South African Reserve Bank and Another v Shuttleworth and Another

Mark Shuttleworth emigrated from South Africa and sought to externalise his blocked assets under the exchange control system established by the Currency and Exchanges Act 9 of 1933 and the Exchange Control Regulations. In terms of a policy announced by the Minister of Finance in 2003, emigrants wishing to export blocked assets exceeding R750 000 were required to pay an exit charge of 10%. Shuttleworth applied to export approximately R2.5 billion and paid about R250 million as an exit charge imposed by the South African Reserve Bank acting under regulation 10(1)(c). He later challenged the charge, contending that it was an unconstitutional tax not enacted as a money Bill and that parts of the exchange control regime were constitutionally invalid. The High Court upheld the validity of the exit charge but declared certain exchange control provisions invalid. The Supreme Court of Appeal held that the exit charge was an unlawful tax and ordered repayment. The Reserve Bank and Minister appealed to the Constitutional Court, while Shuttleworth cross-appealed on the constitutional validity of the exchange control scheme.

Leave to appeal was granted and the main appeal was upheld. The order of the Supreme Court of Appeal declaring the exit charge unlawful and ordering repayment was set aside. Mr Shuttleworth’s application in the High Court was dismissed. The cross-appeal challenging the constitutional validity of the exchange control provisions was dismissed. No order as to costs was made.

The case clarifies the constitutional distinction between taxes and regulatory charges in South African law and establishes the dominant purpose test for determining whether a levy constitutes a tax requiring enactment as a money Bill. It affirms the constitutional validity of South Africa’s exchange control framework and recognises the need for wide discretionary powers in financial and economic regulation. The judgment is a leading authority on money Bills, fiscal powers, and exchange control regulation.