CCT194/14

CCT199/14

[2015] ZACC 17

2015 (5) SA 146 (CC)

2015 (8) BCLR 959 (CC)

Moseneke DCJ Majority judgment

Froneman J separate judgment

3 March 2015

18 June 2015

http://hdl.handle.net/20.500.12144/3775

Application for leave to appeal against a decision of the SCA: Shuttleworth v South African Reserve Bank and Others (864/2013) [2014] ZASCA 157; 2015 (1) SA 586 (SCA); [2014] 4 All SA 693 (SCA) (1 October 2014). The case was first heard in the Pretoria High Court: Shuttleworth v South African Reserve Bank and Others (30709/2010) [2013] ZAGPPHC 200; [2013] 3 All SA 625 (GNP) (18 July 2013).

Sections 75 and 77 of the Constitution — money Bills — difference between taxes and regulatory charges — dominant purpose test Exchange control system — whether exit charge imposed under regulation 10(1)(c) of Exchange Control Regulations a tax or regulatory charge — exit charge a regulatory charge 2 Exchange control system — section 9(4) of the Currency and Exchanges Act 9 of 1933 — definition of “calculated to raise revenue” — “calculated” does not mean “likely” Exchange control system — broad discretionary powers of Minister — necessary for flexible, speedy and expert approach to exchange control. An application for leave to appeal against an order of the Supreme Court of Appeal invalidating a Reserve Bank “exit charge” imposed on capital exported from South Africa. The Court also considered the taxpayer’s application for leave to cross-appeal in relation to the lawfulness of certain aspects of the exchange control legislative scheme. The Court noted that even though the regulatory framework authorising the exit charge was later repealed, the matter was not moot because the State could be exposed to approximately R2.9 billion in claims if the imposition of the charge were unlawful, as the SCA found. The Court found that the decision to impose the exit charge was made by the Minister of Finance and the Reserve Bank, which was responsible only for mechanically applying the policy decision of the Minister. The Bank had no discretion when implementing the decision. The Court further found that primary purpose of the exit charge was not to raise revenue but to regulate and discourage the export of capital and to protect the domestic economy. Therefore the legislation embodying the charge was not subject to the procedural requirements of money Bills in sections 75 and 77 of the Constitution. The Court granted the taxpayer limited leave to appeal in his cross-appeal attacking the constitutional validity of the provision of the Currency and Exchanges Act 9 of 1933 that enables Regulations, as well as the Regulation prohibiting the export of capital without authorisation. The Court found these provisions constitutionally valid as the broad discretionary powers granted to the Minister ensure a speedy and flexible approach to South Africa’s exchange control system and are reasonably necessary to stem the outflow of capital, protect the local currency and safeguard the domestic economy. In a dissent, Froneman J held that national revenue of any sort, tax or not, may be raised only by way of original legislation passed by Parliament. And only the manner of its implementation, not the decision to raise it, may be regulated in delegated legislation. This is because Parliament may only delegate subordinate regulatory authority to the Executive and not assign plenary legislative power. The regulation-making power the Act grants to the President effectively assigns plenary legislative power, which is constitutionally impermissible. Even if this power could be delegated, and even sub-delegated, there had been no sub-delegation to the Minister. However, if there was a valid sub-delegation, the Minister in any event had to impose the charge by way of legislation. Therefore, the imposition of the exit charge by way of proclamation was constitutionally invalid because it raised revenue for national government and yet it was not directly imposed by Parliament. Froneman J would have dismissed the appeal and upheld the taxpayer’s cross-appeal. Majority: Moseneke DCJ (Mogoeng CJ, Cameron J, Jappie AJ, Khampepe J, Molemela AJ, Nkabinde J, Theron AJ and Tshiqi AJ concurring). Dissent: Froneman J.