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[2018] ZAWCHC 144
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National Director of Public Prosecutions v Theron and Others (3214/2017) [2018] ZAWCHC 144; 2019 (2) SACR 32 (WCC) (8 November 2018)
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Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 3214/2017
Before: The Hon. Mr Justice Binns-Ward
Hearing: 30 October 2018
Judgment:
8 November 2018
In
the matter between:
THE
NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS
Applicant
and
EUGENE
JOHANNES
THERON
First
Respondent
EUGENE
JOHANNES THERON
N.O.
Second
Respondent
MARTHINUS
JOHANNES STRYDOM
N.O.
Third
Respondent
JEANNE-MARI
THERON
N.O.
Fourth
Respondent
(The
second to fourth respondents having been cited in
their
capacity as the trustees of the ET 15 Familietrust (IT 1689/2001))
JUDGMENT
BINNS-WARD
J:
[1]
This
matter concerns an application by the National Director of
Prosecutions (‘the NDPP’), in terms of
s 48
of the
Prevention of Organised Crime Act 121 of 1998
(‘the Act’),
for the forfeiture of certain property to the state on the grounds
that it is either ‘
an
instrumentality of an offence referred to in Schedule 1
’
of the Act, or the ‘
the proceeds
of unlawful activities
’.
[1]
The property in issue is described in the notice of motion as:
‘
1.1 Erf […], […] Crescent,
Sonstraal Heights, Durbanville, Western Cape (
the
immovable property
); and
1.2 The cash amount of R134090
(
collectively
referred to as ‘the property
’)
.
That
was also the manner in which the property had been described in
preceding preservation order made in terms of
s 38
of the Act.
(The immovable property was alleged to be the ‘instrumentality’
and the order in respect of the cash
amount was sought on the grounds
that it was the ‘proceeds’.)
[2]
The Act provides that any realisable
property declared forfeit shall be sold and the proceeds deposited
into the Criminal Assets
Recovery Account (‘the Account’),
or if not sold, delivered to the Account (effectively to the National
Treasury).
Any monies declared forfeit must be deposited into
the Account.
[2]
The Account is a separate account in the National Revenue
Fund. It has been established in terms of s 63 of the Act.
The property and money allocated to, or standing to the credit of,
the Account may be utilised by Cabinet in the manner provided
in
terms of s 69A, essentially for the assistance of law
enforcement agencies and bodies engaged in the provision of
assistance
to victims of crime.
[3]
The
orders sought in terms of the notice of motion contemplate that the
curator bonis
appointed in terms of the preservation order will sell the fixed
property and pay the balance of the proceeds into the Account,
after
the deduction of his fees and expenditure. The orders sought in
terms of the notice of motion did not contain any provision
for the
preferent redemption of any debt secured by the mortgage bond that it
is common ground was registered against the title
deeds of the
immovable property.
[4]
At the time the preservation order was made
the immovable property, which is situated in a residential complex
and said to be the
first respondent’s home, was mortgaged in
favour of the ET Familie Trust, and it is still so encumbered.
The trustees
currently in office are the first respondent and his
sister, who are also beneficiaries in terms of terms of the trust
instrument,
and a so-called ‘independent trustee’ (the
third respondent), who says he has no family connections with the
beneficiaries.
The trustees were cited together with the first
respondent as co-respondents in the matter.
[3]
[5]
The third respondent has made an affidavit
stating that the mortgage bond registered over the immovable property
in the trust’s
favour stands as security for a loan in the sum
of R1 million advanced by the trust to the first respondent to
fund the purchase
of the property.
[4]
His affidavit incorporated a ‘request’ by the trustees
that in the event of a forfeiture order being made in
regard to the
immovable property ‘
the interest
of the Trust in the immovable property to the value of the
outstanding loan and interest thereon be excluded from such
an
order
’. (Whether there is,
in all likelihood, a
bona fide
relationship as debtor and creditor between the trust and the first
respondent (a matter that has been placed in contention), and,
if so,
whether the debt(s) carry interest are questions to which I shall
return later in this judgment).
[6]
All
of the respondents were represented in the current proceedings by the
same counsel. Their counsel characterised the affidavit
made by
the third respondent as incorporating or representing ‘a tacit
application’ in terms of s 52 of the Act
for an exclusion
order.
[5]
This is the remedy that is often described as being available to
someone who is able to raise a so-called ‘innocent
owner
defence’
[6]
in the context of a forfeiture order to obtain the exclusion of their
interest in the forfeited property from the operation of
the order.
The Act places an onus on a party seeking exclusionary relief in
terms of s 52 of the Act to satisfy the
court that it had
acquired its interest in the property subject to forfeiture legally,
and for a value broadly equivalent to the
value of the interest
concerned, and that it neither knew, nor had reasonable grounds to
suspect, that the property in which the
interest is held was an
instrumentality of an offence referred to in Schedule 1 to the
Act.
[7]
Only property that is subject to a
preservation order in terms of s 38 of the Act is liable to
forfeiture consequent upon an
application in terms of s 48. The
suggestion that the court was seized of a tacit application in terms
of s 52
therefore implied an understanding by the trustees and
their legal representatives that the mortgagees’ rights in the
immovable
property had been a subject of the preservation order and
accordingly susceptible to forfeiture. When I raised the
question
at the hearing with the NDPP’s legal representative,
he made it clear that he also considered that to be so. It was
not clear to me, however, that the real rights of the trust in the
fixed property were subject to the preservation order.
If the
mortgagees’ interest is not subject to the preservation order,
the basis for any application for an exclusion order
does not exist,
for it is not liable to forfeiture.
[8]
The position that actually obtains demands
determination at the outset because the structure of the Act requires
that forfeiture
applications in terms of s 48 and exclusion
applications in terms of s 52 fall to be determined
pari
passu
.
[7]
And, if there are indeed two applications before court, it affects
how disputes of fact on the papers fall to be dealt with
by the court
in the application of the
Plascon-Evans
rule.
