Continental Cash and Carry (Pty) Limited v South African Reserve Bank and Others (025173/2025) [2025] ZAGPPHC 214 (7 March 2025)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

DELETE WHICHEVER IS NOT APPLICABLE

(1) REPORTABLE: YES/NO

(2) OF INTEREST TO OTHER JUDGES: YES/NO

(3) REVISED:

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DATE SIGNATURE

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DATE SIGNATURE

In the matter between:

CONTINENTAL CASH AND CARRY (PTY) LIMITED Applicant

and

THE SOUTH AFRICAN RESERVE BANK First Respondent

STANDARD BANK OF SOUTH AFRICA Second Respondent

NEDBANK LIMITED Third Respondent

TOLMAY J

INTRODUCTION

1. This is an urgent application for interim relief, pending the final determination of the application. The nature of the relief sought is to allow the applicant to operate its bank accounts held with the second and third respondents, pending an investigation and determination of the alleged contraventions of the Currency and Exchanges Act, Act 9 of 1933 (the Exchange Act).

2. The first respondent did not file an answering affidavit, which they say was due to the limited time available to them, which is true. However, there was no request raised to let the matter stand down until later in the week to enable them to file an answering affidavit. Instead, they opted to file a notice in terms of Rule 6(5)(d)(iii) to raise questions of law in opposition to the application, together with a confirmatory affidavit in support of any factual averments. That affidavit merely confirms the contents of the Rule 6(5) notice and did not confirm that the deponent has any personal knowledge of the facts contained therein.

3. During the argument on behalf of first respondent, counsel referred to an affidavit which was not the initial affidavit filed. It then transpired that the attorney for first respondent uploaded a further affidavit without alerting his opponent or requesting the court’s permission to do so. This constitutes uncollegial conduct, but also was in direct conflict with procedural norms and this court’s directive that no documents may be uploaded after the closing of the roll without the court’s permission.

4. Such conduct by legal practitioners cannot be countenanced by the courts. Counsel for the applicant and the court only became aware of this affidavit during argument on behalf of the first respondent. To add insult to injury, counsel for the applicant alerted the court during his reply that a Rule 30 have also been uploaded to CaseLines without alerting the applicant or the court of it. I take this disregard of procedures by legal practitioners very seriously and must express my utter disappointment in the first respondent’s attorneys conduct. The first respondent is represented by an established and well-known firm of attorneys of whom I expect and, in the past, experienced a high quality of professional conduct.

URGENCY

5. The urgency stems from the following facts. On 18 and 19 February 2025 respectively, the applicant received a report from the second and third respondents that the first respondent had issued an instruction to them to block the applicant’s accounts. Thereafter, the applicant instructed Mr Charles van Staden (“Mr Van Staden”), an Exchange Consultant at Alant, Gell & Martin Incorporated, to liaise with the first respondent to determine the reason for the instruction. Unfortunately, the explanations given were vague and not substantiated by factual evidence. The applicant attempted to arrange a meeting with Mr Wissnik of the first respondent to attempt to clarify the reasons for first respondent’s actions and also in correspondence and the affidavit filed tendered full co-operation with the first respondent. However, once the urgent application was served, Mr Wissnik cancelled the meeting because of the application, an attitude that I find hard to understand.

6. The applicant argued that its business operations require operating banking facilities on a daily basis in order to accept payment for sales, as well as to affect payment to suppliers of goods and other business expenses. As a result of the blocking directives from the first respondent, an amount in excess of R120 000 000(one hundred and twenty million rand) has been blocked restricting the applicant’s ability to trade. Consequently, the applicant is unable to utilize its banking facilities and the available cash which is critical to pay business expenses.

7. The block placed on the banking accounts of the applicant has impacted its trading operations and reputation. Thousands of daily transactions are now affected and the applicant says it is facing financial ruin within days, more so due to the fact that it would not be in a position to pay suppliers, South African Revenue Service and other business expenses before month end and its financial year end. The applicant employs just over 400 employees. They are paid on the 25th of each month. The applicant was unable to pay its employees’ salaries as it normally would have done through its own accounts, due to the first respondent’s actions. The first respondent tendered that the salary payments for this month be released, subject to it being provided by a payroll. The applicant indicated that such an offer will not address its imminent ruin.

8. Supplier payments also become due between the 25th and last day of each month. Additionally, there are a number of suppliers who are paid immediately upon delivery. If payments are not made on time to suppliers, it will adversely affect the applicant’s credit worthiness and trading terms. This will adversely impact on its ability to trade profitably since it enjoys favourable credit terms and pricing from suppliers based on its historic well established trading pattern. The applicant says it trades in an extremely price sensitive and competitive market with low margins which demands that the business trades substantial volumes of stock in order to remain profitable.

