads of Standard Bank
dated the 25 August 2009. Second, the five page application
document
prepared by the applicant himself and annexed to his founding papers
as FA1; and lastly, the document referred to in paragraph
116 above.
It is not like the respondents refused to hear the applicant. But,
more importantly, the process of considering applications
under the
exchange control system is articulated in the quotation in paragraph
45 of this judgment under the heading: “Applications
to the
Exchange Control Department”
CONSTITUTIONAL
INVALIDITY OF THE REGULATIONS
[120]
This is a challenge on the alleged constitutional invalidity of a
whole host of the Regulations made under section 9 of the
Act. Just
to recap, Section 9(1) provides that the Governor-General who is now
(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.
[121]
The following Regulations are specifically targeted as being
inconsistent with the spirit of the Bill of Rights:
(i)
Regulations 3(1)
(ii)
Regulation 3(3)
(iii)
Regulation 3(5)
(iv)
Regulation 10(1 )(b)
(v)
Regulation 18
(Vi)
Regulation 19(1)
(vii)
Regulation 22
LACK
OF STANDING
[122]
Before I deal with the essence of the attack on the constitutional
invalidity of the Regulations, it is important to deal
first with one
preliminary issue that was raised. The respondents took the point
that the applicant has no standing to seek to
attack the alleged
constitutional invalidity of the regulations which have no bearing on
his case.
[123]
The suggestion as put forward by counsel on behalf of the President
(the third respondent) was that the applicant presented
no facts to
justify any standing to seek to invalidate the regulations on the
basis of inconsistency with the spirit of the Constitution.
The
applicant contended that he brought the application in his own
interest and in the interest of the public.
[124]
Court must as a matter of logic, assume that the challenge a litigant
seeks to bring is justified. This is because the question
of standing
is premised from the substance of the case. Accordingly, the question
of standing has two implications for the own
interest litigant.
First, it signals that the nature of the interest that confers
standing on the own interest litigant is insulated
from the merits of
the challenge he or she seeks to bring. 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 interests. He or she has
standing to bring the challenge
even if the decision or law is in fact valid. The interests that
confer standing to bring the challenge
and the impact the decision or
law has on them, must be demonstrated
2
.
[125]
One must add that the interest of justice under the Constitution may
require courts to be hesitant to dispose of cases on
standing alone
where broader concerns of accountability and responsiveness may
require investigation and determination of the merits.
By collary,
there may be cases where the interest of justice or the public
interest might compel a court to scrutinize action even
if the
applicant’s standing is questionable. When the public interest
cries out for relief, an applicant should not fail
merely for acting
in his or her own interest. (See Giant Concerts CC supra par Z4).
Where a litigant acts on his or her own interest,
he or she must show
that the decisions he or she seeks to attack had the capacity or
potential to affect his or her own legal rights
or interest. (See
Giant Concerts supra par 30).
[126]
Applicant lived in South Africa for larger part of his life before
he emigrated in 2001. He strived for business whilst still
in the
country. The bulk of his wealth was made here. He donated a large
amount of his wealth to a number of organizations and
or entities. He
is described in his papers as a South African entrepreneur who is now
living in the Isle of Man. He is a Welkom
son of the soil who grew up
in Cape Town.
[127]
With all of the above, and bearing in mind that the regulations under
attack concern exchange control system, the applicant
should be found
to have succeeded in demonstrating the interests that confer standing
to bring the challenge. The broader concerns
of accountability and
responsiveness require investigations and determination of the merits
regarding the challenged constitutionality
of the regulations
aforesaid. He might still want to come back into the country and
still do business in this country.
[128]
Similarly, and assuming that there is merit in the other challenges,
not only will the applicant’s interest be affected,
but the
public interests in ail probabilities will be affected as well. What
is required regarding public standing is a broad and
not a narrow
approach standing
3
.
Matters relating to exchange control have the potential to affect the
public in general.
[129]
Applicant is therefore found to have standing, both in his personal
interest and in the public interest to challenge the regulations
in
question. I now revert to deal with the constitutionality or
otherwise of the regulations identified in paragraph 121 of this

judgment. Unfortunately one has to deal with each regulation under
attack. For this reason, and for the sake of completeness and