[8]
[9]
[9]
‘
Property
’
is defined in s 1 of the Act to mean ‘
money
or any other movable, immovable, corporeal or incorporeal thing and
includes any rights, privileges, claims and securities
and any
interest therein and all proceeds thereof
’.
It is plain therefore that ‘property’ within the meaning
of the Act can include the rights of a mortgagee
in fixed property.
The defined meaning does not, however, derogate from the primary
ordinary meaning of the word which is
‘
a
thing or things belonging to someone
’
or the right of the right to the possession, use, or disposal of
something.
[10]
The ordinary meaning highlights that the word pertains to the subject
matter of a proprietary connection between the thing
or right
concerned and its owner or holder. Thus, in determining whether
the mortgagees’ rights in the immovable property
have been made
the subject of a preservation order, it has to be acknowledged that
such rights constitute ‘property’
that is quite discrete
from the ‘property’ constituted by the residual rights of
dominium in the fixed property. It
is only the latter that is
the ‘property’ that remains vested in the first
respondent as registered owner of the land
concerned. The Act
itself appears to acknowledge and give effect to this type of
distinction. It does so in s 43,
which carries the
subheading ‘
Orders in respect of
immovable property subject to preservation of property order
’.
[10]
The
preservation order, in paragraphs 2 and 3 thereof, expressly
prohibited all persons with knowledge of the order from disposing
of
or hypothecating the property, and directed the registrar of deeds to
‘
endorse the title deed of the
immovable property with the restriction that the property …
shall not without the prior leave
of
[the court]
be attached, sold in
execution,
further mortgaged
or otherwise encumbered; provided that such endorsement shall not
prevent a transfer of the immovable property effected in accordance
with paragraph 7
’ (underlining
supplied for emphasis). (Paragraph 7 of the order provided for
circumstances in which the
curator bonis
appointed in terms of s 42 might dispose of the property before
the determination of a forfeiture application or the lapsing
of the
preservation order, as the case might be, as provided for in terms of
s 40 of the Act.) The orders made in terms
of paragraphs 2
and 3 of the preservation order were of the nature provided for in
terms of s 43(1) read with s 43(2)(b)
of the Act.
[11]
It
is from s 43 of the Act that a court derives the power to make
orders, such as those reflected in paragraphs 2 and 3 of
the
preservation order mentioned above.
[11]
Section 43(1) gives the court the power to make
any of the orders binding on the registrar of deeds that are provided
for in s 43(2).
An order that the immovable property
subject to the preservation order may not be attached or sold in
execution without the consent
of the court is provided for in terms
of s 43(2)(b) of the Act. That an order contemplated in
terms of s 43(2)(b)
is of restricted effect is evident from the
provisions of s 43(3)(a), which reads:
In order to give effect to subsection (1), the registrar of deeds
concerned shall-
(a) make the necessary entries in his or her
registers and the necessary endorsement on the office copy of the
title deed, and thereupon
any such restriction shall be effective
against all persons
except, in
the case of a restriction contemplated in subsection (2)(b), against
any person in whose favour a mortgage bond or other
charge was
registered against the title deed of immovable property prior to the
endorsement of the restriction on the title deed
of the immovable
property
, but shall lapse on the
transfer of ownership of the immovable property concerned
(Underlining
provided for emphasis.)
In my
view the underlined words in s 43(3), which appear to exclude
from the operation of any order within the meaning of s 43(2)(b)
the right of a mortgagee to attach and sell in execution immovable
property that has been made subject of a preservation order,
serve to
confirm that a preservation order in respect of immovable property
does not affect the real rights in the property of
a mortgagee whose
bond was registered against the title deed of the property prior to a
restrictive endorsement of the deed effected
pursuant to, or in
association with, a preservation order.
[12]
The NDPP’s case on the papers was
that the first respondent, who is the registered owner of the
immovable property, had been
using the residential premises at that
address for the purposes of dealing in undesirable or prohibited
substances.
[12]
It was alleged that the use of the premises in that manner rendered
it susceptible to characterisation as the ‘
instrumentality
of an offence
’ as defined in s 1
of the Act, viz. ‘
any property
which is concerned in the commission or suspected commission of an
offence at any time before or after the commencement
of this Act,
whether committed within the Republic or elsewhere
’.
[13]
The
relatively restricted import of the defined meaning of
‘
instrumentality of an offence
’
has been explained in the jurisprudence. So, in
National
Director of Public Prosecutions v RO Cook Properties (Pty) Ltd;
National Director of Public Prosecutions v 37 Gillespie
Street Durban
(Pty) Ltd and another; National Director of Public Prosecutions v
Seevnarayan
[2004] 2 All SA 491
(SCA),
2004 (2) SACR 208
, at para. 14, the court held in this regard ‘…
the purport of the statute itself
suggests some restriction. The purpose of chapter 6’s
forfeiture provisions is signalled
in the part of the Act’s
Preamble that states that “no person should benefit from the
fruits of unlawful activities,
nor is any person entitled to use
property for the commission of an offence”. The “use”
of property “for”
the commission of crime denotes a
relationship of direct functionality between what is used and what is
achieved.
’ and further, in
para. 31 (in a passage applied by the Constitutional Court in
Prophet v National Director of Public
Prosecutions
[2006] ZACC 17
;
2006 (2)
SACR 525
(CC);
2007 (2) BCLR 140
;
2007 (6) SA 169
, at para. 56)
that ‘ …
the link between
the crime committed and the property
[must be]
reasonably direct and that the
employment of the property must be functional to the commission of
the crime. . . .
[T]
he
property must play a reasonably direct role in the commission of the
offence. In a real or substantial sense the property must
facilitate
or make possible the commission of the offence
’.