9. Between the bank accounts at the second and the third respondent, the total amount in these accounts which are now inaccessible amounts to over R120 million(one hundred and twenty million rand). This amount excludes certain customer payments which have been blocked and returned with error codes. The applicant requires these amounts in order to trade. The steps taken by the first respondent are drastic with irreparable commercial consequences. As such, this application is extremely urgent and the applicant says it has no other remedy available but to approach this court for urgent relief. The urgency of this matter is self-evident and the allegation that it constitutes an abuse of process has no merit at all.

AMENDMENT OF NOTICE OF MOTION

10. The first respondent says in its notice that the relief sought by the applicants is effectively final. They require the upliftment of a blocking order such that they are permitted to utilize the blocked funds (in the immediate, in excess of R102 million), pending the determination of Part B. In essence, to frustrate the South African Reserve Bank’s (SARB) preservation order and dissipate the preserved funds. The purpose of Part B is only to confirm (as final) the court’s “provisional order”. There was no review application against SARB’s blocking orders. This first respondent says is fatal to the applicant’s case and given the finality of the applicant’s order, sufficient time should have been permitted for SARB to file a response to place facts before this court.

11. The aforesaid led to an application for amendment of the notice of motion by the applicant, to include in Part B a review application. This was opposed by first respondent and led to the filing of the Rule 30 notice to which I have already referred to. There is no merit in the opposition, nor can there be any prejudice for the first respondent if it is granted. Due to the manner in which the Rule 30 was uploaded and due to the urgency of the matter, I will ignore the notice. The amendment is therefore granted.

CURRENCY AND EXCHANGES ACT, ACT 9 OF 1933

12. In terms of sections 223 and 224(1) of the Constitution, the first respondent is the central bank of the Republic whose primary object is to “protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic.” The first respondent regulates the national payment system involving South African currency in terms of the South African Reserve Bank Act, 90 of 1989 (“SARB Act”).

13. In South African Reserve Bank and Another v Shuttleworth and Another¹ the Constitutional Court held that:

“… the Constitution affords an express mandate for protecting the value of the currency demonstrates the exceptional significance of the issue. Currency moves with lightning speed. Money has long ceased to be a hand-held commodity or physical article of trade for exchange purposes. The internet and electronic communications enable it to be moved from and between locations and jurisdictions almost instantly. Hence the need for special regulation. Hence also the need for special amplitude of regulatory power. The nature of the power the Act confers on the President to make regulations in regard to currency is unusually wide, but its unusual width meets the unusual circumstance of the subject-matter.”

14. The regulations to the Exchanges Act were made under the powers extended to the Governor-General (later the State President and now the President). The President is empowered by section 9(2)(b)(i) to make regulations relating to the attachment, freezing and forfeiture of tainted money and goods for a period referred to in section 9(2)(g), and by section 9(2)(b)(ii) to make regulations in general in respect of any matter which he “…deems necessary for fulfilment of the objectives and purposes referred to…” in section 9(2)(b)(i), including the attachment and freezing of untainted money and goods.

15. In South African Reserve Bank v Torwood Properties², the court explained the effect of the regulations in broad terms as follows:

“What is contemplated by the regulation, in very general terms, seems (by way of an example) to be this: A contravention of the regulations is committed. The amount involved is Rx. That amount may be recovered by the Treasury. It may recover by attaching and declaring forfeit, for example, the money involved in the contravention. If that Rx cannot be found, the shortfall may be recovered by the attachment of other (untainted) money or goods from the persons mentioned in subpara (i) - (iv) of reg 22C(1).”

16. Regulations 22A, 22B and 22C provide for the blocking of accounts, the attachment of money and goods, and the forfeiture and disposal of money or goods as envisaged by section 9(2)(b) of the Exchanges Act. In the Singh v South African Reserve Bank³ the Court specifically referred to “the cogent evidence”⁴ which created a reasonable suspicion with the first respondent of a contravention of regulations. In terms of Regulations 22A and 22C, the first respondent is empowered to attach funds, where there is a suspicion, based on reasonable grounds, that there has been a contravention of the Regulations. In Singh, the Court referred to the broad discretionary allowances referred to “the cogent evidence” which created a reasonable suspicion with the first respondent of a contravention of regulations.

