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[2020] ZAGPJHC 264
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National Director of Public Prosecutions v Wood and Others (2019/40451) [2020] ZAGPJHC 264 (26 October 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2019/40451
In
the mater between
:
THE
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
Applicant
and
ERIC
ANTHONY
WOOD
First Defendant
MAGANDHERAN
PILLAY
Second Defendant
LITHA
MVELISO
NYHONYHA
Third Defendant
REGIMENTS
CAPITAL (PTY)
LTD
Fourth Defendant
(In
Liquidation)
REGIMENTS
FUND MANAGERS (PTY) LTD
Fifth Defendant
REGIMENTS
SECURITIES (PTY)
LTD
Sixth Defendant
ASHBROOK
15 (PTY)
LTD
First Respondent
CORAL
LAGOON 194 (PTY)
LTD
Second Respondent
ERGOLD
PROPERTIES NO 8
CC
Third Respondent
MARCYTOUCH
(PTY)
LTD
Fourth Respondent
MAGANDHERAN
PILLAY
N.O.
Fifth Respondent
in
his capacity as trustee of the
Pillay
Family Trust IT9190/03
LITHA
MVELISO NYHONYHA
N.O.
Sixth Respondent
in
his capacity as trustee of the
Nyhonyha
Family Trust IT 11919/96
MAGDELINE
SEKGOPI NYHONYHA N.O.
Seventh Respondent
in
her capacity as trustee of the
Nyhonyha
Family Trust IT 11919/96
ERIC
ANTHONY WOOD
N.O.
Eighth Respondent
in
his capacity as trustee of the
Zaza
Share 1 Trust IT 01484/06
TRUSTEGIC
(PTY) LTD
N.O.
Ninth Respondent
in
its capacity as trustee of the
Zaza
Share 1 Trust IT 01484/06
CEDAR
PARK PROPERTIES 39 (PTY) LTD
Tenth Respondent
LITTLE
RIVER TRADING (PTY) LTD
Eleventh Respondent
KGOKO
CONSORTIUM (PTY) LTD
Twelfth Respondent
JUDGMENT
MAHALELO,
J:
[1]
On 18 November 2019 the applicant obtained a provisional restraint
order against the parties pursuant to the provisions of s
26 of the
Prevention of Organised Crime Act, No 121 of 1998 ("POCA").
The order was lengthy and contained detailed provisions
which are not
necessary to repeat. It was granted in the usual format coupled with
a rule
nisi
.
The defendants and respondents were,
in terms of the provisional order,
inter
alia,
prohibited from
disposing
or dealing in any manner with any of the realisable property held or
controlled by them which is mentioned in annexure
"A". A
curator bonis
was
appointed to take possession of all such property pending the
finalisation of an application for a confiscation order in terms
of
section 18 of POCA. This is the extended return day of the rule
nisi.
[2]
Added to the application for the
confirmation of the rule
nisi
is
the application by the NDPP to vary the provisional restraint order
to increase the cap amount of the restraint. Both applications
are
opposed. The parties filed extensive papers. In response to the
founding affidavits the defendants and respondents filed answering
papers to which the applicant filed a consolidated reply in respect
of all the answering affidavits.
[3]
There are six defendants who have been
cited as persons or entities who stood to be prosecuted and other
twelve respondents were
cited as persons or entities who allegedly
hold an interest in or are in possession of realisable property that
the applicant sought
to restraint and who may therefore be affected
by the restraint order sought.
[4]
On 16 September 2020 Regiments Capital
was placed under final liquidation. Two provisional liquidators were
appointed to take over
its affairs and a Rule 15(2) notice was issued
to all the parties. All this happened while the judgment in the
matter was reserved.
Because the provisions of s 36 of POCA were then
triggered the parties were requested to file supplementary heads of
argument.
I remain thankful to them.
The
parties before Court
[5]
The applicant is the National Director
of Public Prosecution represented in these proceedings by Adv Cronje.
In what follows I will
refer to the applicant as NDPP. The first
defendant is Eric Anthony Wood an adult businessman of […],
Sandhurst, Sandton.
The second defendant I Maghanderan Pillay, an
adult businessman residing at […] Houghton, Johannesburg,
Gauteng. The third
defendant is Litha Mveliso Nyhonyha an adult
businessman resident at […], Bryanston, Gauteng. The fourth
defendant is Regiments
Capital (in liquidation) a private company
incorporated under the laws of the Republic
.
For practical purposes and reasons of convenience I shall refer to
the first to third defendants by name and the fourth defendant
as
Regiments Capital. Regiments Capital holds 100% of the share capital
of the fifth and six defendants. It also holds 59.82% of
the share
capital in the first respondent Ashbrook 15 Proprietary Limited
(Ashbrook). The issued share capital of Regiments Capital
is in turn
held as follows:
(a)
33% by the trustees for the time being
of the Pillay Family Trust, Master's registration number IT 9190/03
(the Pillay Family Trust);
(b)
32% by the trustees for the time being
of the Zara 1 Trust, Master's registration IT 01484/06 (the Wood
Family Trust);
(c)
20% by the trustees for the time being
of the Nyhonyha Family Trust, Master's registration number IT
11919/96 (the Nyhonyha Family
Trust); and
(d)
15% by Nyhonyha in his personal
capac'ity
.