[14]
A further factor that in my view supports
the construction attributed to s 43 in paragraph [11]
above is the unlikelihood of a mortgagee’s
real right in encumbered property ever constituting property that
might qualify
as the ‘
instrumentality
of an offence
’ in the accepted
sense of that concept. It is therefore not property that is
readily susceptible to attachment by means
of a preservation order in
terms of s 38. If, however, it had been intended,
exceptionally, that the mortgagees’
interest in the immovable
property be subject to the preservation order, the terms of the order
should have expressly provided
as much.
[15]
It
cannot be unusual that fixed property that the NDPP applies to have
declared forfeit to the state in terms of the Act is mortgaged,
and I
therefore enquired of the legal representative who appeared for him
in these proceedings, and does so regularly in like cases,
whether he
was not aware of any previous matter in which this question had been
considered. I was informed that he was not,
[13]
but that ordinarily, when the mortgagee is
a
financial institution
, the terms of the
order sought in such matters expressly excludes the mortgagee’s
interest. I cannot conceive of any
reason why the identity of
the mortgagee should ordinarily make any difference.
[16]
I have accordingly concluded that the
trust’s interest in the immovable property as security for the
redemption of any claim
it might have against the registered owner
was not property that was subject to the preservation order, and that
it is therefore
excluded from susceptibility to forfeiture in the
NDPP’s application in terms of s 48 of the Act. On a
proper
reading of the statute, and consistently with the ordinary
incidence of the common law of property, a preservation order
simpliciter
in respect of immovable property results in the
preservation of the property subject to its encumbrances if any.
A conclusion
to the same effect is recorded
en
passant
in the majority judgment (per
Nugent JA) in
Mazibuko
,
[14]
at para. 57. In the circumstances a need for the trustees
to protect their interest in the immovable property by way
of an
application in terms of s 52 based on the so-called ‘innocent
owner defence’ does not arise on the facts.
[17]
I turn now to the question whether
the
first respondent’s
property
should be declared forfeit.
[18]
The evidence upon which the NDPP’s
application was founded was garnered in a search carried out by the
police at the immovable
property in the early hours of 18 August
2015. The police detail did not have a warrant to search the
property.
The officers acted in terms of s 11(1) of the
Drugs and Drug Trafficking Act which, insofar as currently relevant,
provided
that a police officer might, if s/he had reasonable grounds
to suspect that an offence under that Act had been or was about to be
committed by means or in respect of any scheduled substance, drug or
property, at any time (i) enter and search any premises
in which
any such substance, drug or property was suspected to be found; and
(ii) search any container or other thing in which
any such
substance, drug or property was suspected to be found; and
seize
anything which in his or her opinion might be connected with, or
provide proof of, a contravention of the statute.
[19]
Those provisions were subsequently held by
the Constitutional Court in
Minister of
Police and Others v Kunjana
[2016] ZACC
21
;
2016 (9) BCLR 1237
(CC);
2016 (2) SACR 473
to be invalid because
they conduced to unjustifiable infringements of the constitutional
rights to privacy and dignity. The
judgment in
Kunjana
was handed down on 27 July 2016, nearly a year after the date of
search of the first respondent’s premises.
[20]
The respondents’ counsel argued that
the evidence related to what had been found in the search and seizure
operation at the
first respondent’s property should be excluded
from consideration because it had been obtained unlawfully. The
exclusion
of the evidence would result in the collapse of the NDPP’s
case.
[21]
The Constitutional Court restricted its
order of invalidity in
Kunjana
to operate only prospectively from the date of its judgment. It
noted (in para. 34) that by framing its order in that
manner it
might be depriving the respondent in that case - being the party who
had successfully impugned the constitutionality
of the provisions –
from obtaining any effective relief from its order during her
upcoming trial on charges under the Drugs
and Drug Trafficking Act.
The Court observed, however (at para. 37), that it nevertheless
remained open to her in any event
to challenge the validity of the
searches during her criminal trial. The respondents’
counsel appeared to rely on the
observation at para. 37 of the
Constitutional Court judgment in support of their submission that the
evidence should be excluded
on some or other basis.
[22]
It is clear from the context, however, the
Constitutional Court’s remark that the respondent in
Kunjana
could still challenge the validity of the searches at her criminal
trial was premised on the effect of s 35(5) of the Constitution,
which provides that ‘(e)
vidence
obtained in a manner that violates any right in the Bill of Rights
must be excluded if the admission of that evidence would
render the
trial unfair or otherwise be detrimental to the administration of
justice
’. Section 35 is the
provision in the Bill of Rights that entrenches the right of
arraigned persons to a fair trial
in criminal proceedings. Section
35(5) is triggered by
the effect
in the given case of the manner in which evidence has been obtained
on the fairness of a criminal trial or the administration of
justice. It applies irrespective of the actual or ostensible
legality of the procurement of the evidence. The current
proceedings are civil in character,
[15]
and therefore not amenable to s 35(5).
[23]
The
Constitutional Court explained that its decision to make its order of
only prospective effect was founded on its concern that
a
retrospectively applicable order might cause criminals who had
contravened provisions of the Drugs Act to go free and undermine the
administration of justice; and that a declaration with retrospective
effect might result in delictual claims by persons subject
to
searches and seizures, thereby further burdening the police
services.
[16]
The restrictive effect of the prospective
incidence of the order of invalidity made by the Constitutional Court
is that the actions
taken by police officials under s 11(1)(a)
and (g) of the Drugs and Drug Trafficking Act before the date of the
Court’s
judgment are clothed with apparent validity, and fall
to be regarded for practical purposes as if carried out within the
ambit
of the law.
[24]
The consequence of this is that it has to
be accepted that the warrantless search and seizure operation
conducted at the first respondent’s
premises was permitted at
the time under the authority of an effective statutory provision.
The uncontroverted evidence is
that the police acted on information
provided by a reliable informer. There is nothing to suggest
that the information provided
to the police did not afford them
reasonable grounds to suspect that offences under the Drugs and Drug
Trafficking Act were being
committed at the premises. In the
result the argument that the evidence obtained in the operation
should be excluded cannot
prevail.