clarity, the Regulations in question are quoted hereunder as follows:
“
RESTRICTION
ON EXPORT OF CURRENCY, GOLD, SECURITIES ETC. ECT AND THE IMPORT OF
SOUTH AFRCAN NOTE:
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
(b)
bis take any South African bank notes into the Republic or send or
consign any such notes to 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 statement assistance to any person in the
Republic, where such person-
(i)
is not resident in the Republic; or
(ii)
is an affected person
(2)
....................................................................................................................
(3)
(a) Every person who is about to leave the Republic and every person
in any
port
or other place recognised as a place of departure from the Republic,
who is requested to do so by the appropriate officer shall-
(b)
produce any bank notes, gold, securities or foreign currency which he
has with him;
and
the appropriate officer and any person acting under his directions
may search such person and examine or search any article
which such
person has with him, for the purpose of ascertaining whether he has
with him any bank notes, gold, securities or foreign
currency, and
may seize any ban notes, gold, securities or foreign currency
produced or found upon such examination or search unless
either-
(i)
the appropriate officer is satisfied that such person is, in respect
of any bank notes, gold, securities or foreign currency
which he has
with him, exempt from the prohibition imposed by sub-regulation (1);
or
(ii)
such person produces to the appropriate officer a certificate granted
by the Treasury which shows that the expropriation by
such person of
any bank notes, gold, securities or foreign currency which he has
with him does not involve a contravention of that
sub-regulations.
No
female shall be searched in pursuance of this sub-regulation except
by a female.
(4)
The appropriate officer and any person acting under his directions
may examine or search any goods consigned or letters or parcels
sent
from the Republic to a destination outside the Republic, for the
purpose of ascertaining whether there are being sent therewith
any
bank notes, gold, securities, or foreign currency, and may seize any
bank notes, gold, securities or foreign currency found
upon such
examination or search, unless the appropriate officer is satisfied
that the Treasury has granted a certificate which
shows that the
sending as aforesaid of the bank notes, gold, securities or foreign
currency does not involve a contravention of
sub-regulation (1), and
that such certificate was not granted in reliance on any incorrect
statement.
(5)
All bank notes, gold, securities and foreign currency seized under
sub-regulation (3) or
(4)
shall be forfeited for the benefit of the National Revenue Fund:
Provided that the Treasury may, in its discretion, direct that
any
bank notes, gold, securities of foreign currency so seized, be
refunded or returned, in whole or in part, to the person from
whom
they were taken, or who was entitled to have the custody or
possession of them at the time when they were seized.
RESTRICTION
ON EXPORT OF CAPITAL
10(1)
No person shall, except with permission granted by the Treasury and
in accordance with such conditions as the Treasury may
impose-
(a)
(i)
(ii)
(iii)
(a)
take out of the Republic goods, including personal apparel, household
affects, and jewellery which have value in excess of six
hundred rand
or of such greater amount as the Treasury may determine;
PROVISION
OF SECURITY
18.
(1) The Treasury or a person authorised by the Treasury, may order
any person to provide
security,
in such form and in such amount as the Treasury may determine, that
he will comply, either generally or in respect of
any particular
transaction, with the provisions of any of these regulations
specified by the Treasury or by a person authorised
by the Treasury,
(2)
Where any person who has provided security in terms of this
regulation, has failed to comply with the provisions of the
regulations
in respect of which the security has been provided, the
Treasury may direct that the said security shall be forfeited for the
benefit
of the National Revenue Fund.
FURNISHING
OF INFORMATION
19.
(1) The Treasury, or any person authorised by the Treasury, may order
any person to furnish
any
information at such person’s disposal which the Treasury or
such authorised person deems necessary for the purposes of
these
regulations and any person generally or specifically appointed by the
Treasury for the purpose may enter the residential
or business
premises of a person so ordered and may inspect any books or
documents belonging to, or under the control of such person.
(2)
If any person makes any statement in any information furnished in
compliance with such an order which is in conflict with any
other
statement previously made by him in giving information required in
connection with the subject matter of such order, he shall
be deemed
to have made an incorrect statement in terms of Regulation 22 and
may, on an indictment, summons or charge alleging that
he made the
two conflicting statements, be convicted of making an incorrect
statement in contravention of the said Regulation 22
upon proof of
the two statements in question and without proof as to which of the
said statements was incorrect, unless he proves
that when he made
each statement he believed it to be true.
PENALTY
22.
Every person who contravenes or fails to comply with any provision of
these regulations, or contraventions 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 proved 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 any information which he
is required to furnish under these regulations, shall be guilty of an
offence and
liable upon conviction to a fine not exceeding two
hundred and fifty thousand rand 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 fine not exceeding
two hundred and fifty rand, 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”.
THE ESSENCE OF THE ATTACK ON THE
REGULATIONS AFORESAID
[130]
In his written heads of argument, the applicant contends that the
regulations make no provision for the power to grant permissions
and
exceptions which is given to the Minister of Treasury and has been
delegated to the Reserve Bank, to be exercised in accordance
with the
requirements of procedural fairness. (My own emphasis)
[131]
On the contrary, it is said, the Regulations simply vest the Treasury
or the Minister with an unfettered discretion to grant
exemptions
from the blanket prohibitions on any transactions involving foreign
currency, gold or other assets readily convertible
into foreign
currency. They do not prescribe any process of notice and comment
which must be followed prior to the Reserve Bank
determining that an
exemption or permission should be granted. This unbridled discretion
creates a system on non-participative
rule making, so it is
contended. This is said to be inconsistent with the right to
proceduraliy fair administrative action and
therefore inconsistent
with the Constitution. Specifically the Regulations are said to be in
conflict with sections 22, 25(1) and
(2) of the Constitution. Section
25 was quoted earlier in paragraph 107 of this judgment, section 22
provides as follows:
"22.
Freedom of trade, occupation and profession
Every
citizen has the right to choose their trade, occupation or profession
freely. The practice of a trade, occupation or profession
may be
regulated by law. ”
[132]
The Regulations under attack are said to infringe everyone’s
rights under sections 22 and 25 of the Constitution because
they
establish a system of exchange control which prohibits any
transaction involving currency, gold or other foreign currency.
The
prohibition itself interferes with every member of the public’s
ability to deal with his or her property as he or she
chooses, and to
engage in free trade because, it places a limit on what transactions
may be undertaken in relation to that property
and in the pursuit of
that trade, so it is contended.
[133]
For three reasons it is said, although the Regulations make provision
for the prohibitions which interfere with the rights
under sections
22 and 25 of the Constitution to be mediated or minimized through the
grant of exemptions and permissions, the relaxation
on the
prohibitions does not save them from Constitutional inconsistency.
The protection of fundamental rights cannot be made to
be departed
from on the exercise of a discretion
4
and
5
.
In my view, only in compelling situations can the provisions of
section 36 of the Constitution be brought into play.
[134]
The view expressed is that the very fact that extensive system is put
in place by the Rules and Circulars of the default prohibitions,