[6]
The fifth defendant is Regiments Fund
Managers Proprietary Limited
.
The
fifth defendant is a wholly owned subsidiary of Regiments Capital
(Regiments Fund Managers). The sixth defendant is Regiments
Securities, a private company incorporated under the laws of the
Republic of South Africa. The sixth defendant is a wholly owned
subsidiary of Regiments Capital (Regiments Securities).
[7]
The first respondent is Ashbrook.
Ashbrook Share Capital is held as follows:
(a)
Regiments - 59.82%
(b)
Ergold Properties No 8 CC - 13.09%
(c)
Lemoshanang Investment Pty Ltd - 13.29%
(d)
Marcytouch Pty Ltd - 9.37%
(e)
Rorisang Basadi Investments Holdings Pty
Ltd -4.42%
[8]
The second respondent is Coral Lagoon
194 Proprietary Limited, wholly owned by Ashbrook. Coral Lagoon held
1,354,435 shares in Capitec
(the Capitec Shares). The third
respondent is Ergold, a close corporation whose sole member is Pillay
Family Trust, represented
by Pillay. Its registered address is
Pillay's residential address. The fourth respondent is Marcytouch, a
private company registered
under the company laws of South Africa.
Its registered address is Nyhonyha's residential address. Nyhonyha is
its sole director
and shareholder. Fifth respondent is Pillay N.O. in
his capacity as sole trustee of the Pillay Family Trust. The sixth
respondent
is Nyhonyha N.O., in his capacity as sole trustee of
the Nyhonyha Family Trust. The seventh respondent is Magdeline
Sekgopi
Nyhonya N.O., in her capacity as trustee of the Nyhonyha
Family Trust. The eighth respondent is Wood N.O. in his capacity as
trustee
of the Wood Family Trust. The ninth respondent is Trustegic
Pty Ltd in its capacity as trustee of the Wood Family Trust. The
tenth
respondent is Cedar Park Properties 39 Pty Ltd (Cedar Park)
with its registered address at 35 Ferguson Road lllovo, Johannesburg.
Cedar Park is wholly owned by the Kgoro Consortium which in turn is
majority owned by Regiments Capital. The eleventh respondent
is
Little River Trading Pty Ltd (Little River) with registered address
at 35 Ferguson Road lllovo, Johannesburg. It is wholly owned
by
Regiments Capital. The twelfth respondent is Kgoro Consortium, with
its registered address as 35 Ferguson Road lllovo, Johannesburg.
Kgoro Consortium is wholly owned by Regiments Capital.
The
interlocutory application
[9]
On the date of hearing I dismissed the
application by the NDPP to file a transcript of Mr Ian Sinton
(Sinton)'s evidence given at
the State Capture Commission on 12 March
2019. I undertook to give reasons for the order in the judgment.
[10]
The basis for the application was that
an incorrect transcript of the evidence of Sinton was mistakenly
annexed to the founding
papers in the
ex
parte
court. The NDPP summarised the
evidence at paragraph 69 to 85 of her founding affidavit. She
indicated that the transcript that
was attached was of Sinton's
evidence of 17 September 2018 instead of 12 March 2019. She further
indicated that Sinton's sworn
statement formed part of the papers
before the
ex parte
court.
She contended that her intention was not to file a further affidavit
therefore, the provisions of Rule 6(5)(e) do not find
application.
The NDPP submitted that she wished to file the said transcript only
for the convenience of the court as she would
not refer to it when
she argued the main application. She further pointed out that if the
court were to refuse her application
she would suffer no prejudice to
her case.
[11]
The application was opposed. The basis
for the opposition being that the relief sought by the NDPP is not
procedurally competent.
Multiple contentions were raised in this
regard.
[12]
It was contended on behalf of the
defendants and respondents that the alleged transcript is
self-standing, it is not attached to
any affidavit which identifies
it, attests to its origin and explains its omission
.
It was further argued that because an
affidavit in civil proceedings represents evidence which has been
presented, it cannot be
amended and annexures cannot be simply
swapped
.
Further
that the evidence that was placed before the
ex
parte
court is a matter of record,
the defendants and respondents have not been given an opportunity to
consider the transcript which
the NDPP sought to file when they
prepared their answering affidavits. Counsel for the defendants and
respondents furthermore pointed
out that the NDPP's application is
made at a prejudicially late stage, in already deferred proceedings
even after the parties had
agreed before court that no additional
papers or further applications were to be filed. They say that the
NDPP failed to lay adequate
basis in her founding affidavit for the
indulgence requested
.
[13]
I have considered the prejudice which
the defendants and respondents would suffer if the transcript were to
be allowed. The transcript
is said to be lengthy with about 2 000
pages. It was introduced at a very late stage, approximately two days
before the date of
hearing of the application. The opposing parties
have not been given an opportunity to deal with it and their answers
were informed
by the documents that were attached to the founding
affidavit. For those reasons I dismissed the application.