[17]
[25]
The police found a considerable amount of
cannabis at the first respondent’s premises. There were
57 cannabis plants
under hydroponic cultivation (capable of producing
about 855 gm. of processed dagga) and a quantity (423,16 gm.) of
the processed
product, some of which was contained in bottles. The
cultivation operation was assisted by the use of halogen lamps and
bright
florescent lighting. This lighting was even set up in
what had been designed as the built in cupboards in the house.
The doors of the cupboards had been removed and florescent lighting
installed in the tops of the modified cupboards. The
purpose of
the lighting, which was regulated by timers it would appear, was to
accelerate the growth of the cannabis plants thereby
shortening the
production cycle. A system for drying the harvested cannabis
was set up in one of the rooms. Evidence
was adduced that dagga
processed from cannabis plants cultivated under controlled
circumstances, such as hydroponically, commands
a significantly
higher market value (i.e. by tens of multiples) than does product
from the field-grown variety. This, because
of the much higher
concentration of the active ingredient, tetrahydrocannabinol (THC),
that is found in the plants cultivated under
controlled
circumstances.
[26]
Large tins and certain other containers
containing a variety of other chemicals that were prohibited
substances or homologues of
such substances and marketable in the
illicit drug market were also found in the search. The
chemicals and solvents found
on the premises included 2-Butanone,
Hexane and Dichloromethane, which are substances that can be used in
the manufacture, processing
or purification of drugs. Numerous
plastic packages containing narcotic substances of drugs that were
homologues of methcathinone
(known on the street as “Cat”)
and lysergic acid diethylamide (LSD) were also amongst the material
discovered on the
premises. I find it unnecessary to list them
all. They were fully described in the affidavits of Surita
Smit, a forensic
analyst employed at the Forensic Science Laboratory,
amplified by the commentary furnished in the affidavit of Detective
Captain
Johan Smit. The first respondent did not challenge the
evidence adduced by the NDPP concerning the forensic analysis and
identification of the substances found in his house, other than by
bald denial.
[27]
San Pedro cactus plants were cultivated in
the garden on the premises and pieces of the plants were discovered
in the fridge in
the house. Mescaline can be extracted from
this plant. Sodium hydroxide and sulphuric acid that would be
used in such
an extraction process were found in the search.
The types of glassware that would be useful for the purpose, such as
a volumetric
flask, separation funnel, ceramic suction funnel and
measuring cylinder were also present.
[28]
A police officer with 27 years’
experience in the investigation of drugs related offences testified
that the total estimated
street value of the substances found in the
first respondent’s premised was just over R1,3 million.
(He excluded
from his valuation the values of certain of the
substances, which, because of a confessed lack of necessary
knowledge, were beyond
his ability to value.) The uncontroverted
evidence was that every room in the house, apart from the main
bedroom, and also the
garage were given over to, or contained
evidence of, what appeared to be drug production activity. The
photographs taken
by the police and put in evidence speak volumes.
They give the impression of something approaching a mini-industrial
operation
having been conducted there. The picture they present
of the interior of what is supposed to be the inside of a dwelling
house is far removed from that of anything approaching a conventional
domestic set-up. They support the opinion evidence of
two
policemen with nearly 60 years’ experience between them in
narcotics-related investigations that the property was used
for the
manufacture and preparation of illicit drugs for sale, and that the
physical evidence found in the search was inconsistent
with any claim
that the set-up was related only to the use of the drugs found there
for private consumption by the couple living
there.
[29]
The police also found R134 090 in cash
at the premises. Some of the money was stored in a cupboard and
the rest in a
desk drawer. According to the first respondent
and his girlfriend, who lived with him at the premises, fifteen
thousand rand
of the cash seized by the police had been in a
knapsack.
[30]
The NDPP’s case is that the first
respondent’s house is the instrumentality of the offence of
dealing in drugs in contravention
of s 5 of the Drugs and Drug
Trafficking Act (an offence in terms of s 13 of that Act), and that
the cash seized at the premises
was the proceeds of crime. The
term ‘
deal in
’
is widely defined in that Act and includes, amongst other things,
performing any act in connection with the cultivation,
manufacture or
administration of a drug. In
Cook
Properties
supra, the appeal court in
analogous circumstances allowed by implication that
evidence
that the premises themselves were used to manufacture, package or
distribute drugs, or that any part of the premises was
adapted or
equipped to facilitate drug dealing was a strong pointer to the
property concerned being the instrumentality of an offence,
as
defined.
[18]
The court affirmatively restated that proposition in
Prophet
(SCA).
[19]
[31]
The first respondent’s case is that
the cannabis found in his house was being cultivated and processed by
him for his own
private consumption. He called in aid in this
regard the judgments of this court and the Constitutional Court that
were subsequently
delivered in
Prince v
Minister of Justice and Constitutional Development and Others; Rubin
v National Director of Public Prosecutions and Others;
Acton and
Others v National Director of Public Prosecutions and Others
[2017] ZAWCHC 30
;
[2017] 2 All SA 864
(WCC);
2017 (4) SA 299
and
Minister of Justice and Constitutional
Development and Others v Prince (Clarke and Others Intervening);
National Director of Public
Prosecutions and Others v Rubin; National
Director of Public Prosecutions and Others v Acton
[2018] ZACC 30
;
2018 (10) BCLR 1220
(CC), which held in essence that
the prohibition against the possession of cannabis for personal
consumption constituted an unjustified
infringement of a person’s
constitutional right to privacy. The first respondent did not
explain the presence of the
other scheduled substances found at the
premises. He claimed that he had been using the pieces of San
Pedro cactus found
in the house to experiment in the making of some
sort of tea. He alleged that all of the cash seized at his
home, apart from
that found in the knapsack, was a nest egg that he
preferred to hold for ready use in money-generating activities that
he might
engage in from time to time, rather than depositing it in a
bank account. He claimed to have accumulated the cash from the
purchase and resale of a used motor vehicle at some point for a
profit of R14 000 and from the profit made on a similar
transaction
involving a motor cycle and (to the extent of R15 000)
the proceeds of the sale of another vehicle that his girlfriend had
received as a gift. The rest was money that he earned from the
sale of small glass objects that he made and sold at fetes
and flea
markets. He gave no particulars of to whom he had sold the
vehicles or when those transactions had occurred.
