Banco De Moçambique v Inter-Science Research and Development Services (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Goldstone J
• Judgment Date: 24 March 1982
• Court: Transvaal Provincial Division
• Hearing Date: 23 February 1982

Goldstone J:

On 18 December 1980 the Full Court granted an order, inter alia, for the attachment of certain assets to found or alternatively to G confirm the jurisdiction of this Court in an action by the respondent against the República Popular de Moçambique, ie the Government of Moçambique (and to which I shall refer as 'the Government'). The assets so attached included:

'All moneys standing to the credit of Banco de Moçambique of Maputo in the books of account of the Bank of Lisbon, 37 Sauer Street, Johannesburg, but not exceeding the sum of R480 468,71.'

H The judgment is reported as Inter-Science Research and Development Services (Pty) Ltd v Republica Popular de Moçambique 1980 (2) SA 111 (T); and the order is to be found at 126.

The applicant now seeks to set aside the attachment of the moneys standing to its credit in the books of account of the Bank of Lisbon. The attachment of those particular assets was made pursuant to allegations contained in a supplementary affidavit made on behalf of the present respondent which was placed before the Full Court. In that

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affidavit it was alleged that the foreign manager of the Bank of Lisbon had informed the deponent that:

'... The Banco (ie the present applicant) has a banking account with A the Bank of Lisbon; that the Banco is in credit in that account; and that the Banco is a State Bank, its assets being owned by the Republic of Moçambique.'

The applicant's case, in short, is that the respondent has not established, on a balance of probabilities, that the moneys belong to the Government or that the Government has an attachable interest in those moneys.

B The aforesaid order of attachment, as is usual in such cases, was made ex parte. Accordingly, notwithstanding such attachment having been ordered, the onus rests upon the respondent now to satisfy the Court that, had all the facts presently before the Court been before the Full C Court, the attachment would have been made, and that it should continue to operate: Anderson & Coltman Ltd v Universal Trading Co 1948 (1) SA 1277 (W) at 1280. More particularly, in the present case, the respondent must now satisfy the Court, on a balance of probabilities, that the property under attachment belongs to the debtor: Lendalease Finance D (Pty) Ltd v Corporacion de Mercadeo Agricola and Others 1976 (4) SA 464 (A) at 489B - C.

The applicant has placed before the Court the terms of the statutory instrument which created it as the central bank of Moçambique. The background thereto is described as follows by MARGO J who delivered the judgment of the Full Court (at 113):

E 'Until 1974 Moçambique was a Portuguese colony, governed by a branch of the Government of Portugal... On 7 September 1974 a treaty known as the Lusaka Agreement was concluded between the Frente de Libertacae de Moçambique (Frelimo) and the State of Portugal, in terms whereof Moçambique was to become independent and there was to be a transfer of power to a transitional government. Arising out of the Lusaka Agreement, the Republic Popular de Moçambique... came into existence.'

F As appears also from the judgment, the South African Department of Foreign Affairs provided the Court with a certificate to the effect that the South African Government recognises the Government 'as the de facto and de jure government of the Popular Republic of Moçambique'.

G In terms of the Lusaka Agreement the creation of a central bank was envisaged. Article 16 of that agreement reads as follows:

'In order to permit the Transitional Government to carry out an independent financial policy, there shall be created in Moçambique a central bank which shall also have the functions of issuing bank. For the purpose of realising that objective, the State of Portugal undertakes to transfer to the bank the attributions, the assets and H liabilities of the Department in Moçambique of the Banco Naçional Ultramarino. A joint commission shall forthwith come into function for the purpose of studying the conditions of such transfer.'

(I have quoted from the sworn translation appearing at 109 of the papers before the Full Court.)

Pursuant to art 16 of the Lusaka Agreement, Decree Law 53 of 1975 was published. Article 1 thereof granted to the Transitional Government the power:

(a)

to create the central bank of Moçambique which could also have the functions of a commercial bank;

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(b)

to establish the rules governing the conduct of the bank's activities.