The
Act
[14]
The
purpose of POCA and the justification,
inter
alia,
for
provisional restraint orders against realisable property as an
effective mechanism to meet the Act's overall purpose has been
eloquently summarized in
NDPP
v Mohammed N.
0.
&
Others.
[1]
The
idea is that criminals should be stripped of the proceeds of their
offences to remove the incentive of crime. POCA uses two
mechanisms
to achieve this end, which are set forth in Chapter 5 (comprising
subsections 12 to 36) and Chapter 6 (comprising subsections
37- 62).
In the present matter we are concerned with the provisions of Chapter
5, which provides for the ultimate forfeiture of
the benefits derived
from crime, but its confiscation machinery may only be invoked when
the “
defendant”
[2]
is
convicted of an offence. The purpose of a restraint order is to
preserve sufficient property to satisfy a reasonably anticipated
confiscation order.
[15]
Whilst
the effect of POCA appear harsh because the Act intercepts the
property rights of individuals who may be entirely innocent
of any
complicity with crime, the Constitutional Court has found the
provisions of POCA not only to be consistent with the Constitution,
but to be a
"friend'
to
its aims, as is evidenced from the following observation by Cameron J
in
NDPP
v Elran:
[3]
"There
is no constitutional challenge to these provisions. We therefore have
no
reason
to
approach
the powers POCA confers
on
courts
with reserve. We should embrace POCA as
a
friend
to democracy, the rule of law and constitutionalism
-
and
as indispensable in a world where the institutions of state are
fragile, and the instruments of law sometimes struggle for their
very
survival against criminals who subvert them."
[4]
[16]
Section 18 of POCA is designed to enable
the court to deprive a convicted person of the proceeds of crime. The
section empowers
the court which has convicted a person of an
offence, to make a confiscation order which has the effect of a civil
judgment. The
order made against a convicted person is for payment to
the State of any amount the court considers appropriate and the court
may
make any further orders as it may deem fit to ensure the
effectiveness and fairness of that order.
[17]
The amount relates to a
"benefit”
a person has derived from illegal
activities, and in terms of section 12(3) a person has benefited from
unlawful activities if he
or she has at any time
,
whether before or after the commencement
of the Act received or retained any proceeds of unlawful activities.
The amount for which
a confiscation order may be made may not exceed
the lesser of the value of the defendant's proceeds of the offences
or related
criminal activities referred to in s 18(1), or the
net value of the sum of the defendant's property and certain defined
gifts made
by the defendant. Section 19(1) defines the
"value
of a defendant's proceeds of unlawful activities"
to
be
"the sum of the values of the
property, services, advantages, benefits or rewards received,
retained or derived by him or her
at any time
,
whether before or after the
commencement of this Act, in connection with the unlawful activity
carried on by him or her or any other
person".
[18]
Section 26(1) authorises the National
Director of Public Prosecutions to apply to a High Court on an
ex
parte
basis for an order prohibiting
any person from dealing in any manner with any property to which the
order relates. In this regard
section 26 provides as follows:
"
26
Restraint orders
(1)
The National Director may by way
of an ex parte application apply to
a
competent High Court for an order
prohibiting any person, subject to such conditions and exceptions as
may be specified in the order,
from dealing in any manner with any
property to which the order relates.
(2)
A restraint order may be made
-
(a)
in respect of such realisable
property
as
may
be specified in the restraint order and which is held by the person
against whom the restraint order is being made;
(b)
in respect of all realisable
property held by such person, whether it is specified in the
restraint order or not
;
(c)
in respect of all property which,
if it is transferred to such person after the making of the restraint
order, would be realisable
property.
(3)
(a) A court to which an
application is made in terms of ss (1) may make
a
provisional restraint order having
immediate effect and may simultaneously grant
a
rule nisi calling upon the defendant
upon
a
day
mentioned in the rule to appear and to show cause why the restraint
order should not be made final.
(a)
If the defendant has been absent
during a period of 21 days from his or her usual place of residence
and from his or her business,
if any, within the Republic, the court
may direct that it shall be sufficient service of that rule if
a
copy thereof is affixed to or near
the outer door of the buildings where the court sits and published in
the Gazette, or may direct
some other mode of service."
[19]
Section 25 of the Act provides for
circumstances in which a restraint order may be made. The relevant
portions of s 25 read as follows:
"25.
Cases in which restraint orders
may be made- (1) A High Court may exercise the powers conferred on it
by section 26(1)
-
(a)
When-
(i)
that court is satisfied that a
person is to be charged with an offence; and
(ii)
it appears to the court that
there are reasonable grounds for believing that
a
confiscation order
may
be made against such person."
[20]
Counsel for the NDPP submitted that the
NDPP has complied with the requirements for the confirmation of the
rule
nisi
as
set out in section 25 of POCA above.
[21]
It is common cause that a prosecution
has not yet been instituted against the defendants and that
proceedings against them have
not concluded. It is alleged that they
will face charges of
inter alia,
corruption, money laundering and
fraud. The offences are said to arise from the following: It is not
disputed that Pillay and Nyhonyha
are the sole directors of the
Regiments companies. Wood was a director of Regiments companies until
13 October 2016 when he was
removed by a resolution of shareholders.