In other
words, he gave no details against which the veracity of his evidence
could be interrogated by the applicant. That
someone of the
first respondent’s apparently relatively modest means (he had a
reported income from formal employment of
R10 000 a month on
average) should keep such a relatively large sum in cash is
improbable.
[32]
It was claimed that the money in the
knapsack belonged to his girlfriend’s employer, Exclusive
Access Trading 815 (Pty) Ltd
t/a LG Brandshop. The respondents’
version was that that money had been entrusted to her when she left
work the previous
day to be banked at Canal Walk on her way back to
work the following morning. LG Brandshop appears to be a
business conducted
by one Morné van Taak. There are
indications on the papers that van Taak is a business associate or
friend of the
first respondent’s. The claim that the
money in the knapsack belonged to LG Brandshop was supported by a
letter, dated
26 June 2017, apparently signed by van Taak, a
copy of which was attached to the first respondent’s answering
affidavit.
A supporting affidavit by van Taak confirming the
truth of the letter’s content was notably absent from the
answering papers.
As the applicant’s legal representative
pertinently emphasised in argument it was also significant that there
was no evidence
of any attempt by LG Brandshop in the ensuing three
years to recover its money from the police or the
curator
bonis
, as might ordinarily have been
expected if there were substance in its claim.
[33]
The respondents’ counsel submitted
that on the application of the
Plascon-Evans
rule the case should be decided on the basis of an acceptance of the
respondents’ evidence where that conflicted with that
of the
applicant. It falls to be observed in this regard that reliance
on the
Plascon-Evans
rule is too frequently made by litigants without a proper
appreciation of the ambit of the rule and the exceptions that form
part
of it. In particular, it is often overlooked that where
the allegations or denials of the respondent are far-fetched or
clearly
untenable the court is justified in rejecting them merely on
the papers (cf.
Administrator,
Transvaal and Others v Theletsane and Others
[1990] ZASCA 156
;
1991
(2) SA 192
(A) at 197)
, and that where the
denial by respondent of a fact alleged by the applicant does not
raise a real, genuine or bona fide dispute
of fact – in the
sense explained in
Room Hire Co (Pty)
Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T) at 1163-5 and
Da Mata v
Otto NO
1972 (3) SA 858
(A) at 882D-H –
and the respondent has not availed himself of the right to apply to
cross-examine the deponents concerned
and the court is satisfied as
to the inherent credibility of the pertinent factual averments in the
affidavits in the applicant’s
case, it may proceed on the basis
of the correctness thereof for the purposes of determining a case for
final relief.
[34]
The following observations made by
Shongwe JA in
Buffalo Freight
Systems (Pty) Ltd v Castleigh Trading (Pty) Ltd and Another
[2010] ZASCA 66
;
2011 (1) SA 8
(SCA);
[2011] 1 All SA 1
, at para. 19,
in the context of an argument about the application of the
Plascon-Evans
rule, underscore that the rule does not bind the court in every case
to proceed on an uncritical acceptance of a respondent’s
version, especially where such version defies credulity or cannot
withstand objective analysis:
…
in
Truth
Verification Testing Centre CC v AE Truth Detection CC
1998 (2) SA 689
(W) at 698 H-J , Eloff AJ said:
‘
I
am also mindful of the fact the so-called robust common-sense,
approach’ which adopted in cases such as
Soffiantini
v Mould
1956 (4) SA
150
(E) in relation to the resolution of disputed issues on paper
usually relates to situations where a respondent contents himself
with bald and hollow denials of factual matter confronting him. There
is, however, no reason in logic why it should not be applied
in
assessing a detailed version which is wholly fanciful and untenable.’
I respectfully agree. The court should be prepared to
undertake an objective analysis of such disputes when required to do
so. In
J W Wightman (Pty) Ltd v Headfour (Pty) Ltd
[2008]
ZASCA 6
;
2008 (3) SA 371(SCA)
, [at para. 13] it was suggested how
that might be done in appropriate circumstances.
[35]
In assessing whether the first respondent’s
version so far-fetched or clearly untenable that the court would be
justified
in rejecting it on the papers, it is appropriate in my view
to consider the evidence as a whole, and not compartmentally.
So, for example, whilst the improbability that attaches to the first
respondent’s explanation for having such a large sum
in cash on
hand in his house might not be enough, in itself to satisfy the
stringent test that has to be applied in deciding whether
an
exception to the ordinary incidence of the
Plascon-Evans
rule is justified,
[20]
the tenability of his version is seriously eroded to the point of
being far-fetched when it is considered in the context of the
compelling evidence indicating the conduct of a drug dealing business
at the premises and his risible attempts to escape the effect
of the
real evidence put before the court by means of the photographic and
forensic analysis evidence. On this approach,
and having a
holistic regard to the evidence, I am left in no doubt that a finding
is justified on the papers that the premises
were an instrumentality
of crime and that the cash seized by the police was the proceeds of
crime.
[36]
An
order for the forfeiture of the property cannot follow, however, if
the effect would be disproportionate in the sense of it resulting
in
an arbitrary deprivation of property, or of operating unduly harshly
on the affected owner or rights holder. The proper
approach to
the assessment of whether or not forfeiture would be a
disproportionate remedy in cases like this is well established;
see
Prophet
supra,
at paras. 58-62. The factors enumerated in
F
irst
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA Ltd
t/a
Wesbank v Minister of Finance
(‘
FNB
’)
[2002] ZACC 5
[2002] ZACC 5
; ;
2002 (4) SA 768
(CC);
2002 (7) BCLR 702
, at para.
