Pratt v First Rand Bank Limited

Mrs Anne Elizabeth Mary Pratt, a businesswoman, owned 30% of the shares in Anne Pratt and Associates (Pty) Ltd. The remaining 70% was held by the Fast Track Trust, registered in the Isle of Man, of which she was a beneficiary. In 2001 she sought to restructure her affairs and consulted First Rand Bank Limited, an authorised dealer in foreign exchange. A series of agreements was concluded under which Classy Living CC, to be wholly owned by Pratt, would acquire the Trust’s interest in the company. First Rand Bank lent Pratt R25 million, which at her request was transferred to the Trust’s bank account in Jersey. When repayment became due, Pratt refused to pay and instead instituted action seeking a declaration that the agreements were null and void on the basis that they contravened Exchange Control Regulation 10(1)(c) by exporting capital without Treasury permission. First Rand Bank denied illegality and counterclaimed for repayment of the loan.

The appeal was dismissed with costs, including the costs of two counsel.

The case is significant for clarifying the operation of South Africa’s exchange control regime, particularly the evidentiary status and practical effect of Reserve Bank exchange control rulings. It confirms that such rulings, while not subordinate legislation, can constitute proof of permission under the Exchange Control Regulations and that parties alleging illegality bear the onus of proving absence of permission. The judgment is frequently cited on onus, admissibility of evidence in exchange control matters, and the practical administration of exchange controls by authorised dealers.