Although different versions have been provided, the evidence
discloses that he was employed
by regiments Capital until 29 March
2016 when he resigned but that he remained doing work for Regiments.
It is alleged that during
their directorship in the Regiments
companies they committed the offences of corruption, fraud and money
laundering in relation
to Transnet SOC Ltd (Transnet) and the
Transnet Defined Benefit Fund (the Fund). It is said that Regiments
Capital obtained contracts
unlawfully fro Transnet either directly,
or indirectly as a subcontractor to McKinsey, it implemented those
contracts and their
proceeds illegally. The NDPP alleges that
Transnet paid the Regiments Companies more than R1 billion arising
from the unlawful
contracts. It is contended that all this
constituted proceeds of crime. The
NDPP
says that the offences were part of the State Capture project aimed
at enriching the defendants, the Gupta family and their
associates.
[22]
The Fund sued Regiments for R848 million
which was said to be in respect of criminal offences committed
against it. The Regiments
paid the Fund R639 million in settlement of
the claims. On 2 October 2019 Regiments also concluded a settlement
agreement with
Transnet in which it agreed to pay R180 million to
Transnet on 2 October 2020. These settlement agreements were publicly
announced
in the press and the media. The Regiments denied their
involvement in the crimes alleging broadly that there was no
wrongdoing
on their part. They questioned the NDPP's intention to
charge them and they disputed that they may be convicted. They
disputed
that they had received or retained a benefit, they averred
that the NDPP has failed to meet the jurisdictional requirements of
section 25 of POCA in that on the evidence she has presented, they
argued, there are no grounds reasonably to believe that a
confiscation
order may be made against them. They have raised various
other defences and
in limine
points
which I deal with herein below.
[23]
Counsel for Regiments with other
defendants and respondents making similar argument contended that the
provisional restraint order
was improperly sought and obtained on an
ex parte
basis
and that the NDPP offended against the trite principles of full
disclosure when an applicant approaches Court on an
ex
parte
basis.
Ex
parte proceedings
[24]
It
was contended that the Regiments defendants and respondents should
have been given notice of the application and there was no
good
reason why the application was brought urgent,
in
camera
and
ex
parte
in
the light of the relevant facts in this matter. Counsel for Regiments
submitted that it has been held that courts will grant
ex
parte
orders
only when it is essential. He criticized the reasons advanced by the
NDPP why she elected to follow that course of action,
in particular,
the statement by Adv Cronje that once the accused persons in a
criminal matter learn that the State is taking action
to deprive them
of their ill-gotten gains, they will attempt to dissipate such
property while it is still possible for them to
do so lawfully. He
submitted that the
audi
alteram partem
rule
is a requirement of natural justice and taking a decision adverse to
someone without giving them a chance to defend themselves
represents
a drastic departure from the first principle of understanding what is
fair and just. He referred the court to the cooperation
which
Regiments directors offered to the NDPP in the investigations which
the NDPP allegedly ignored. In regard to the duty of
utmost good
faith he referred court to what was said in
Recycling
and Economic Development Initiative of South Africa NPC v Minister
of
Environmental
Affairs
2019
(3) SA 257
(SCA)
(REDISA)
[5]
that:
"[89] In
regard to the use
of
ex
parte proceedings, the court a
quo
said that the Minister had made out
a
sufficient case that the urgent and
drastic action was needed in view
of
the 'underhand and secretive manner'
in which Redisa's executive directors had acted. In my view and
having regard to the rules
in application proceedings, this was
not
the
conclusion that could reasonably be reached on the papers. On the
contrary, I am firmly of the view that it was an abuse to
seek the
provisional order ex parte
..
.
[90] The
Minister's skewed disclosure and non-disclosure were extensive. They
related to matters that must have influenced the judges
hearing the
ex parte applications
.
Indeed,
I do not think that ex parte orders would have been granted
.
If fair disclosure had been made
.
The Minister gave no satisfactory
explanation of her inadequate disclosure and material
non-disclosure."
[25]
He
also referred to
National
Director of Public Prosecutions v Scholtz
[6]
and
Van
der Heever v National Director of Public Prosecutions
[7]
to
substantiate his argument. He argued that section 26(1) of POCA does
not confer on the NDPP an additional or stronger right but
simply
restates the common law principles.
[26]
Section
26(1) permits the NDPP to approach court on an
ex
parte
basis.
It is not couched in peremptory terms. The term
"may''
confers
a discretion on the NDPP to follow the
ex
parte
route.
Nowhere in the section is the NDPP expressly or by implication
prevented from pursuing that option, the exigency of the situation
may dictate the choice to be made
[8]
.
Counsel for the Regiments further argued that the NDPP has since 2017
to investigate the matter and nothing happened in November
2019 that
would have required her
to
act as she did. I do not agree. Adv Cronje explains the timing of the
application at para 7 of the founding affidavit:
"the
timing of this application is necessitated by the fact that the
defendants' assets will immediately be released from an
anti
dissipation order currently in force in favour of the Transnet
Defined Benefit Fund. The likely consequences of which
will be that
the defendants' most important liquid assets in the form of shares
and cash are dissipated."
