Shuttleworth case in Concourt today

THE Constitutional Court will hear the SA Reserve Bank’s application for leave to appeal against a Supreme Court of Appeal judgment in favour of entrepreneur Mark Shuttleworth today.

Last year, the supreme court ordered that the SA Reserve Bank repay Shuttleworth R250 million plus interest in a case about exchange controls.

The matter dates from March 5, 2008, when Shuttleworth applied to the Reserve Bank to transfer R1.5 billion out of South Africa when he moved to the Isle of Man.

This had to be done through an authorised dealer bank, and Shuttleworth elected Standard Bank. The application was granted, subject to the payment of an exit levy calculated at R165m.

A calculating error in the 10% levy led to Shuttleworth’s being told later that the amount which could be transferred out of the country was R1.485bn – to bring the exit payment to 10% of the total amount.

In June 2009, Shuttleworth decided to transfer his remaining assets out of South Africa. He was advised that the 10% levy was unlawful and challenged it, contending that aspects of the exchange regime were unconstitutional. Shuttleworth accepted the principle of exchange control.

He paid R250 474 893 under protest as the 10% exit levy necessary for the release of his blocked assets. He approached the high court in Pretoria, which did not order that he be repaid but did strike down certain provisions of the Currency and Exchanges Act and the Exchange Control Regulations.

Shuttleworth approached the supreme court to appeal against the high court’s refusal to order repayment, while the reserve bank, the minister of finance and the president cross-appealed against the orders of invalidity.

The supreme court found that Shuttleworth’s payment was not voluntary and that he reserved the right to seek its reversal.

The Reserve Bank’s imposition of the 10% exit levy was set aside, and so too were the high court’s declarations of invalidity of the exchange legislation and regulations.