During a budget speech in 2003, the Minister of Finance imposed what was termed a 10% exit charge on monies leaving the country in excess of R750 000.  In 2009, Mr Shuttleworth applied to the South African Reserve Bank ("the SARB") for permission to transfer approximately R2.5 billion out of South Africa.  The SARB granted Mr Shuttleworth permission to transfer this amount on condition that he paid the exit charge.  Mr Shuttleworth paid the charge of approximately R250 million.  He was later advised that the exit charge was a tax and had been imposed in a manner not permitted by the Constitution or the applicable statute.

Mr Shuttleworth brought an application in the High Court contending that the exit charge, as well as various legislative and regulatory provisions of the exchange control system, were constitutionally invalid.  The High Court  held for the SARB and the Minister that the exit charge was not a revenue-raising tax and had been lawfully imposed.  However, it found that a number of the Exchange Control Regulations were unconstitutional. The High Court also held that a provision of the Currency and Exchanges Act to be unlawful on the basis that it grants the President overly broad powers enabling him to suspend any legislation connected with exchange control.

Mr Shuttleworth appealed to the Supreme Court of Appeal ("the SCA"). The SARB and the Minister brought a cross-appeal on the basis that the High Court incorrectly found that certain provisions of the Act and Regulations were constitutionally invalid.

The Supreme Court of Appeal directed SARB to refund the amount paid by Mr Shuttleworth, but  refused to decide whether any of the exchange control provisions were inconsistent with the Constitution and invalid. 

The SARB and the Minister then brought the matter before the Constitutional Court on appeal against the order to refund the exit charge.  Mr Shuttleworth brought a cross-appeal against the finding that that the Regulations, and certain provisions of the Act, were constitutionally valid.

The question which the Constitutional Court was confronted with was whether the exit charge was a tax imposed for the purpose of raising revenue for the State (as contended by Mr Shuttleworth) or, as the Reserve Bank and Minister submit, a regulatory charge whose main object was to "disincentivise" the export of capital.  If the charge was a tax – a revenue-raising mechanism – then the regulation that authorised the exit charge would be invalid. This would be so because the exit charge had not been enacted in accordance with prescribed constitutional and statutory strictures.

The Constitutional Court found that the main purpose of the exit charge was not to raise revenue but rather to regulate conduct by discouraging the export of capital to protect the domestic economy.

The Constitutional Court also granted leave to appeal in the cross-appeal by Mr Shuttleworth but only in respect of the attack on the constitutional validity of the section of the Act that enables the making of Regulations and the provision in the Regulations prohibiting the export of capital without authorisation under certain conditions.  These provisions were found to be constitutionally valid as the broad discretionary powers granted to the Minister are necessary for flexible, speedy and expert approach to exchange control and are reasonably necessary to curb the outflow of capital, to protect the Rand and to ensure that the domestic economy is "shielded from capital flight".

For these reasons, the main appeal was upheld and the cross-appeal dismissed.  The Court made no order as to costs.

In a dissenting judgment, Froneman J held that national revenue of whatever kind, tax or not, may be raised only by original legislation passed by Parliament.  Only the manner of its implementation, not the decision to raise it, may be regulated in delegated legislation.  He therefore concludes that the exit charge of 10% is unconstitutional and invalid because it has raised revenue for the national government and yet it was not directly imposed by Parliament.  Froneman J stated he would have dismissed the appeal with costs and granted the cross-appeal with costs.