Corpclo 2290 CC t/a U-Care v The Registrar of Banks

The appellants, Corpclo 2290 CC trading as U-Care and Corpclo 2297 (Pty) Ltd trading as DMP Marketing, operated a multi-tiered contribution-based business model in which members of the public made monthly payments. These funds were pooled into the first appellant’s bank account and distributed as commissions and bonuses to members who recruited others, payments to the second appellant for administration, and donations to nominated charities. The Registrar of Banks, acting under the Banks Act 94 of 1990, appointed inspectors who concluded that the appellants were conducting ‘the business of a bank’ as defined in s 1 of the Act read with Government Notice 498 of 1997. As neither appellant was a registered bank, the Registrar applied to the KwaZulu-Natal High Court for an interdict under s 81 of the Act to prohibit the continuation of this business. The High Court granted the interdict, and the appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, and the interdict prohibiting the appellants from conducting the business in contravention of the Banks Act remained in force.

This case confirms the wide scope of the statutory definition of ‘the business of a bank’ under the Banks Act, particularly in relation to pyramid or multi-tiered contribution schemes. It underscores the regulatory authority of the Registrar of Banks to act proactively to prevent unregistered entities from conducting banking activities. The judgment is also significant for reaffirming procedural rules that constitutional challenges and new defences cannot be raised for the first time on appeal, especially in motion proceedings.