[27]
The anti-dissipation orders referred to by Adv Cronje are the orders
of Tsoka J and Van der Linde J, they form part of these
papers. Adv
Cronje explains that the Regiments assets were going to be released
from the anti dissipation interdicts once
a settlement agreement
between the Fund and Regiments was implemented. The settlement
agreement was implemented on 21 November
2019 two days after the
provisional order was issued. On 21 November 2019 the orders of Tsoka
and Van der Linde JJ fell away. I
am constrained to agree with the
NDPP that had she not urgently obtained the provisional restraint
order two days earlier Regiments
would have once more had control
over disposal of its assets, and it is highly likely that if the
NDPP's application was brought
on notice Regiments would have
exercised that control to placed its assets beyond her reach. I am
satisfied that the NDPP was justified
in approaching the court on an
ex parte
basis.
Non-disclosure
[28]
It was contended that the NDPP failed to honour her duty of utmost
good faith in that she failed to disclose material facts
to the court
granting the
ex parte
order.
The material facts not so disclosed is said to include
inter
alia
,
the
order granted by Vally J on 26 September 2019, the Settlement
Agreement between the Regiments and Transnet, the manner in which
the
TSDBF Settlement Agreement was implemented, the cooperation offered
by the defendants, that the NDPP did what is called
"straw
man's"
disclosure by filing
affidavits deposed to by the defendants in other litigation in an
excised form and the interests of minority
shareholders. It is common
cause that the material referred to above did not form part of the
papers in the
ex parte
court.
The question to be answered is therefore, whether the non-disclosure
was material and whether it influenced or might have
influenced the
ex parte
court
in coming to a decision. I do not propose to deal with all the
alleged non disclosures. They are lengthy, I find it unnecessary
to
deal with all of them in the present case. For purposes of coming to
a decision in this matter I will confine myself to the
alleged
non-disclosures of Vally J's order of 26 September 2019 and the
Transnet Settlement Agreement. This should however not
be construed
that other alleged non disclosures have not been considered. Before I
deal with the alleged non-disclosures it is
necessary to first set
out the legal principles and the authorities.
[29]
It
is trite that approaching court
ex
parte
is
a serious departure from the ordinary principles applicable to civil
proceedings. An
ex
parte
application,
by its nature, places only one side before the court.
[9]
It is, therefore, our law that an applicant in an
ex
parte
application
bears the duty of utmost good faith in placing before the court all
the relevant material facts that might influence
a court in coming to
a decision to borrow from the words of
HJ
Erasmus, et
al:
[10]
"Good
faith is a sine qua non in ex parte applications. If any material
facts are not disclosed, whether they be wilfully suppressed
or
negligently omitted, the court may on that ground alone dismiss an ex
parte application. The court will also not hold itself
bound by any
order obtained under the consequent misapprehension of the true
position. Among the factors which the court will take
into account in
the exercise of its discretion to grant or deny relief to a litigant
who has been remiss in his duty to disclose,
are the extent to which
the rule has been breached, the reasons for the non-disclosure, the
extent to which the court might have
been influenced by proper
disclosure, the consequences, from the point of doing justice between
the parties, of denying relief
to the applicant on the ex parte
order, and the interest of innocent third parties
...
"
[30]
In
National
Director of Public Prosecutions v Basson
[11]
Nugent
AJA held:
"[21]
Where an order is sought ex parte it is well established that the
utmost good faith must be observed. All material facts
must be
disclosed which might influence a court in coming to its decision,
and the withholding or suppression of material facts,
by itself,
entities a court to set aside an order even if the non-disclosure or
suppression was not wilful or mala fide (Schlesinger
v Schlesinger
1979 (4) SA 342
(W) at 348E to 349B)."
[31]
In
National
Director of Public Prosecutions v Kyriacou
[12]
Mlambo
AJA pronounced:
"[17]
Counsel for the respondent submitted that the appellant should be
non-suited for failing to disclose in the ex parte
application that
the trial court had granted
a
forfeiture order in terms of section
34(1) of the Criminal Procedure Act and the amount thereof. It was
submitted that such disclosure
was called for as it is likely to have
influenced the court whether to grant the provisional order or refuse
it. It is common cause
that the
s.
34 order was not referred to in the
papers.
[18] It is
correct that utmost good faith must be observed when initiating an ex
parte application, and failure to disclose and
present fully and
fairly all known material facts may constitute
a
ground to dismiss an application. The
duty to disclose extends to all facts which might influence
a
court in coming to its decision.
[19] The
learned judge in the court
a
quo
had
a
discretion,
on being appraised of all the facts, to either set aside the
provisional order or confirm it. An important consideration
in the
court
a
quo
was the question whether the court that granted the provisional order
might properly have been influenced by the non-disclosure
of the
s.
34 order to refuse relief. The
learned judge in the court
a
quo
heard full argument on this issue but elected to discharge rule on
another ground. He did not deem it necessary to deal with
this one. I
can see no reason to have discharged the order by reason of the
non-
disclosure in question. Had
disclosure been made the s. 34 order would not have been the answer
to
a
confiscation
order. There was, in addition, as already said the matter of related
criminal activity and the force of the presumptions."