illustrates the unjustifiability of the absolute prohibitions that
are to be found in the Regulations. The applicant contends that,
that
is why despite absolute prohibitions the respondents do not see any
need to prohibit.
[135]
The latter contention in my view, should be seen in the light of the
respondents’ own programme of liberalization of
exchange
control which is articulated in the first respondent’s heads of
argument as follows:
“
38.
There has been a gradual approach to the liberalization of exchange
control particularly since a new democratic government was
elected in
1994. The reason for the liberalization of exchange controls is the
need for South Africa to integrate competitively
into global economy.
39.
The Minister of Finance has adopted, as a matter of policy,
an
approach which favours incremental relaxation as opposed to
abolishing exchange controls all at once. This was done in the belief

which is still held today, that it is in the interest of
sustainability long term development in South Africa that each
successive
step of exchange control liberalization must be taken from
a position of strength, without compromising overall financial
security.
It is in line with the notion that exchange control reform
of economic reform once macro-economic stability is in place. In
essence,
therefore,
the position is that the democratic government inherited the system
of exchange control and had to decide how best to
face it out”.
[136]
The programme of liberalization of exchange controls as articulated
above, in my view, is a sign of sensitivity by the Minister
towards
some provisions of the Regulations falling fowl of being inconsistent
with the Constitution. For this reason, the Regulations
under attack
need to be examined closely.
REGULATION 3(1)
[137]
It was quoted in paragraph 129 above. Regulation 3(1) as a whole is
said to be contrary to the spirit and object of the Constitution

under section 22. Section 22 is quoted in paragraph 131 of this
judgment. This is so, because regulation 3 (1) is said to blatantly

prohibits any action contemplated in sub-regulation (1) (a) to (f) as
quoted in paragraph 129 above. Clearly, these prohibitions
infringe
on one’s right to freedom of trade.
[138]
One might be tempted to say that the making of regulations under
section 9 of the Act should be seen as ‘regulated by
law’
referred to in section 22 of the Constitution. Any such regulation as
referred to in section 22 of the Constitution
must be
constitutionally compliant. The issue at hand is, whether exemptions
and or permissions under Regulation 3(1) are capable
of making what
is not constitutional compliant, compliant by introducing an exercise
of discretion in the form of exemptions and
or permissions.
[139]
Authorities referred to in paragraph 122 of this judgment seem to be
against this approach, save in matters that could appropriately
be
falling under section 36 of the Constitution. I am not satisfied that
such circumstances exist insofar as regulation 3(1) is
concerned.
Regulation 3 (1) should therefore be found to be inconsistent with
section 22 of the Constitution. Other paragraphs
of regulation 3(1)
are said to be inconsistent with the Constitution on other grounds as
identified hereunder.
REGULATION 3(1) (C) INCONSISTENCY WITH
SECTION 16 OF THE CONSTITUTION
[140]
Sub-regulation (1) (c) prohibits the making of any payment to or in
favour, or on behalf of a person resident outside the
Republic or
place any such sum to the credit of such person. The applicant
contends that it is inconsistent with section 16 of
the Constitution.
Section 16(1) of the Constitution provides that everyone has the
right to freedom of expression which includes:
(a) freedom of the
press and other media, (b) freedom to receive or impart information
or ideas, (c) freedom of artistic creativity,
and academic freedom
and freedom of science research”
[141]
A brief background might be necessary. The Regulations as we know,
were first promulgated in 1961, after the Sharpeville
massacre.
Freedom of speech was non-existence save doing it at the risk of
being locked up. Everything was done to ensure that
the citizens of
this country, especially Blacks do not have access of communication
with the outside world.
[142]
At a glance, one might say, the applicant’s contention around
the criticism raised, is not covered under section 16
of the
Constitution. Of course it is. If you require information with the
advent of the technology, you have to pay. Some of the
information
that one might need for example, artistic creativity or scientific
research, may not be readily available within the
country. What do
you do? You access the information through internet. In the process,
you have to pay directly or indirectly to
access the information.
This is happening on a daily basis. Sub-regulation (1)(c) of
Regulation 3 is offensive to the spirit of
the Constitution and it
has to be expunged.
REGULATION 3(1) (C) INCONSISTENCY WITH
SECTION 14 OF THE CONSTITUTION
[143]
Section 14(a) of the Constitution provides that everyone has the
right to privacy which includes the right not to have the
privacy of
their communication infringed. The suggestion is that sub-regulation
(1)(c) is inconsistent with section 14 of the Constitution
in that it
unjustifiably requires South African residents to obtain permission
from the Minister before purchasing outside the
country any goods,
including goods which may be of a person or private nature.
[144]
Underlining is my own emphasis. For this, the applicant relies on
what the Constitutional Court said in Bernstein and others
v Bester
and other NNO
1006 (2) SA 751
(CC) par 65. I understand the
contention around this to be that, if you require permission to buy
something and make payment thereof
outside the country, you might be
required to disclose what the payment is all about. This might relate
to personal things that
you may not want to disclose to anyone.
Breach of privacy could occur either by way of an unlawful intrusion
upon the personal
privacy of another or by way of unlawful disclosure
of private facts about a person
6
.
Disclosure of what you have paid for may in certain circumstances
invade one’s right to privacy. Therefore, Regulation 3(1)
(c)
should also be found to offend against section 14(a) of the
Constitution.
REGULATION 3(1) (a) and (b)
INCONSISTENCY WITH SECTION 21(2) OF THE CONSTITUTION
[145]
The applicant contends that sub-regulation (1) (a) and (b) quoted in
paragraph 129 above, is inconsistent with section 21(2)
of the
Constitution, because it places an unjustifiable restriction on the
fundamental right of South Africans to leave the Republic.
Is it
remotely raised? I do not think so. Section 21 (2) of the
Constitution provides that everyone has the right to leave the