17. In Odendaal⁵, the court referred to the broad discretionary powers that the first respondent has to issue blocking orders, and stated that there are obviously competing interests between the first applicant an entity or person whose accounts are being blocked, and although there is no closed list of relevant factors to be considered, it may include, for example, the financial position of the affected entity, the hardship that the entity may suffer as a result of the block, and the seriousness of the alleged contravention.⁶

18. In the Ambruster⁷, the Constitutional Court stated that whilst it is accepted that the first respondent can place a block on funds prior to there being any hearing, there must be strict compliance with the regulations, because of the extreme effect of such power. The first respondent argued that blocking and/or forfeiture order(s) constitutes a decision of an administrative nature⁸. This is indeed so and the correct remedy is to bring review proceedings against the decision. This however does not exclude interim relief pending the review, the problem raised by the first respondent, as far as it may have merit, has been addressed by the amendment.

19. At this stage the applicant only seeks interdictory relief pending those review proceedings. The constitutional and statutory powers of the first respondent cannot be gainsaid, but those powers are not unlimited and in appropriate circumstances courts are empowered to ensure fair administrative action as envisaged in s33 of the Constitution and PAJA⁹. Whether the administrative action should be set aside is not for this court to determine at this stage.

20. The problem presently lies in the manner that the first respondent chose to execute its duties. Despite requests for reasons and offers of meetings by the applicant to clarify and assist the first respondent, the first respondent has not set out any reasonable grounds for its alleged suspicion let alone “cogent evidence”, nor did it agree to an urgent meeting. It is clear from the letter authored by Mr Wissink, that the first respondent believes that “it appears” that the applicant “allegedly” contravened the Regulations. The vague language used make it impossible to determine whether the requirement of a suspicion based on reasonable grounds have been met, even the further affidavit filed did not address these concerns raised by the applicant.

THE ALLEGED CONTRAVENTIONS

21. The first respondent alleges that the applicant contravened:

“…Regulations 2(4)(b) and/or 6(2) and/or 6(10) and/or 6(12) and/or

6(13) and/or 7(1) and/or 10(1) and/or 11…”

21.1 Regulation 2(4)(b) prescribes that:-

“(4) No person other than an authorised dealer shall-

(a) use or apply any foreign currency or gold acquired from an authorised dealer for or to any purpose other than that stated in his application to be the purpose for which it was required; or

(b) do any act calculated to lead to the use or application of such foreign currency or gold for or to any purpose other than that so stated.”

21.2 Regulation 6(2) prescribes that:-

“(2) Every person resident in the Republic who becomes entitled to assign or to procure the assignment of any right to receive outside the Republic, in respect of any credit or of any balance at a bank, payment of any amount in a foreign currency shall, within thirty days after becoming so entitled, make or cause to be made, a declaration in writing of such right to the Treasury or to an authorised dealer.”

21.3 Regulation 6(10) prescribes that:-

“(10) (a) Subject to any exemption which may be granted by the Treasury, no person shall export goods from the Republic, unless the relative bill of entry export in respect of such goods is duly completed

and signed by the consignor or a person duly authorised by the consignor.

(b) The Treasury may direct that the said bill of entry export shall be completed in respect of any commodity or article, irrespective of its value.

(c) For the purposes of this subregulation 'value' shall mean-

(i) for customs purposes, the value as defined in section seventy two of the Customs and Excise Act, 1964 (Act 91 of 1964); and

(ii) for the purposes of an authorised dealer, the full proceeds of the goods exported.”

21.4 Regulation 6(12) prescribes that:-

“(12) If in any criminal proceedings against any person for a contravention of subregulation (2) of this regulation there is produced to the Court any document of which such person is proved or has admitted himself to be the author and which contains a statement by such person from which it may reasonably be inferred that any amount is standing to his credit outside the Republic or that he has any balance at a bank outside the Republic, it shall be presumed, until the contrary is proved, that such person is entitled to assign or to procure the assignment of such a right as is referred to in the said subregulation (2).”

21.5 Regulation 6(13) prescribes that:-

“(13) If in any criminal proceedings against any person for a contravention of subregulation (1) or (2) of this regulation, it is proved that such person is entitled to sell or to procure the sale of or to assign or to procure the assignment of any foreign currency, it shall be presumed, until the contrary is proved, that a declaration in writing has not been made to the Treasury or to an authorised dealer within the period required by subregulation (1) or (2), as the case may be.”

21.6 Regulation 7(1) prescribes that:-

“(1) Every person resident in the Republic who is, or becomes, entitled to sell or to procure the sale of any foreign asset, shall within thirty days after becoming so entitled, make or cause to be made, a declaration in writing in the form prescribed by the Treasury of such foreign asset to the Treasury or to an authorised dealer. Such declaration shall state when and how such foreign asset was acquired, where it is held and whether and to what extent it is held in cover for or in respect of any foreign liability.