100, should be weighed appropriately with regard to the circumstances
of the given case in order to check that the operation
of the
forfeiture provisions in the Act would not impermissibly result in an
arbitrary deprivation of property in contravention
of s 25(1) of
the Constitution;
[21]
or have a disproportionately punitive effect.
[37]
The facts of this case are equivalent in
material respects to those in the
Prophet
matter referred to earlier.
[22]
In that case the immovable property was a house in the Cape Town
suburb of Woodstock. The house was being used as a
mini-laboratory for the production of illicit drugs. In that
matter too a significant portion of the house had been given
over to
activities connected with the manufacture of the drugs. The
monetary value of the drugs-related material found there
was also, as
in the current matter, relatively high. The forfeiture order made by
the High Court in that matter was confirmed on
appeal by both the
Supreme Court of Appeal and the Constitutional Court in circumstances
quite closely comparable to those in the
current matter.
[38]
The recognised objects of the Act would be
well served by forfeiture in this case. Drug dealing is a
scourge in our society.
The social havoc it wreaks, especially
amongst the young and unemployed, is well-documented, and a reality
that judges in this
country are confronted with daily in the
discharge of various of their functions, most especially when trying
offences involving
violence, which are often associated with drug
use, and reviewing committals for involuntary psychiatric care in
terms of the
Mental Health Care Act 17 of 2002
, which are often
necessitated for the treatment of conditions brought on by the
consumption of undesirable or prohibited dependence
inducing
substances.
[39]
The first respondent on the other hand must
have, or should have, appreciated the risk that he was taking in
using his house primarily
for a drug-dealing enterprise rather than
as the proper home that it should have provided. On the
respondents’ version
the property is heavily bonded, and the
direct financial effect of its forfeiture on him would be much less
than the market value
of the property. He is the beneficiary of
a family trust that appears to have the means to extend him financial
support if
he should be in need of it.
[23]
He is young and, judging by his involvement in various businesses,
seems to have an entrepreneurial aptitude. It seems
unlikely
that a forfeiture order would leave him destitute or homeless.
[40]
Making a forfeiture order in the
circumstances would not result in an arbitrary deprivation of
property, nor would it give rise
to disproportionately penal
consequences.
[41]
I am not persuaded that an exclusion order
falls to be made in respect of the R15 000 of the seized cash
that is alleged to
have been the property of LG Brandshop. There
was in any event no application by LG Brandshop for an exclusion
order.
The mere writing, more than two years after the event,
of a ‘to whom it may concern’ letter by the alleged owner
of
the cash does not qualify as an application in terms of
s 52
,
whether express or tacit. And even if it had, its content would
not have sufficed in the circumstances to discharge the
onus that
burdens a party seeking to obtain an exclusion order on the basis of
the innocent owner defence. There is no explanation
why, if the
police had seized its money, LG Brandshop did not lay claim to it
immediately or give notice in terms of
s 39
of the Act.
There is also no evidence to indicate why the first respondent’s
girlfriend should have been entrusted
with such a comparatively large
sum in cash to deal with in the manner claimed. Was this a
once-off event, or something that
was done regularly in the ordinary
conduct of LG Brandshop’s business? No corroborating
detail whatsoever has been
offered in support of the allegation.
The statement in a single sentence of the letter signed by van Taak
that ‘
One of Molly’s duties
at the company is daily banking
’
is hardly illuminating. Many a trading entity will have a staff
member that attends to daily banking, but I would
consider it
improbable that such employees would ordinarily take large sums of
the business’s cash takings home with them
in the evening to
bank the next day. And if there were any such arrangement I
would expect there to be some form of documentary
record, such as
pre-signed deposit slips. In short, there is no evidence to
lend the claim verisimilitude.
[42]
The NDPP has contended, through an
affidavit made by his local representative, a deputy director of
public prosecutions, that the
alleged loan in respect of which the
mortgage bond registered in favour of the family trust is said to
provide security is a sham
and that if there had indeed been any flow
of funds from the trust (which the applicant appears to call into
question) it was a
donation dressed up as a loan to avoid tax.
There is insufficient evidence on the papers to determine whether
there is any
substance to these accusations, and they are in any
event matters that lie outside of the scope of these proceedings.
[43]
There are indeed some anomalies in the
respondents’ evidence concerning the loan. I have already
pointed to the fact
that the mortgage bond was not registered
simul
et semel
the registration of the
transfer of the title of the property in the first respondent’s
name, which is what ordinarily happens
when security is given for a
loan advanced to finance the purchase of fixed property. No
substantiating evidence of a relevant
flow of funds was offered by
the trustees. It is also odd that the third respondent claims
that the bond secures a claim
not only in respect of the capital of
the loan, but
possibly
also interest thereon in an unspecified basis. Odd, because if
the loan were interest bearing one would expect the loan agreement
to
provide for the payment of instalments towards its redemption, which,
as far as one is able to gather, it does not. It
was also
peculiar that the third respondent should have given the evidence he
did concerning the loan and security without having
confirmed the
actual position against the trust’s accounting records.
The loan agreement itself, a copy of which was
attached to the
answering papers, is unconventional in various respects, most notably
in its provision that interest might be levied
on the loan at a rate
to be agreed if the parties should at any time so agree.
[44]
I mention these matters because it should
not be misunderstood from the finding that the trust’s rights
as mortgagee did not
form part of the property affected by the
preservation order, that the existence or amount of any claim secured
thereby has been
found to have been established. It will be for
the
curator bonis
,
when the fixed property is realised pursuant to the forfeiture order
that will be made, to satisfy himself as to the validity
of any claim
on the proceeds based on the mortgage bond. If he is not
satisfied, he will be entitled to require the trustees
to establish
any claim to any part of the proceeds in appropriate legal
proceedings.
