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[2016] ZAGPJHC 139
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National Director of Public Prosecutions v Airport Clinic JHB International (Pty) Ltd and Another (2014/29695) [2016] ZAGPJHC 139; 2016 (2) SACR 576 (GJ) (13 May 2016)
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE NO: 2014/29695
DATE: 13 MAY 2016
In the matter between:
THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS
.........................................
Applicant
And
AIRPORT CLINIC JHB INTERNATIONAL (PTY)
LTD
.......................................
First
Respondent
SOLANKI, DR VIVEK
SAVJI
................................................................................
Second
Respondent
JUDGMENT
ADAMS AJ:
[1].
The
applicant applies in terms of chapter 6 of the Prevention of
Organised Crime Act 121 of 1998
(‘POCA’)
for the forfeiture of foreign currency
presently held in cash by the South African Reserve Bank
(‘SARB’).
The forfeiture is sought on the basis
that the foreign currency in cash constitutes the proceeds of
unlawful activities.
[2].
The
application is opposed by the first respondent, Airports Clinic
Johannesburg International (Pty) Limited, and the second respondent,
Vivek Savji Solanki, the sole shareholder of the first respondent. I
interpose here to note that the first respondent is at times
incorrectly cited by the second respondent himself. However, on the
version of the applicant himself the correct citation of the
first
respondent is as per the aforegoing and the case heading.
[3].
The
foreign currency consisting of US$184,420.00,
€
4,280.00
and £1,080.00 in cash
(‘the
property’),
was seized at the
instance of the South African Revenue Services
(‘SARS’)
on the 5
th
February 2010 and was handed over to
the South African Reserve Bank
(‘SARB’)
on the 2
nd
March 2010.
[4].
The
property was acquired lawfully by the first respondent and
represented amounts paid by patients to it in respect of medical
services rendered and medication supplied by the clinic to patients
from time to time. The property was not the proceeds of criminal
activities in that it was not acquired by the respondents in the
commission of a crime, and accordingly it cannot be described
as ill
– gotten gains.
[5].
The first and second respondents have
breached the provisions of Regulation 6(1) of the Exchange Control
Regulations which provides
as follows:
‘
Every person resident in the Republic
who becomes entitled to sell or to procure the sale of any foreign
currency, shall within
30 days after becoming so entitled, make or
cause to be made, a declaration in writing of such foreign currency
to the Treasury
or to an authorised dealer’.
[6].
The
applicant contends that the property constitutes the proceeds of
unlawful activities in that the first respondent infringed
Exchange
Control Regulation 6(1) by failing to sell the property to an ADLA
within 30 days of accrual. This violation constitutes
a criminal
offence in terms of Exchange Control Regulation 22.
[7].
The aforegoing is the sum total of the
bases on which the applicant endeavours to bring the property within
the confines of the
section 50
(‘Making
of Forfeiture Order’)
of POCA,
which provides thus:
‘
(1) The
High Court shall, subject to section 52, make an order applied for
under section 48(1) if the Court finds on a balance of
probabilities
that the property concerned -
(a) is an
instrumentality of an offence referred to in Schedule 1;
(b) is the proceeds of
unlawful activities; or
(c) is property associated with terrorist and
related activities’.
[8].
The
first and second respondents oppose the application. The opposition
is based mainly on a claim that they (the respondents) were
not aware
that their conduct amounted to a criminal offence.
[9].
As
rightly contended by Mr Latif, who appeared on behalf of the
applicant, this ‘
defence’
is
untenable as it is far – fetched if regard is had to the
circumstances of this matter, most notably the fact that prior
to the
seizure of the property the respondents had been involved with SARB
with respect to foreign exchange issues. This means
that they were
familiar with the regulations, and I find it hard to believe that the
first and second respondents would have been
ignorant of the fact
that their conduct constituted a criminal offence.
[10].
I
therefore reject the version of the respondents as false on this
particular aspect.
[11].
The
applicant has also raised a few points
in
limine
in relation to the respondents’
opposition to the application. These points are of a very technical /
legal nature. For the
reasons mentioned below I am of the view that
there is no merit in any of the preliminary points raised by the
applicant.
[12].
The
applicant takes issue with the citation of the first respondent.
However, as I alluded to above, the applicant himself confirms
the
correct citation of the first respondent and any incorrect citation
can at best be attributed to a
bona fide
error.
[13].
The
applicant furthermore questions the
locus
standi
of the second respondent and
whether he has the necessary authority to act on behalf of the first
respondent. I agree with the
submission made on behalf of the
respondents in the regard that
Eskom v
Soweto City Council
,
1992 (2) SA 703
(W) finds application in this matter. This means that challenging the
authority of the first respondent to be represented should
have been
directed at the authority of the attorney representing it. That was
not done in this matter, and the legal point relating
to
locus
standi
stands to be dismissed.
[14].
The
only issue which remains for me to decide is whether the property
falls within the ambit of Section 48(1) as being ‘
the
proceeds of unlawful activities’.
[15].