[32]
In
REDISA
[13]
the
court held
:
"Disclosure
-
legal
principles
[45]
The principle of disclosure in ex
parte proceedings is clear. In NDPP v Basson this court said:
'
Where
an order is sought ex parte it is well established that the utmost
good faith must be observed. All material facts must be
disclosed
which might influence a court in coming to its decision, and the
withholding or suppression of material facts, by itself,
entities
a
court to set aside an order, even if
the nondisclosure or suppression was not wilful or mala fide
(Schlesinger v Schlesinger
1979 (4) SA 342
(W) at 348E-349B)'.
[46]
The duty of utmost good faith,
and in particular the duty of full and fair disclosure, is imposed
because orders granted without
notice to affected parties are a
departure from a fundamental principle of the administration of
justice, namely, audi alteram
partem. The law sometimes allows a
departure from this principle in the interests of justice but in
those exceptional circumstances
the ex parte applicant assumes a
heavy responsibility to neutralise the prejudice the affected party
suffers by his or her absence.
[47]
The applicant must thus be
scrupulously fair in presenting her own case. She must also speak for
the absent party by disclosing
all relevant facts she knows or
reasonably expects the absent party would want placed before the
court. The applicant must disclose
and deal fairly with any defence
of which she is aware or which she may reasonably anticipate
.
She must disclose all relevant
adverse material that the absent respondent might have put up in
opposition to the order. She must
also exercise due care and make
such enquiries and conduct such investigations as are reasonable in
the circumstances before seeking
ex parte relief. She may not refrain
from disclosing matter asserted by the absent party because she
believes it to be untrue.
And even where the ex parte applicant has
endeavoured in good faith to discharge her duty, she will be held to
have fallen short
if the court finds that matter she regarded as
irrelevant was sufficiently material to require disclosure. The test
is objective
.
[48]
As
Waller
J said in Arab Business Consortium, points in favour of the absent
party should not only be drawn to the judge's attention
,
but must be done clearly: 'There should be no thought in the mind of
those preparing affidavits that provided that somewhere in
the
exhibits or in the affidavit a point of materiality can be discerned,
that is good enough.'
[49]
The ex parte litigant should not
be guided by any notion of doing the bare minimum. She should not
make disclosure in
a
way
calculated to deflect the judge's attention from the force and
substance of the
absent
respondent's known or likely stance on the matters at issue.
Generally, this will require disclosure in the body of the affidavit.
The judge who hears an ex parte application, particularly if urgent
and voluminous, is rarely able to study the papers at length
and
cannot be expected to trawl through annexures in order to find
material favouring the absent party
.
[50]
In regard to the court's
discretion as to whether to set aside an ex parte order because of
nondisclosure, Le Roux J said in Schlesinger
v Schlesinger: '(U)nless
there are very cogent practical reasons why an order should not be
rescinded
,
the
Court will always frown on an order obtained ex parte on incomplete
infonnation and will set it aside even if relief could be
obtained on
a subsequent application by the same applicant
.
'
[51]
This is consistent with the
approach in English law, that if material nondisclosure is
established
a
court
will be 'astute to ensure that
a
plaintiff who obtains [an ex parte
order] without full disclosure, is deprived of any advantage he may
have derived by that breach
of duty'.
[52]
As to the factors that are
relevant in the court's exercise of its discretion whether or not to
set aside an ex parte order on grounds
of nondisclosure, in NDPP v
Phillips this court said that regard must be had to the extent of the
nondisclosure, the question whether
the judge hearing the ex parte
application might have been influenced by proper
disclosure,
the reasons for nondisclosure and the consequences of setting the
provisional order aside."
The
order of Vally J
[33]
Regiments defendants and respondents
contended that the NDPP failed to disclose to the court which granted
the
ex parte
order
that Regiments' assets would remain subject to an anti-dissipation
order granted by Vally J on 26 September 2019 once the
TSDBF
anti-dissipation orders fell away. This is so, it was contended,
because paragraph 1.5 of that order provided that pending
finalisation of the dispute as to whether ZARA 1 is a 32% shareholder
in Regiments, Regiments may not:
(a)
make any distribution to shareholders
unless it is made proportionately between Regiments Shareholders, or
with ZARA 1's consent
,
or
in terms of an order of court to the contrary.
(b)
Remove, encumber, dispose of, deal with,
diminish the value of, forego, or reduce control over any of their
assets, whether held
directly or indirectly by them, or acquiesce in
any such steps being taken and whether such assets are solely or
jointly owned
or solely or jointly controlled and whether those
assets are held on the date of this order or acquired thereafter,
other than
in terms of the TSDBF settlement agreement or in the
ordinary course of business unless prior written notice has been
given to
ZARA 1's attorney, or with consent of ZARA 1, or in terms of
an order of court to the contrary.
[34]
Counsel for Regiments and respondents
argued that the effect of Vally J's order is that Regiments was to
use the proceeds of the
TSDBF settlement that were distributed to it
to settle its creditors and that Regiments was not permitted to
dissipate the remaining
assets until the dispute as to whether ZARA 1
was a 32% shareholder in Regiments was resolved unless any
distribution or dealing
in its assets proportionately benefited ZARA
1, was with ZARA 1's consent or was pursuant to a court order.