Country.
[146]
This should also be seen in the light of Regulation 10(1) (b) which
limits the taking of money out of the country not in excess
of
R600-00. Put simply, such a restriction clearly impedes seriously on
people’s freedom of movement.
[147]
This should be seen in the context of what is said earlier in this
judgment regarding the taking or repatriating capital as
envisaged in
Regulation 10(1) (c). The taking of money out of the country as
envisaged in Regulation 3(1) (a) and (b), cannot be
the same as
envisaged in Regulation 10(1) (c). Therefore, in addition to being
inconsistent with section 22 of the Constitution,
regulation 3 (1)
(a) and (b) is also
inconsistent
with the provisions of section 21(2) of the Constitution. Everyone’
freedom of movement is dictated by what amount
of money you carry
along with you. Prohibition on the taking or sending, of any bank
notes out of the country has a serious potential
to impede on one’
right to freedom of movement, except where clearly it appears to be
intended to export, like consignment
of bank notes, gold, securities,
or foreign currency or transfer of any securities from the Republic.
Consignment referred to in
paragraphs (b) and (b bis) of
sub-regulation 3(1) for own use, cannot be protected under section
21(2) of the Constitution, particularly
if there are no facts to
justify such consignment.
REGULATION
3 (3) and (5) INCONSISTENCY WITH SECTION 21(2) OF THE
CONSTITUTION?
[148]
The applicant takes the view that Regulation 3(3) and 3(5) insofar as
they relate to assets seized in terms of Regulation
3(3) are
additionally unconstitutional and invalid. Invalid in that they are
ultra vires section 9(2) (d) of the Act. They purport
to authorize
the seizure and forfeiture without procedural protections required by
section 9(2) (d). For regulations 3(3) and (5)
to validly confer a
power to seizure or forfeiture, it must be compliant of section 9 (2)
(d) of the Act, so it is contended. Before
dealing with section
9(2)(d), the applicant in prayer 4.1 wants paragraphs (a), (c) and
(f) of subsection (2) of the Act to be
declared inconsistent with the
Constitution and invalid. Paragraph (a) provides that regulations may
provide that the President
may apply any sanctions therein set forth
which he thinks fit to impose, whether civil or criminal. There is a
process for making
of regulations or proclamation thereof. Therefore,
paragraph (a) should be on the assumption that such a process would
be followed.
I am therefore unable to see where the
unconstitutionality lies. On the other hand, paragraph (c) provides
that any regulations
contemplated in paragraph (a) may authorise any
person who is vested with any power or who shall fulfill any duty in
terms of the
regulation, to delegate such power or to assign such
duty, as the case may be to any other person. I can see no problem
with this.
Such delegation is founded in regulation 22E. There is no
basis to attack it on unconstitutionality. Similarly, paragraph (f)
deals
with delegations and Regulation 22E appears to be promulgated
on the basis of paragraphs (c) and (f) of subsection (2) of section
9
of the Act.
[149]
Section 9(2) (d) of the Act provides as follows:
(d)
Any regulation contemplated in paragraph (a) shall provide-
(i)
that any person who feels aggrieved by any decision made or action
taken by any person in the exercise of his powers under a
regulation
referred to in paragraph (b) which has the effect of blocking,
attaching or interdicting any money or goods, may lodge
an
application in a competent court for the revision of such decision or
action or for any other relief, and the court shall not
set aside
such decision or action or grant such other relief unless it is
satisfied-
(aa)
that the person who made such decision or took action did not act in
accordance with the relevant provisions of the regulations;
or
(bb)
that such person did not have reasonable grounds to make such
decision or to take such action; or
(cc)
that such grounds for the making of such decision or the taking of
such action no longer exist.
(iii)
that the Treasury shall cause a notice to be published in the
Gazzette of any decision to forfeit and dispose of any money
or goods
blocked, attached or interdicted in terms of the regulations referred
to in paragraph (b), and that a notice of such decision
shall be sent
simultaneously with publication thereof in the Gazzette by registered
mail to any person who is, according to the
Treasury,
affected
by such decision or, if no address of such person is available, that
such notice shall be so sent to the last known address
of such
person; and
(iii)
that any person who feels aggrieved by any decision to forfeit and
dispose of such money or goods may, within a period prescribed
by the
regulations, which shall not be less than 90 days after the date of
the notice published in the Gazette and referred to
in subparagraph
(ii), institute legal proceedings in a competent court for the
setting aside of such decision, and the court shall
not set aside
such decision unless it is satisfied-
(aa)
that the person who made such decision did not act in accordance with
the relevant provisions of the regulation, or
(bb)
that such person did not have grounds to make such decision; or
(cc)
that the grounds for the making of such decision no longer exist".
[150]
I do not see regulation 3(3) and (5) as being inconsistent with the
Constitution in limiting freedom of trade like sub-regulation
(1).
Neither one can say they restrict one’s freedom of movement.
For example, sub-regulation (3) obliges one to produce
any bank
notes, gold, securities, or foreign currency on request at port of
departure. It also allows search at port of departure.
There might
well be circumstances at port of departure or entry which makes it
necessary for actions to be taken as contemplated
under
sub-regulations (3) and (4). However, I understand the applicant to
be saying that for a power to be legally conferred under
regulation
3(3) and (5) above, there has to be compliance with section 9(2) (d).
[151]
In other words, regulation 3 under sub-regulations (3) and (5) must
provide for situations as set out under sections 9(2)
(d) (i) (ii)
and (iii) quoted in paragraph 149 of this judgment. Regulations 3(3)
is for example, conspicuous by the absence of
a provision dealing
with what is provided in section 9 (2) (d) (i) (ii) and (iii). For
regulation 3(3) to be of force and effect,
it must specifically
provide for the mechanism for relief to those who might feel
aggrieved as contemplated in section 9(2) (d)(i).
In other words, it
must draw the attention to the fact that any such aggrieved person
may lodge an application in a competent court
for the revision of
such a decision or action or for any other relief. Put simply, there
is no enabling legislative authority,
authorizing the taking of
actions as contemplated in sub- regulations (3) and (5). The two
sub-regulations should therefore be
found to lack legality and in
conflict with section 1 (c) of the Bills of Rights.
REGULATION
10 (1) (b) INCONSITENCY WITH SECTION 21 (2) OF THE
CONSTITUTION
[152]
I have referred to section 21(2) in paragraph 145 of this judgment. I
also referred to regulation 10 (1) (b) in paragraph
146 above.
Regulation 10 (1) (b) is quoted in paragraph 129. Six hundred rand
restriction on what one can take with out of the
country is not only
inconsistent with section 21(2), but it also does not make sense. The
R600.00 is inclusive of any goods, personal
apparel, household
effects and jewellery. One might be tempted to say that obviously,
the restrictions cannot be applied or implemented
on these days in
time. That might be so. But, that would not be a justification to
leave it in the statute book. Clearly, regulation
10 (1) (b)
restricts everyone’ freedom of movement and therefore contrary
to the provisions of section 21(1) of the Constitution
by limiting
the amount of money up to R600-00 when one is getting out of the
country. Six hundred rands is too little to do anything
outside the
country. If one is not allowed to take anything more than R600, one’
movement is restricted.
INCONSISTENCY
OF REGULATION 18 WITH SECTION 25(1) OF THE
CONSTITUTION
[153]
Regulation 18 was quoted earlier in paragraph 129 of this judgment.
The applicant contended that regulation 18 vests power
in the
Minister, (the second respondent) or any person authorized thereto
without prior intervention of a court of law to requisition
assets as
security for compliance with the regulations. It is said, it vests
this power in terms of which it does not constrain
the manner in
which the Minister, or his delegate or of the delegate’s
delegate will be able to exercise the power. In so
doing, it is said,
it purports to authorise the unconstitutional deprivation of property
which will take place by means of an arbitrary
procedure and which
may be substantially arbitrary.
[154]
I am hesitant to say that regulation 18 is unconstitutional or that
it makes it difficult or impossible to challenge the decision
that
might be taken under regulation 18 on the basis that it offends
against the spirit and purpose of section 33 of the Constitution.