The
principles relating to this issue was dealt with extensively by the
Supreme Court of Appeal in the matter of
National
Director of Public Prosecutions v Seevnarayan
,
(111/03)
[2004] ZASCA 38
;
[2004] 2 All SA 491
(SCA). At paragraph
[18]
the Court explains the philosophy behind the relevant provision
of POCA as follows:-
‘
[18] The
inter-related purposes of chapter 6 therefore seem to us to include:
(a) removing incentives for crime; (b) deterring persons
from using
or allowing their property to be used in crime, (c) eliminating or
incapacitating some of the means by which crime may
be committed
(‘neutralising’, as counsel put it, property that has
been used and may again be used in crime); and,
we would add, (d)
advancing the ends of justice by depriving those involved in crime of
the property concerned. At least (b) and
(d) embody a palpably penal
aspect; but the statutory objectives transcend the merely penal. We
accordingly agree the provisions
must be restrictively interpreted,
though not for the narrow reasons counsel advanced’.
[16].
At paragraph [64] the court deals with the
concept of ‘
Proceeds of unlawful
activities’
and has this to say:
‘
[64] The statute defines ‘
proceeds
of unlawful activities’
as meaning
–
‘
any
property or any service, advantage, benefit or reward which was
derived, received or retained, directly or indirectly, in the
Republic or elsewhere, at any time before or after the commencement
of this Act, in connection with or as a result of any unlawful
activity carried on by any person, and includes any property
representing property so derived’.
The
definition in essence requires that the property in question be
‘derived, received or retained’ ‘in connection
with
or as a result of’ unlawful activities. Griesel J considered
that a literal application of the definition would lead
to absurd and
grossly inequitable results, and that a restrictive interpretation
was therefore imperative. For this approach he
relied on the Act’s
short title (‘prevention of organised crime’), and noted
that its long title suggested that
it was intended to ‘combat
organised crime, money laundering and criminal gang activities’.
From this and the preamble
he concluded that evasion of personal
income tax by a single individual could not be considered ‘organised
crime’ and
that ‘the Act was never intended to be applied
in situations such as the present’. For these and other reasons
he applied
a restrictive approach.
[65]
We cannot agree with this construction, which radically truncates the
scope of the Act. It leaves out portions of the long
title, as well
as the ninth paragraph of the preamble. These show that the statute
is designed to reach far beyond
‘
organised
crime, money laundering and criminal gang activities’.
The
Act clearly applies to cases of individual wrong-doing.
… …
… …
[73] In our view,
even viewing the definition broadly, there is no such connection
between the interest earned and any of the offences
Seevnarayan
committed. The interest did not accrue to him in consequence of his
conduct in proffering false information to Sanlam,
but from his
conduct in making the investments. Nor did the interest accrue to him
in consequence of his conduct in proffering
false income tax returns.
It might be said that the interest accrued to him in consequence of
his intention to commit fraud on
the revenue services by submitting
false returns in the future. But it was still not an accrual that
flowed from the commission
of that offence. On the contrary, the
offence was committed in consequence of the accrual of the interest.
It is true that the
offence was committed with the object of evading
liability for the income tax payable on the interest earned, but that
is not to
say that Seevnarayan ‘retained’ (or attempted
to retain) any part of the interest ‘in connection with or as a
result of the offence’.
[17].
In
the end, the SCA, applying the above principles, found that Mr
Seevnarayan’s interest earned on investments made with a
view
to evading tax, did not fall within the definition of ‘
proceed
of unlawful activities’.
[18].
Applying
these principles to the present matter, I am not persuaded that the
property constitutes the proceeds of unlawful activities.
I cannot
see my way clear to find that the foreign currency, which the
respondents acquired lawfully in the ordinary course of
their
business as a travel clinic, was the proceeds of unlawful activities,
that being the contravention of Exchange Control Regulation
6(1). In
the words of the SCA, I consider that the ‘
connection’
the definition envisaged requires some
form of consequential relation between the return and the unlawful
activity. In other words,
the proceeds must in some way be the
consequence of unlawful activity.
In
casu
there is no such connection
between foreign currency and the respondents’ contravention of
Regulation 6(1).
[19].
Accordingly,
the application for forfeiture in terms of section 53 of COPA, of the
property identified as US$184,420.00, €4,280.00
and £1,080.00
in foreign currency, currently held by the South African Reserve Bank
under receipt number 1248
(‘the
property’),
stands to be
dismissed.
Costs
[20].
The
first and second respondents have successfully opposed the
application for forfeiture of the property, and in the normal course
of events the cost should follow the suit.
[21].
However,
the respondents have contravened the provisions of the Exchange
Control Regulations, which is a criminal offence, and I
am advised
that to date hereof they have not been prosecuted for the offence.
The applicant was justified in bringing this application
especially
in view of the many issues relating to the correct procedures not
being followed by the respondents from the inception
of this matter.
[22].
Therefore,
in the exercise of my discretion I intend granting no order as to the
cost of the application.
order
Accordingly, I make the following order:
1.
The
application is dismissed.
2.
Each
party shall bear his / its own costs.
L ADAMS
Acting Judge of the High Court
Gauteng Local Division, Johannesburg
HEARD ON: 10th May 2016
JUDGMENT DATE:13th May 2016
FOR THE APPLICANT: Adv F Latif
INSTRUCTED BY: The State Attorney, Johannesburg
FOR THE RESPONDENTS: Adv Hodes SC
INSTRUCTED BY: BBM Attorneys