[45]
As mentioned, the NDPP sought an order
directing the
curator bonis
to pay the proceeds of the sale of the immovable property after
deducting his fees and expenses to the Account. The Supreme
Court of Appeal held in
Mazibuko
supra, at para 57, with reference to
s 57(5)
of the
Act,
[24]
that such an order was legally incompetent because the Act provides
that the proceeds must be paid to the Account and the expenses
attendant on forfeiture proceedings must be defrayed from funds
appropriated for that purpose by Parliament. This court has
in
at least one previous reported judgment also declined to make such an
order, and cited the judgment in
Mazibuko
in explanation of its approach.
[25]
It does not appear from the judgment that the matter was argued
before the Supreme Court of Appeal, and it seems to me, with
respect,
having regard to the provisions of
s 42(2)(a)
of the Act,
[26]
that the observation founded on
s 57(5)
construed in isolation
was made
per incuriam
.
An order allowing for the payment of the fees and expenses of the
curator bonis
from the proceeds of the forfeited property appears to me to be a
sensible and practicable provision in most cases.
[46]
It was also pointed out in both of the
earlier judgments to which I have referred that seeking an order
confirming the appointment
of the
curator
bonis
who was appointed when the
preservation order was made was unnecessary and inappropriate because
the operation of the Act provided
for this automatically. The
NDPP was party to these matters. It is puzzling therefore that
he persists in praying for
orders to that effect when it has been
plainly spelled out that they are superfluous.
[47]
The judgment in
Mazibuko
held further that it was unnecessary to spell out in an order that
the proceeds of the disposition of immovable property to be
paid by
the
curator bonis
to the Account should be net of any amount due to a mortgagee or
other party that has a charge on the property. For the reasons
discussed above, that should indeed be self-evident, but I shall
nevertheless include such a provision in the orders to be made
in the
current matter. I consider that the making of such an order is
indicated for the sake of clarity in this case in view
of the
confusion on both sides identified earlier as to the correct
position.
[48]
An order will issue in the following terms:
1. The following property, which is currently the subject matter of a
preservation of property order granted by this Court on 23
February
2017, is declared forfeit to the State in terms of section 50(1) of
the Prevention of Organised Crime Act 121 of 1998
(‘the Act’):
1.1 Erf […], […], Sonstraal Heights, Durbanville,
Western Cape (the immovable property); and
1.2 The cash amount of R134 090.
(collectively referred to as ‘the property’).
2. The Registrar of this Court is directed to publish notice of this
order in the Government Gazette as soon as practicable after
the
order is made, as required in terms of s 50(5) of the Act.
3. Upon the disposal of the immovable property as contemplated by s
57(1)(c) of the Act, the
curator bonis
appointed in terms of
the aforementioned preservation of property order shall, after
settling any claim to any portion thereof
that may be duly
established by the mortgagees, being the trustees for the time being
of the ET 15 Familietrust (IT 1689/2001),
deposit the proceeds of the
disposal, net of his fees and expenses, into the Criminal Asset
Recovery Account established under
s 63 of the Act, being number
[…] held at the South African Reserve Bank.
4. It is directed that as soon as this order takes effect, as
provided for in terms of section 50(6) of the Act, read with s 54(1)
thereof, that is after 45 calendar days after the Government Gazette
publication referred to in paragraph 2 hereof, the responsible
finance officer of the South African Police Service currently in
control of the SAPS bank account number […] at ABSA Bank
Ltd,
where the cash subject of paragraph 1.2 of this order is held, is
authorised and directed, after confirming with
curator bonis
that the fees and expenses referred to in paragraph 5 below have been
paid or provided for, to cause the said property (or the
balance
thereof remaining after the payment of the curator’s fees and
expenses) to be paid into the banking account of the
Criminal Asset
Recovery Account as mentioned above.
5. As adumbrated in paragraphs 3 and 4 above, an order is made in
terms of s 42(2)(a) of the Act that the fees and expenses
of the
curator bonis
shall be paid from the forfeited property.
6. The
curator bonis
shall, as soon as possible, but not later
than within a period of 90 days of this order coming into effect,
file a report with
the applicant and the Master of the High Court,
concerning the manner in which he has -
6.1 completed the administration of the property, and
6.2 complied with the terms of this order.
7. Any person, whose interest in the property concerned is affected
by the forfeiture order, may within 20 days after he or she
has
acquired knowledge of such order, set the matter down for variation
or rescission by the court.
8. The first respondent is ordered to pay the applicant’s costs
of suit.
A.G. BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicant’s
legal representative: Muhammed Kagee
Asset
Forfeiture Unit
Applicant’s
attorneys: The State Attorney
Cape
Town
Respondents’
counsel: Craig Webster SC
Helmut
Schölzel
Respondents’
attorneys: Mathewson Gess Inc.
Cape
Town
[1]
See s 50(1)(a) and (b) of the Act.
[2]
See s 57 of the Act.
[3]
A former trustee, who had resigned from the
position several years ago, was erroneously cited as the fifth
respondent, but nothing
turns on that.
[4]
The mortgage, which is a covering bond, was
registered approximately eight months after the transfer of the
property into the
first respondent’s name.
[5]
That an application in terms of s 52 may be imputed on the answering
papers in an application in terms of s 48 of the Act is
confirmed in
National Director of Public Prosecutions v Parker
2006 (3) SA
198
(SCA). See in this connection
National
Director of Public Prosecutions v Van der Merwe and Another
[2011] ZAWCHC 8
;
2011 (2) SACR 188
(WCC);
[2011]
3 All SA 635
, at para. 22
.
[6]
See e.g.
