Francis George Hill Family Trust v South African Reserve Bank and Others

• Jurisdiction: South Africa
• Judge: McCreath J
• Judgment Date: 26 March 1990
• Court: Transvaal Provincial Division
• Hearing Date: 13 February 1990
• Citation: 1990 (3) SA 704 (T)

McCreath J:

On 10 May 1989 the first respondent, acting in terms of regs 22A and 22C of the Exchange Control Regulations ('the regulations'), J promulgated in terms of s 9 of the Currency and Exchanges Act of 1933

McCreath J

A ('the Act'), attached 50% of the moneys deposited by the second respondent in various accounts at the Trust Bank of Africa Ltd. The applicant has applied for leave to bring the present application derivatively on behalf of the second respondent and for an order setting aside the aforesaid attachment.

In the founding affidavit the applicant states that it is the B registered owner of 50% of the total issued share capital of the second respondent and that the other 50% thereof is owned by the third respondent. It is not denied by the first respondent that there are four directors of the second respondent and that in terms of the articles of association of that company, questions arising at a meeting of directors are to be decided by a majority of votes and the chairman has no second C or casting vote. The quorum for a meeting of directors, so it is alleged by the applicant, is two, being one director representing the applicant and one representing the third respondent. The applicant maintains that the third respondent has refused to permit the second respondent to bring an application for the setting aside of the attachment which, the D applicant maintains, is unlawful on various grounds. Accordingly, and on the basis of the principles laid down in cases such as Prudential Assurance Co Ltd v Newman Industries Ltd and Others (2) [1980] 2 All ER 841 (Ch) and Moti v Moti and Hassim Moti Ltd 1934 TPD 428, the applicant maintains that it is entitled to approach this Court derivatively on E behalf of the second respondent. The first respondent contends that the applicant, on the facts placed before this Court, has not established that it is legally entitled to approach the Court by way of a derivative action. I do not consider it necessary for purposes of this judgment to decide all the requisites of our law for a derivative action. I shall assume in favour of the applicant that, if the attachment by the first F respondent was not lawfully justified, the applicant is entitled to bring the application on behalf of the second respondent, notwithstanding the absence of any resolution by the latter which would have enabled the application to have been brought by that company in its own name.

Before dealing with the factual grounds on which the first respondent relies for effecting the attachment it is necessary to dispose of certain legal issues relating to the regulations. The regulations were G promulgated in terms of s 9 of the Act, the relevant portions whereof read as follows:

'9 Regulations regarding currency, banking or the exchanges

(1) The State 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. H

(2)(a) Such regulations may provide that the State President may apply any sanctions therein set forth which he thinks fit to impose, whether civil or criminal.

(b) Any regulations contemplated in para (a) may provide for -

(i)

the blocking, attachment and obtaining of interdicts for a period referred to in para (g) by the Treasury and the forfeiture and disposal by the Treasury of any money or goods I referred to or defined in the regulations or determined in terms of the regulations or any money or goods into which such money or goods have been transformed by any person, and -

(aa)

which are suspected by the Treasury on reasonable grounds to be involved in an offence against any regulation referred to in this section, or in respect of which such offence has been J committed or so suspected to have been committed;

McCreath J

(bb)

A which are in the possession of the offender, suspected offender or any other person or have been obtained by any such person or are due to any such person and which would not have been in such possession or so obtained or due if such offence or suspected offence had not been committed; or

(cc)

by which the offender, suspected offender or any other person B has been benefited or enriched as a result of such offence or suspected offence:

Provided that, in the case of any person other than the offender or suspected offender, no such money or goods shall be blocked, attached, interdicted, forfeited and disposed of if such money or goods were acquired by such person bona fide for reasonable consideration as a result of a transaction in the ordinary course of business and not in contravention of the regulations; and

(ii)

in general, any matter which the C State President deems necessary for the fulfilment of the objectives and purposes referred to in subpara (i), including the blocking, attachment, interdicting, forfeiture and disposal referred to in subpara (i) by the Treasury of any other money or goods belonging to the offender, suspected offender or any other person in order to recover an amount equal to the value of the money or goods recoverable, in D terms of the regulations referred to in subpara (i), but which can for any reason not be so recovered.

(c) Any regulation contemplated in para (a) may authorise any person who is vested with any power or who shall fulfil any duty in terms of the regulation, to delegate such power or to assign such duty, as the case may be, to any other person.

(d) E Any regulation contemplated in para (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 para (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 F shall not set aside such decision or action or grant such relief unless it is satisfied -

(aa)

that the person who made such decision or took such action did not act in accordance with the relevant provisions of the regulation; 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....' G

The attachment of the aforesaid assets was effected by written notice signed by Dr J A Lombard in his capacity as Deputy Governor of the South African Reserve Bank. Section 9(2)(f) of the Act defines, for the purposes of ss (2), the 'Treasury' as the Minister of Finance or an H officer in the Department of Finance who, by virtue of the division of work in that Department, deals with that matter on the authority of the Minister. It is clear that the said Lombard is not an officer in the Department of Finance. However, the first respondent alleges that the Minister of Finance has by virtue of the provisions of reg 22E of the regulations delegated the powers and functions conferred upon the I Treasury to, inter alia, a Deputy Governor of the said Bank. Regulation 22E provides that the Minister of Finance may delegate to any person any power or function conferred upon the Treasury by any provision of the regulations or assign to any such person a duty imposed thereunder on the Treasury. The question which arises is whether any such delegation is valid in relation to an attachment of the nature of that which is J presently in issue.

McCreath J

A On behalf of the applicant it is argued, firstly, that the powers of attachment conferred by the Legislature are draconian in nature and that s 9 of the Act should therefore be construed so as to limit the performance of such powers to the Treasury as defined in s 9(2)(f). Accordingly, so it is argued, reg 22E is valid only insofar as it does not purport to empower the Treasury to delegate its powers under B regulations made pursuant to s 9(2)(b). This argument involves an interpretation of para (c) of ss (2) of s 9 and the powers of delegation therein conferred.

It is suggested that as para (c) refers only to a regulation contemplated in para (a) and makes no mention of para (b), none of the powers or duties specified in the latter paragraph may be delegated. The power of delegation, so it is argued, applies to any regulation C generally made by the State President under para (a) but not to the specific provisions contained in para (b). In my view this argument is untenable. Paragraph (b) cannot be divorced from para (a) and is merely supplementary thereto. As is provided in the paragraph itself, it applies to regulations contemplated in para (a). Paragraph (c) likewise D refers to any...