(2) Any foreign asset in respect of which a declaration has been made in terms of subregulation (1) of this regulation shall not be sold, transferred or otherwise disposed of without the permission of the Treasury, and in accordance with such conditions as the Treasury may impose.

(3) The provisions of subregulation (2) of this regulation shall not impose upon any person an obligation in respect of any foreign asset if he is, in respect of that asset, exempted from this regulation by the Treasury.

(4) The Treasury may withdraw any exemption granted in terms of subregulation (3) of this regulation.

(5) For the purposes of this regulation any person who has at any time since the date of publication thereof been in the Republic shall be deemed, until the contrary is proved, to have been and still to be resident in the Republic.”

• take out of the Republic goods, including personal apparel, household effects, and jewellery which have a value in excess of six hundred rand or of such greater amount as the Treasury may determine;

• enter into any transaction whereby capital or any right to capital is directly or indirectly exported from the Republic.”

21.7 Regulation 10(1) prescribes that:-

“(1) No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose-

(a) export from the Republic during any period of twelve months a total quantity of goods which exceeds in value twenty rand or such greater amount as the Treasury may determine, if-

(i) no payment for such goods has been or is to be received in the Republic from a person outside the Republic; or

(ii) such goods are exported at a price which is less than the value thereof; or

(b) the period within which payment for such goods is to be made exceeds six months from the date of shipment from the Republic or such shorter period as an authorised dealer may determine in respect of such goods; take out of the Republic goods, including personal apparel, household effects, and jewellery which have a value in excess of six hundred rand or of such greater amount as the Treasury may determine;

(c) enter into any transaction whereby capital or any right to capital is directly or indirectly exported from the Republic.”

21.8 Regulation 11 prescribes that:-

“(1) Whenever a person has exported goods from the Republic and has failed to sell such goods within six months from the date of shipment from the Republic, or within such shorter period as may have been determined in terms of subregulation (1)(a)(iii) of regulation 10, without having permission in terms of subregulation (1) of regulation 10 aforesaid to export such goods without sale, or without payment within the period mentioned by subregulation (1)(a)(iii) aforesaid, then in such event such person shall within fourteen days from the date of expiry of the said period report in writing to the Treasury or to an authorised dealer that the said goods have not been sold, and the Treasury may thereupon order such person to assign to the Treasury or to a person authorised by the Treasury his right to the said goods.

The sum payable as consideration for any assignment in terms of this regulation shall be such sum as may be determined by or on behalf of the Treasury, but shall not be less than the amount realised by the Treasury after deduction of the cost of realisation.

(2) After the date on which this regulation comes into force, no person shall export any goods on conditions which would preclude him from giving effect to an order issued in terms of subregulation (1).”

22. There is presently no cogent evidence before me that the applicant contravened any of these regulations, to the contrary, the contents and calculations set out in the founding affidavit by the applicant illustrates that there is, at least at this stage, no merit or justifiable suspicion of any contraventions

THE REQUIREMENTS FOR INTERDICTORY RELIEF

23. The requirements an applicant must satisfy to succeed with an interim interdict are as follows¹⁰:

23.1. That the right which is the subject-matter of the main action and which the applicant seeks to protect by means of interim relief is clear or, if not clear, is prima facie established;

23.2. That, if the right is only prima facie established, there is a well- grounded apprehension of irreparable harm to the applicant if the interim relief is not granted and the applicant ultimately

succeeds in establishing its right;

23.3. That the balance of convenience favours the granting of interim relief; and;

23.4. The absence of similar protection by any will weigh up the balance of convenience against the relevant strengths and weaknesses of the applicant’s case¹¹.

^24. An applicant is not obliged to show on a balance of probabilities that injury will follow, but needs to show a reasonable apprehension of injury¹². The term “injury” means an infringement of the applicant’s right¹³.

25. The applicant met all the requirements for an interim interdict as is simply illustrated by the facts set out above. An interdict should be granted. The terms of the order must attempt to address the applicant’s concerns whilst acknowledging the important function of the first respondent. I attempted to find a balance in this regard.

_______________________________

R TOLMAY

JUDGE OF THE HIGH COURT

GAUTENG DIVISION, SOUTH AFRICA

Appearances:

For Applicant: Adv GC Nel SC & E Eksteen instructed by Abba Parak Incorporated Attorneys

For Respondent: Adv RT Tshehlo instructed by Macrobert Incorporated.

Date of Hearing: 26 February 2025

Date of Order: 28 February 2025

Date of Reasons