South African Reserve Bank v Torwood Properties (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Harms JA, Hefer JA, Vivier JA, Marais JA and Plewman JA
• Judgment Date: 25 September 1996
• Citation: 1997 (2) SA 169 (A)
• Docket Number: 626/94
• Hearing Date: 03 September 1996
• Counsel: J W Louw (with him JH Dreyer) for the appellant M D Kuper (with him DN Unterhalter) for the respondent
• Court: Appellate Division

Harms JA:

This appeal is concerned with an attachment by the appellant, the South A African Reserve Bank (the 'Reserve Bank'), of immovable property held by the respondent, Torwood Properties (Pty) Ltd ('Torwood'), under a deed of transfer dated 6 September 1968. The attachment occurred, nearly 21 years later, on 9 May 1989 and was effected pursuant to provisions of the Exchange Control Regulations ('the regulations'). These were made under s 9 of the Currency and Exchanges Act 9 B of 1933 ('the Act'). As far as this case is concerned, the regulations permit the attachment and forfeiture of money and goods involved in exchange control contraventions and provide a mechanism for the recovery of certain shortfalls upon forfeiture. C

Torwood, in due course, instituted review proceedings against the Reserve Bank in the Transvaal Provincial Division. After the filing of answering affidavits by the Reserve Bank, that application was left dormant. Much later, on 10 August 1993, Torwood launched another application (the 'time lapse application') against the Reserve Bank in the same Court. This time it applied for a declaratory order to the effect that the D attachment had lapsed due to the effluxion of time. In this regard Torwood relied upon s 9(2)(g) of the Act - it provides that the period of an attachment shall not exceed 36 months. In opposing this application, the Reserve Bank in turn relied upon subpara (i) of s 9(2)(g) which prolongs the 36-month period until one year after the final judgment in criminal proceedings related to the exchange control contravention E that gave rise to the attachment. As an alternative, and by way of a counter-application, the Reserve Bank applied for an extension of the 36-month period, something permitted by its subpara (ii). For this purpose it had to show 'good cause'. These cases were by agreement consolidated and heard as such by Zulman J. He found that (a) the attachment had lapsed, (b) the Reserve Bank was not entitled to F an extension and (c), in consequence of the first finding, it was unnecessary to decide the merits of the review application. He accordingly issued the declaratory order sought by Torwood and ordered the Reserve Bank to pay the costs of both applications. The matter is before us by reason of leave to appeal granted by Zulman J. G

The fact that Zulman J did not decide the review application caused difficulties during the hearing on appeal. There was no 'judgment or order' in that application against which an appeal could have been noted. Both parties invited us, depending on the outcome of the appeal on the time lapse application, to consider the merits of the review application and to make an order on it. It is arguable that what Zulman J in H effect did by disposing of the issues in the manner set out, was to dismiss by implication the review application. This would be so because the time lapse application was based upon the assumption that the attachment had been in order. On the other hand, without a judgment or order, there was nothing against which Torwood could I cross-appeal. Something similar happened in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue and Another 1992 (4) SA 202 (A) at 214A-G. But, as will be apparent, the validity of the attachment has to be decided as a material jurisdictional issue in the appeal on the time lapse application. This means that, if the attachment were invalid, Zulman J ought to have upheld the review J

Harms JA

or issued a declaratory order to the same effect in the time lapse application, something A he could have done since the review papers were incorporated into and formed part of that application.

The notice of attachment B

The notice of attachment was signed by Dr J A Lombard in his capacity as Deputy Governor of the Reserve Bank. He acted in terms of powers vesting in the Treasury delegated to him in this capacity. References to the Treasury should therefore be taken to include a reference to the Reserve Bank and vice versa. The attachment purportedly took place pursuant to the provisions of regs 22A and/or 22C. The cause C for the attachment was that the Reserve Bank had reasonable grounds to suspect that, 'inter alia', regs 1, 2, 3, 6, 7, 10, 14, 14A and/or 22 had been contravened. In addition, the suspicion was that these contraventions were 'in respect of' the property of Torwood; that the property had been 'involved' therein; that the property had been D obtained due to the contraventions, and/or that Torwood had 'been benefited or enriched' as a result of these contraventions.

The regulations referred to in the notice restrict the purchase and sale of foreign currency (reg 2) and the export of currency (reg 3); require of residents to transfer their rights to foreign currency to the Treasury (reg 6) and to declare their foreign assets and liabilities (reg 7); restrict the export of capital (reg 10), dealings in securities E belonging to non-residents (reg 14), and limit the purchase and sale of financial Rand (reg 14A). Regulation 1 contains definitions and reg 22 provides that a contravention of the regulations is an offence punishable with a fine and/or a term of imprisonment. The Treasury may, under prescribed conditions, attach money and goods involved in F any such contravention (reg 22A). The money or goods attached may be forfeited to the State (reg 22B) and the Treasury may recover certain 'shortfalls' upon the realisation of the money or goods forfeited (reg 22C).

Torwood and its property G

Torwood is a private property-holding company with one asset, namely the fixed property mentioned, that is erf 778 situated in the township of Forest Town in Johannesburg. The property can be described as the family home of one Robert Oliver Hill ('Hill'). Hill is said to be the main perpetrator of the exchange control H contraventions that gave rise to this...