Everyone has the right to administrative action that is lawful,
reasonable and procedurally fair.
[155]
Should any person feel aggrieved in that his or her right under
section 33 has been infringed, should be able to approach
the court
in terms of section 6 of Promotion of Administration Justice Act. The
challenge could be on a number of grounds. For
example, that the
action was procedurally unfair or that it was arbitrarily or
capriciously taken or that the action lacks rationality.
Any fear or
decision of forfeiture of property as contemplated in regulation
18(2) will be guided by the facts of each case which
might be
challenged under section 6 of PAJA. I do not see regulation 18 as
introducing absolute prohibition contrary to any provision
of the
Constitution.
REGULATION 19(1) INCOSISTENCY WITH
SECTION 14 OF THE CONSTITUTION
[156]
Both regulation 19(1) and section 14 of the Constitution were
respectively referred to earlier in paragraphs 129 and 143 of
this
judgment. Section 14 deals with the right to privacy. The view taken
was that without any judicial oversight or other safeguard,
the
regulation vests in the Minister or any person authorised by him, to
enter private premises with a view to gathering information
for the
purposes of enforcing the regulations
7
.
[157]
The applicant further contends that having regard to the
extra-ordinary breach of the prohibitions in the Regulations, and
to
the criminal offence created by Regulation 22, it vests the Minister
or any person authorised by him, or any person authorised
by that
person, with extensive intrusive powers, to demand information which
may include private information from persons, on pain
of criminal
conviction for refusal to provide this information
8
.
[158]
I understand the contention around this to be that, entering private
homes of individuals, demand information, and inspect
any books or
documents belonging to or under the control of an occupier of the
premises without a warrant can be subject to an
abuse. But, even most
importantly, it has a potential to infringement of one’s right
to privacy.
[159]
I should be concerned about what the exercise of power under
Regulation 19 might entail. Obliging people to furnish information