[35]
Regiments defendants say that what the
NDPP did not disclose to the court, which was apparent from
Nyhonyha's affidavit of 4 September
2019, which was attached to the
founding affidavit is that, the relationship between Regiments, on
the one hand, and ZARA 1 and
Wood, on the other is acrimonious. They
submitted that there was no prospect that Regiments would declare a
proportional dividend
before its dispute with ZARA 1 had been
resolved. According to Regiments the dispute remains and the order of
Vally J would have
continued to operate accordingly.
[36]
Regiments argued that had the NDPP
disclosed these facts to the court granting the
ex
parte
order, it would have been
clear that Regiments had undertaken multiple proceedings to use its
"liquid assets, in the form of
shares and cash"
to pay its
creditors and this undertaking was embodied in Vally J's order.
Regiments contended that this should have been disclosed
to the
ex
parte
court and that the NDPP's
non-disclosure resulted in that court granting an order which is at
variance with the order granted by
Vally J, rendering it in material
respect incapable of being implemented. It was therefore contended
that the NDPP breached its
duty of good faith when she knowingly
withheld the order of Vally J from the court in order to persuade it
to grant an order that
conflicted with the existing order and that
had the ex parte court been told about the order of 26 September, it
should have influenced
it in its decision to grant or refuse the
application. On that basis alone it was argued that the rule
nisi
be discharged.
[37]
The
NDPP contended that Vally J's order is not sufficiently relevant to
warrant disclosure. She submitted that the said order had
nothing to
do with the issues the court granting the
ex
parte
order
was faced with on 18 November 2019, being to decide whether the
restraint was justified and if so, to which amount. The NDPP
argued
that the order of Vally J did not resolve any issues which has a
bearing on the application. She submitted that the order
was by
agreement between the parties which principally settled a dispute
between Regiments' Companies and Wood as to whether Regiments'
shares
in Capitec should be sold, partly in settlement of the claim by the
Fund against Regiments Companies and how the proceeds
should be
distributed as between companies, shareholders and the creditors
.
The
NDPP therefore argued that the said order is not an anti-dissipation
order and it would not have influenced the court in arriving
at its
decision. She pointed out that the test for disclosure is whether
Vally J's order was “
sufficiently
relevant”
to
warrant disclosure. She referred the court to what was held by the
Constitutional Court in Thint (Pty) Ltd v The National Director
of
Public Prosecutions and Others; Zuma v The National Director of
Public Prosecutions and Others
[14]
that:
"It
follows that, in cases such as the present, an applicant for
a
search and seizure warrant will
inevitably have to make
a
judgment
as to which facts might influence the judicial officer in reaching
its decision and which, although connected to the application,
are
not sufficiently relevant to justify inclusion
.
The test of materiality should
not be set at a level that renders it practically impossible for the
State to comply with its duty
of disclosure, or that will result in
applications so large that they might swamp ex parte judges."
[38]
The NDPP appeared to have had concerns
about the sufficiency of Vally J's order. She contended that that
order does not do what
the Regiments defendants and respondents say
it does i.e it does not preserve the assets of Regiments'. Even if it
is to be accepted
that the NDPP had concerns as to whether Vally J's
order was sufficient, I do not think that she was entitled to
withhold that
order from the court granting the
ex
parte
order. The concerns which she
may have had about the sufficiency of that order should in my view
have formed part of her founding
affidavit along with Vally J's
order. This in my view, would have enabled the
ex
parte
court to make a determination
whether her concerns were valid. I agree with Counsel for Regiments
that it was not appropriate for
NDPP to pick and choose what should
be drawn to the attention of the ex parte court particularly given
that she relied on the lapse
of the TSDBF anti-dissipation orders as
the justification for her resorting to the urgent
ex
parte
proceedings. There can be no
doubt that Vally J's order was for the same reason of equal force and
relevance to the application
and failure to disclose it to the ex
parte court is simply indefensible. The order is material. Even if I
am wrong in my conclusion,
I still have to deal with the alleged
non-disclosure of the Transnet Settlement Agreement.
The
Transnet Settlement Agreement
[39]
Counsel for Regiments contended that the
NDPP failed to bring to the attention of the ex parte court that
Transnet and Regiments
concluded a settlement agreement in terms of
which, inter alia, Regiments would pay Transnet R180 million in full
and final settlement
of any claim by Transnet against Regiments
including, inter alia, Transnet procurement of the 1064 locomotives
and the funding
procured from China Development Bank for Transnet.
Regiments contended that even though the settlement was concluded on
2 October
2019, the NDPP knew or at best, had she exercised due care
and made enquiries and conducted investigations as are reasonable in
the circumstances, she should have known because:
(a)
Nyhonyha's affidavit in the Regiments
Business Rescue application which the NDPP attached to the founding
affidavit (albeit excising
the relevant portion) states that Regiment
and Transnet had concluded a Settlement Agreement to the effect that
Regiments would
repay Transnet R180 million.
(b)
On 12 November 2019 Transnet CEO
publicly announced that Transnet had concluded a settlement with
Regiments which settlement was
widely reported in the press.