Decree Law 2 of 1975 was published, and constitutes the constitution of the applicant.

A The argument on behalf of the applicant is that it is a corporation separate and distinct from the Government; that it owns its own assets and contracts its own liabilities; and that, consequently, its assets cannot be attached at the instance of a creditor of the Government.

B On behalf of the respondent the formal separate corporate existence of the applicant was not placed in issue. The submission is that the applicant is an organ or Department of the Government; that it is not an independent body and that its assets in reality belong to and are owned by the Government. In the alternative, it is submitted that the applicant's corporate veil, in all the circumstances, should be lifted C and that, in substance and in law, the assets of the applicant should be dealt with as those of the Government. In the further alternative it is submitted that, in any event, the moneys standing to the credit of the applicant are in reality those of the Government.

The first question to be considered is whether and, if so, in what circumstances, the assets of a public corporation may be attached in D satisfaction of a debt of the Government which created it. On this issue counsel were unable to refer me to any South African authority and my own research has proved to be no more successful. However, counsel for the respondent referred me to a most useful article by Mr V K E Moorthy in vol 30 (1980) International and Comparative Law Quarterly 638 entitled 'The Malaysian National Oil Corporation - Is it a Government Instrumentality?' At 639 the author says the following:

'Whether a corporation is an agent or servant of the Government will depend on (a) express provisions included in the constituent Act or (b) on the degree of control by the Executive over the corporation which the Courts will be prepared to accept as being sufficient to make the F corporation an agent of the Government or (c) whether the function of the corporation is a Government function.

Not all corporations need necessarily be Government instrumentalities although they may be serving a public purpose, using public funds or assets, with some degree of control by the Executive Government.

This is well illustrated by the judgment of DENNING LJ in Tamlin v Hannaford where he held that the British Transport Commission G established by the Transport Act 1947 (UK) was not an agent or servant of the Government. DENNING LJ stated that

'... when Parliament intends that a new corporation should act on behalf of the Crown, it as a rule, says so expressly...'

It is not the case always that Parliament expressly states that a corporation should be a Government instrumentality. In several cases it H will be the task of the Courts to determine by a process of statutory interpretation whether the Legislature intended that a particular corporation should be a Government instrumentality. This will be done by reference to such indicia as the constituting statute may provide.'

The author, with reference to decisions in England, Australia, New Zealand and Canada states at 640 - 1:

'The Courts have evaluated the relationship between the Government and a statutory corporation for the purpose of determining whether or not the corporation is a Government instrumentality by the application of various tests.

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The tests are as follows:

(1) Whether the body has any discretion of its own; if it has, what is the degree of control by the Executive over the exercise of that discretion;

A (2) whether the property vested in the corporation is held by it for and on behalf of the Government;

(3) whether the corporation has any financial autonomy;

(4) whether the functions of the corporation are Governmental functions.'

The conclusion expressed by the learned author is that the most B important factor is that of control and that, if there is significant control, the functional test is of little or no importance (at 641). This approach finds support in the speeches of the majority of the Law Lords in Bank Voor Handel en Scheepvaart NV v Administrator of Hungarian Property 1954 AC 584. The question which fell to be decided by the House C of Lords was whether the Custodian of Enemy Property was a servant of the Crown and, as such, exempt from payment of income tax. In the course of his speech Lord REID said the following at 616.

'In my judgment the question whether the custodian is a servant of the Crown depends on the degree of control which the Crown through its Ministers can exercise over him in the performance of his duties. The fact that a statute has authorised his appointment is, I think, D immaterial, but the definition in the statute of his rights, duties and obligations is highly important. In the ordinary way a civil servant's duties are not prescribed, though his salary may be fixed in Parliament, and I have no doubt that he is a servant of the Crown. But when a statute creates an office it may give to the holder more or less independence from ministerial control so that the officer has to a greater or less extent a discretion which he alone can exercise, and it E may be that the grant of any substantial independent discretion takes the officer out of the category of servants of the Crown for the present purpose.'

And Mr Moorthy cites a recent Australian High Court case...