and entering their homes with no oversight, reminds one of the past.
Regulation 19(1) should therefore be found to be inconsistent
with
section 14 of the Constitution.
REGULATION 22 INCONSITENCY WITH
SECTION 35(1)(a) AND 31(h) OF THE CONSTITUTION
[160]
Regulation 22 quoted in paragraph 129 of this judgment introduces a
penalty clause. It also places an onus on the accused
to prove that
he or she did not know, and could not by the exercise of a reasonable
degree of care have ascertained, that the statement
was incorrect.
This clearly offends against presumption of innocence, and the right
to remain silent.
[161]
Section 35(1 )(a) provides that everyone who is arrested for
allegedly committing an offence has a right to remain silent.

Similarly, section 35(3)(h) provides that every accused person has a
right to a fair trial, which includes, the right to be presumed

innocent, to remain silent and not to testify during the proceeding.
Therefore, ‘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
any information which he is required to furnish under these
regulations shall be guilty of an offence in regulation
22, is in
conflict with sections 35(1 )(a) and 35(3)(h) of the Constitution.
[162]
Section 9(3) of the Act provides that the Governor-General, now 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
exchange and any such Act or law which is in conflict or inconsistent
with any such 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.
[163]
This provision has the potential to unravel the healed wounds of the
past when laws were changed at the stroke of pen by one
individual.
This can never again happen in a constitutional and democratic South
Africa. I do not think that one needs to have
a case on point in
order to remove this from the Statute book as it was suggested by
counsel on behalf of the President. Clearly,
no President in the
living Supreme Law of the land, (the Constitution) can ever wish to
act as it is envisaged in section 9(3)
of the Constitution. This does
not even need a programme of liberalization of the system of exchange
controls as envisaged by the
Minister of Finance referred to earlier
in paragraph 135 of this judgment.
[164]
As correctly put by the applicant in his written heads of argument,
section 9(3) gives the President not only the power, through

regulations to amend or suspend any part of the Act, and any other
law relating to currency, banking or exchange, but also the
power to
amend or suspend any other Act of Parliament. This is said to be an
extra ordinary wide power. It effectively vests in
the President the
power to amend or suspend any Act of Parliament irrespective of
whether that other piece of legislation deals
with issues of
currency, banking or exchange. Subsection (3) also deems any law
inconsistent with the Regulations made by the President
to be
suspended, so it is contended. Without further ado, section 9(3) of
the Act should be found to be inconsistent with the Constitution.
SECTION 9 (1) ALLEGED INCONSISTENCY
WITH SECTION 37 OF THE CONSTITUTION
[165]
At the risk of repeating myself, subsection (1), empowers the
President to make regulations in regard to any matter directly
or
indirectly relating to or affecting or having any bearing upon
currency, banking or exchange. The applicant contends that this
gives
the President unlimited powers to regulate upon currency, banking or
exchanges. The President is also said to be given unfettered
plenary
legislative powers. In his answering affidavit, the first respondent
deal with the criticism as follows:
“
71.2
The applicant specifically takes issues with the terms of section 9
on the grounds that the separation of powers between the
legislature
and executive has been breached.
71.3
I am advised that the powers conferred on the President in section 9
are subordinate and not plenary legislative powers. In
layman’s
terms, the President acts on and in terms of the instructions of
Parliament when he exercised the functions conferred
on him by the
Act.
71.4
I am further advised that it is competent for the President to
delegate legislative power to the executive.
71.5
The Regulations and amendments thereto enacted between 1966 and 2011
are framed in terms that give effect to the intention
of Parliament.
What the executive is prohibited from doing is to pass subordinate
legislation that goes beyond what the empowering
enactment conferred
on it. ”
[166]
In his notes for argument, the applicant challenges section 9 as
follows: If the President were to purport to rely on section
9 to
make new Regulations, he would be purporting to exercise legislative
power which the Constitution vests in Parliament and
so he would be
acting in a manner inconsistent with section 37 of the Constitution”.
[167]
Section 37 of the Constitution deals with the state of emergency. I
do not understand why the applicant brings section 37
into play in
relation to section 9. The applicant suggested that section 9 (1) is
inconsistent with the Constitution, because it
vests in the
President, legislative powers which do not have to be exercised in
accordance with any of the manner and form of provisions
of the
Constitution, say in case of national disaster. The contention cannot
be correct, because such an exercise of power can
only happen in
terms of an Act of Parliament as envisaged in section 37(1) of the
Constitution. I cannot see the basis on which
section 9(1) can be
said to be inconsistent with the Constitution on the grounds as
suggested.
[168]
I am therefore not convinced that there is merit in the
unconstitutionality of section 9 as a whole. In particular, I do not