National
Director of Public Prosecutions v Mohamed NO
[2002] ZACC 9
,
2002 (4) SA 843
(CC) at para. 18. The label has
been described as ‘a misnomer’; see
Mazibuko
and Another v National Director of Public Prosecutions
[2009]
ZASCA 52
,
[2009] 3 All SA 548
(SCA),
2009 (6) SA 479
, at para. 40.
An example of such a ‘defence’ is to be found in the
facts in
Van der Merwe supra
,
where the owner of the fixed property that was declared forfeit in
that case because the tenant had been using it as an outlet
for the
sale of illicit drugs sought (unsuccessfully) to protect her
proprietary interest from forfeiture on the grounds that
she had not
been complicit in the unlawful activity carried on there and had
taken reasonable measures to stop it.
[7]
See s 52(1) of the Act, and, consider, in
particular, the effect of the words ‘
and
when it makes a forfeiture order …
’.
[8]
See
Plascon -Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634E-635C
[9]
Van der Merwe
supra,
at paras. 18-19.
[10]
See
The Oxford
Dictionary of English
, s.v.
‘
property
’.
[11]
In paragraph [10] above.
[12]
An offence referred to in
s 13
of the
Drugs
and Drug Trafficking Act, 1992
, listed in item 22 of Schedule 1 to
the
Prevention of Organised Crime Act.
[13
]
He might have overlooked his previous appearance
for the NDPP in
National Director of
Public Prosecutions v Salie and Another
[2014] ZAWCHC 40
;
[2014] 2 All SA 688
(WCC);
2015 (1) SACR 121
(WCC), where this very issue was addressed at para. 173, with
reference to the judgment of the Supreme Court of Appeal in
Mazibuko
supra, at para. 57. I accept, however, that the mortgagees in
both those matters were banks or registered financial institutions,
which the applicant’s legal representative appears to have
regarded as a pertinent basis for distinguishing the current
case.
[14]
Note 6
above. My
attention was directed to
Mazibuko
in a note from the respondents’ counsel that was submitted
after the hearing in response to a request by the court for
supplementary argument on the effect of s 43(2)(b) of the Act.
It does not appear that the question had been argued
in
Mazibuko
.
The point was made by Nugent JA incidentally in the context of the
learned judge’s passing observation that an order
made by the
court of first instance directing the
curator
bonis
in that matter to settle any
outstanding balance on a mortgage bond that was registered against
the property before paying the
proceeds to the Account had been
unnecessary.
[15]
See s 37 of the Act.
[16]
See
Kunjana
supra, at para. 38.
[17]
The respondents’ counsel also sought to argue that the
evidence should be excluded because it had been obtained in a manner
inconsistent with the safeguards provided in terms of s 22 of
the
Criminal Procedure Act 51 of 1977
. The argument was
founded on an averment in an affidavit by a member of the
applicant’s staff that the police had
acted in terms of that
provision. There was no basis in fact for that averment.
The direct evidence by the police
officers who conducted the
operation, supported in this respect by the evidence of the first
respondent himself, was that they
had acted in terms of
s 11
of
the
Drugs and Drug Trafficking Act.
[18
]
At para. 49.
[19]
Prophet v National Director of Public
Prosecutions
[2005] ZASCA 94
;
[2006] 1
All SA 212
(SCA), at para. 26.
[20]
Cf.
Mathewson and
Another v Van Niekerk and Others
[2012] ZASCA 12
(16 March 2012), at para. 7 and
National
Scrap Metal v Murray & Roberts
[2012] ZASCA 47
;
2012 (5) SA 300
(SCA), at paras. 21-22.
[21]
According to
FNB
supra, loc. cit., in cases involving the deprivation of corporeal
property, ‘
sufficient reason
’
is to be established as follows:
(a)
It is to be determined by evaluating the relationship between means
employed, namely the deprivation in question, and ends
sought to be
achieved, namely the purpose of the law in question.
(b)
A complexity of relationships has to be considered.
(c)
In evaluating the deprivation in question, regard must be had to the
relationship between the purpose for the deprivation
and the person
whose property is affected.
(d)
In addition, regard must be had to the relationship between the
purpose of the deprivation and the nature of the property
as well as
the extent of the deprivation in respect of such property.
(e)
Generally speaking, where the property in question is ownership of
land or a corporeal moveable, a more compelling purpose
will have to
be established in order for the depriving law to constitute
sufficient reason for the deprivation, than in the case
when the
property is something different, and the property right something
less extensive. … .
(f)
Generally speaking, when the deprivation in question embraces all
the incidents of ownership, the purpose for the deprivation
will
have to be more compelling than when the deprivation embraces only
some incidents of ownership and those incidents only
partially.
(g)
Depending on such interplay between variable means and ends, the
nature of the property in question and the extent of its
deprivation, there may be circumstances when sufficient reason is
established by, in effect, no more than a mere rational relationship
between means and ends; in others this might only be established by
a proportionality evaluation closer to that required by section
36(1) of the Constitution.
(h)
Whether there is sufficient reason to warrant the deprivation is a
matter to be decided on all the relevant facts of each
particular
case, always bearing in mind that the enquiry is concerned with
“arbitrary” in relation to the deprivation
of property
under section 25
[of the
Constitution]
.
[22]
At paragraph [13]
above.
[23]
Not only has it been alleged that the trust
advanced a R1 million loan to the first respondent, but
the respondents
also had the means to engage the services of both
senior and junior counsel to represent their interests in the
current proceedings.
[24]
Section 57(5) provides:
The expenses
incurred in connection with the forfeiture and the sale, including
expenses of seizure, maintenance and custody of
the property pending
its disposition, advertising and court costs shall be defrayed out
of moneys appropriated by Parliament
for that purpose.
[25]
See
Salie
’s case cited in note 13 above.
[26]
Section 42(2)(a) provides:
The High Court
which made an order under subsection (1) may make such order
relating to the fees and expenditure of the curator
bonis as it
deems fit, including an order for the payment of the fees of the
curator bonis-
(a) from the
forfeited property if a forfeiture order is made; or …