think that there is a constitutional basis to attack section 9(1) of
the Act. The underlining is my emphasis.
ARE THE RESPONDENTS OBLIGED TO REPAY
THE APPLICANT WITH THE AMOUTNS OF THE LEVY INCLUDING THE INTEREST?
[169]
The question is identified in paragraph 11.3 of this judgment. The
question is dependent entirely on the findings regarding
the
imposition of the levy. The findings in paragraphs 88 to 105 of this
judgment make it unnecessary to deal with this issue.
The first
respondent had a discretion whether to allow or not to allow the
applicant to repatriate from South Africa his last blocked
loan
account assets. However, the imposition of the levy was not the
decision of the first respondent although embodied in the
Circulars
and or Rulings. It was rather that of the second respondent. The
first respondent had no discretion not to impose the
10% levy once it
had taken the decision to permit the repatriation of the applicant’s
remaining blocked assets. The decision
to impose the levy had already
been taken by the Minister and the first respondent was bound
thereby. The applicant decided not
to specifically challenge the
decision of the Minister. I do not find it necessary to deal with the
issue save to say that the
applicant's claim for refund ought to be
dismissed. As I said, it might well be that the applicant wishes to
continue with his
claim referred to in paragraph 28 of this judgment.
IS THE APPROPRIATE REMEDY FOR
UNCOSTITUTIONALITY OF SECTION 9 OF THE ACT AND REGULATIONS AN
IMMEDIATE STRIKING DOWN OR AN ORDER
FOR SUSPENSION?
[170]
This question is relevant to my findings insofar as they might relate
to the unconstitutionality of certain provisions of
section 9 and
some regulations placed under attack by the applicant.
[171]
Section 9(3) of the Act in my view does not require suspension. It is
a clear provision which should never have been allowed
to stay in the
statute book for so long.
[172]
Similarly, regulation 22(1) insofar as it is inconsistent with
section 35(1 )(a) and 35(3)(h) of the Constitution, ought to
be
struck down. It is not a provision that can be brought back into the
Statute book or regulations in whatever form. I dealt with
the basis
for the inconsistency thereof under paragraphs 160 to161 of this
judgment.
[173]
Regulations 3(1) and 3(3) read with regulation 3(5) might need some
panel-beating. Immediate striking down might have undesired

consequences. I say this despite the fact that the respondents do not
seem to have vigorously enforced the Regulations aforesaid.
Perhaps
it is because of the programme of liberalization of exchange control
system initiated by the Minister. Suspension of declaration
of
invalidity for a period of 12 months in my view would be sufficient
for corrective measures if any, to be taken. Similarly,
regulation 19
(1) might need to be revisited, corrected and or rectified so as to
be constitutionally compliant.
COSTS
[174]
Issues that were raised in these proceedings are very important and
are of a constitutional importance. It was not only a
matter of
importance for the applicant but also for the respondents. Secondly,
one can also say that all parties have substantially
succeeded. For
this reason, the order I intend making is that each party must pay
his or her own costs.
CONCLUSION
[175]
Consequently, an order is hereby made as follows:
175.1
Prayers 1, 1A, 1B, and 1C of the applicant’s amended notice of
motion dated 13 April 2012, are hereby dismissed,
175.2
The applicant’s application for condonation as in prayer 1D of
the notice of motion and insofar as it might be necessary,
is hereby
granted,
175.3
Prayers 2, 2.1, 2. 2 and 2.3 of the applicant’s amended notice
of motion, declaring that the words “and an exit
charge of 10%
of the amount” in Exchange Control Circulars No. D.375 of 26
February 2003, Exchange Control Circulars No.
D. 380 of 26 February
2003 and section B.2 (E) (iii) (e) of the Exchange Control Rulings
inconsistent with the Constitution and
invalid, are hereby dismissed.
175.4
Prayer 3 of the applicant’s amended notice of motion declaring
in its entirety, section 9 of the Currency and Exchange
Act 9 of 1933
inconsistent with the Constitution and invalid, is hereby dismissed.
175.5
Prayer 4.1 which is couched as an alternative to prayer 3 above, is
hereby dismissed insofar as it is intended to declare
paragraphs (a),
(c)
and (f) of subsection 2 of section 9 of the Act inconsistent with the
Constitution and invalid.
175.6
Prayer 4.2 which is also couched as an alternative to prayer 3
declaring that subsection (3) of section 9 of the Act inconsistent

with the Constitution invalid, is hereby granted and subsection (3)
of section 9 of the Act is accordingly declared inconsistent
with the
Constitution and is struck down subject to confirmation by the
Constitutional Court in terms of section 172 of the Constitution.
175.7
Prayer 4.3 which also serves as an alternative to prayer 3, declaring
subsection (5) of section 9 of the Act inconsistent
with the
Constitution and invalid, is hereby dismissed.
175.8
Prayer 5 declaring that the Exchange Control Regulations in their
entirety are inconsistent with the Constitution and invalid,
is
hereby dismissed.
175.9
In the alternative to prayer 5 of the applicant’s amended
notice of motion, it is hereby declared that regulation 3(1)
in its
entirety is inconsistent with section 22 of the Constitution and
invalid. Declaration of constitutional invalidity herein,
is
suspended for a period of twelve months to enable the respondents to
correct the cause of constitutional invalidity.
175.9.1
Further in the alternative to prayer 5 of the applicant’s
amended notice of motion, prayer 6.1 is hereby granted and
it is
hereby declared that the paragraphs (a) to (c) of Regulation 3 (1)
are additionally inconsistent with the Constitution and
invalid to
the extent that:
Paragraphs
(a), (b) and (b bis) are invalid and inconsistent with section 21(1)
and (2) of the Constitution to the extent that ‘consign’

in paragraphs (b) and (b bis) is excluded from declaration of
invalidity and inconsistency with section 21(1) and (2) of the
Constitution.
Paragraph
(c) is further inconsistent with sections 14 and 16 of the
Constitution.
175.9.2
Declaration of constitutional invalidity in paragraph 175.9.1 above
is hereby suspended for a period of twelve months to
enable the
respondents to correct the cause of constitutional invalidity.
175.10
Prayers 6.2 and 6.3 which serve as alternative to prayer 5, declaring
sub-regulations (3) and (5) of Regulation 3 inconsistent,
with the
Constitution and invalid, are hereby granted insofar as they have not
been promulgated in compliance with section 9(2)(a)
of the Act. The
declaration of invalidity is hereby suspended for a period of 12
months to enable the respondents to attend to
the cause of
constitutional invalidity.
175.11
Prayers 6.4 which serves as an alternative to prayer 5, declaring
Regulation 10(1 )(b) of the Exchange Control Regulations
inconsistent
with section 21(2) of the Constitution and invalid, is hereby granted
and declaration of constitutional inconsistency
and invalidity
hereof, is suspended for a period of 12 months to enable the
respondents to correct the cause of constitutional
invalidity.
175.12
Prayer 6.5 which serves as an alternative to prayer 5 of the
applicant’s amended notice of motion, declaring that Regulation

18 of the Exchange Control Regulations is inconsistent with the
constitution and invalid, is hereby dismissed.
175.13Prayer
6.6 which serves as an alternative to prayer 5, declaring Regulation
19(1) of the Exchange and Control Regulations
inconsistent with
section 14 of the Constitution and invalid, is hereby granted and
declaration of unconstitutionality and invalidity
thereof, is
suspended for a period of twelve months from the date of handing down
of this judgment, to enable the respondents to
correct the cause of
constitutional invalidity herein.
175.14
Prayer 6.7 which also serves as an alternative to prayer 5, declaring
the words “unless he proves that he did not know,
and could not
by exercise of reasonable degree of care have ascertained that the
statement was incorrect” in Regulation 22
of the Exchange
Control Regulations inconsistent with sections 35(1 )(a) and 35(1
)(b) of the Constitution and invalid, is hereby
granted, and the
words aforesaid are hereby struck down.
175.15
Prayers 7 and 8 of the applicant’s amended notice of motion,
declaring the Orders and Rules under the Exchange and
Control
Regulations inconsistent with the Constitution and invalid, are
hereby dismissed.
175.16
Prayer 9 of the applicant’s amended notice of motion seeking to
declare the policy of the first respondent not to deal
directly with
members of the public in relation to the exercise of its delegated
powers under the Exchange Control Regulations,
and insisting that
members of the public communicate with it through the intermediation
of authorised dealer banks, inconsistent
with the Constitution and
invalid, is hereby dismissed.
175.17
Each party to pay his or her own costs.
M
F LEGODI
JUDGE
OF THE HIGH COURT
FOR
THE APPLICANT
GLYN
MARAIS INC. with SNR DENTON
C/O
SUZETTE GERBER ATTORNEYS
Newlands
Office Park, Block B,
Ground
Floor 261 Lois Avenue,
NEWLANDS
TEL: 012 348 5686 MR Richard Glyn
FOR
THE FIRST RESPONDENT KNOWLES HUSAIN LINDSAY INC.
TELL
011 669 6000
REF:
Mr Nicholas Taitz/SOUT 6281.001
C/O
FRIEDLAND HARD
SOLOMON
& NOCOLSON INC.
4-301
& 6-1-1 Monument Office Park 79 Steenbok Avenue,
Monument
Park
PRETORIA,
TEL:
012 424 0200
FOR
THE SECOND & THIRD RESPONDENTS THE STATE ATTORNEY
8,h
Floor, Manaka Heights 167 Andries Street
PRETORIA
012 309 1533
REF:
PC/EB 897/2010/307/261
1
Miniser
of Justice & Constitutional Development v Chonco & Others
2010{4) SA 82 CC par 27
2
Giant Concerts CC v Rinaldo Investments (PTY) Ltd
2013 (3) BCLR 251
CC par 33
3
Ferreira
V Levin NO and others
1956 (1) SA 984
CC at par 165
4
See S
\i
Zuma & Others
[1995] ZACC 1
;
1995 (2) SA 642
(CC) at par 28
5
Dawood
v Minister of Home Affairs
[2000] ZACC 8
;
2000 (3) SA 936
(CC)
6
Financial Mail (PTY) Lt & Others v Sage Holdings Ltd &
Another
[1993] ZASCA 3
;
1993 (2) SA 451
at
462 F
7
Minister
of Safety and Security v Van der Merwe and Others
2011 (5) SA 61
(CC) par 27
8
Harken
v Lane NO and Others 1998 (1)SA 300 (CC) pars 70-77