(c)
The announcements were overshadowed by
the testimony of Transnet senior officials in the State Capture
Commission where it was stated
that Regiments and Transnet were
engaged in settlement negotiations.
[40]
Regiments further submitted that it is
on the basis of the claims that Regiments and Transnet have settled
which the NDPP relied
upon to obtain the ex parte order and quantify
the value of the restraint. Regiments argued that NDPP should have
disclosed the
Settlement Agreement to the
ex
parte
court because it is not only
relevant but also material to the determination of the restraint
amount.
[41]
The NDPP contended that the Settlement
Agreement between Regiments and Transnet to repay Transnet R180
million is not relevant to
justify disclosure. In any event, so the
argument goes, Adv Cronje became aware of the Settlement Agreement
after the interim order
was granted. The NDPP submitted that payment
of the agreed amount without admission of liability is not relevant
towards the determination
of whether the restraint order should be
granted. According to her, the agreed amount is only relevant to the
determination of
the appropriate cap on the restraint order. I
disagree with with argument.
[42]
In
her replying affidavit, the NDPP does not dispute that she was in
possession of Nyhonyha's affidavit in Regiments' Business Rescue
application before she launched her original application in this
matter. Having perused that affidavit, I am not persuaded that
the
NDPP became aware of the Transnet Settlement Agreement after the
interim
order
was granted, the more- so if it was publicly announced in the press a
month before she applied for the interim order.
"The
applicant must thus be scrupulously fair in presenting her own case.
She must also speak for the absent party by disclosing
all relevant
facts she knows or reasonably expects the absent party would want
placed before the court. The applicant must disclose
and deal fairly
with any defences of which she is aware or which she
may
reasonably
anticipate
.
She
must disclose all relevant adverse material that the absent
respondent might have put up in opposition to the order. She must
also exercise due care and make such enquiries and conduct such
investigations as are reasonable in the circumstances before seeking
ex parte relief. She may not refrain from disclosing matter asserted
by the absent party because she believes it to be untrue.
And even
where the ex parte applicant has endeavoured in good faith to
discharge her duty, she will be held to have fallen short
if the
court finds that matter she regarded as irrelevant was sufficiently
material to require disclosure. The test is objective.”
[15]
[43]
Surely
if the court granting the ex parte order was informed that the
Settlement Agreement concluded between Transnet and regiments
was in
full and final settlement of the claims by Transnet against
Regiments, he might have wanted to know more about it and it
may have
influenced the court in coming to its decision
.
It
is not necessary to show that the non-disclosure was wilful or
mala
fide
.
[16]
[44]
The next question to answer is whether
there has been a serious non disclosure as would entitle the
court to discharge the
rule nisi. Amongst the factors which the Court
will take into account in the exercise of its discretion to grant or
deny relief
to a litigant who has been remiss in his duty to disclose
are at least:
1. The extent to
which the rule has been breached;
2. The reasons
for the non-disclosure;
3. The extent to
which the first Court might have been influenced by proper
disclosure;
4. The
consequences from the point of doing justice between the parties.
[17]
[45]
If
the failure to disclose Vally J's order stood alone, I might perhaps
have been persuaded to exercise my discretion in favour
of the NDPP.
If material facts are not disclosed in an
ex
parte
application
or the facts are deliberately misrepresented the court the order will
be erroneously granted.
[18]
It follows from what I have said that I have come to the conclusion
that the non - disclosure was material.
[46]
In the result the following order is
made:
Order
1
The Provisional order including the Rule
Nisi is discharged.
2
The NDPP is ordered to pay costs of the
application, including costs of the interlocutory application. (The
costs will include costs
consequent upon employment of two counsel
where applicable, and the costs of senior counsel where applicable)
______________________
M
B MAHALELO
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
Appearances:
On
behalf of the Applicant: Adv Gm Budlender SC (with Adv K Saller)
Instructed
by: State Attorney (per J Tagane)
On
behalf of first defendant, eighth and ninth respondent: Adv E Killian
SC
Instructed
by: Fairbridges Wertheim Becker Inc
.
On
behalf of second defendant, third and fifth respondent: Adv Cilliers
SC (with Adv A Ramlaal)
Instructed
by
:
Govender
Patel Dladla Inc.
On
behalf of third defendant, fourth and seventh respondent: Adv
Dorfling SC (with DG
Ngcangisa)
Instructed
by: Moroka Atttorneys
On
behalf of fourth to sixth defendant, first to second and tenth to
twelfth
respondent:
Adv Gauntlett SC (with Adv AC Mckenzie and Adv T Scott)
Instructed
by: Smit Sewgoolam Inc.
Date
of hearing: 28, -1/6 JUNE 2020
Date
of Judgment: 26 October 2020
[1]
[2002] ZACC 9
;
2002 (4) SA 843
(CC) at pars [14] to [16]
[2]
This is the appellation used in POCA "Defendanr is defined in
section 12(1) as a person against whom a prosecution for an
offence
has been instituted, and one who is to be charged with an offence on
the basis envisaged in section 25(1)(b)
[3]
2013 (1) SACR 429
(CC)
[4]
At par (70)
[5]
2019 (3) SA 257
(SCA) (REDISA) para 89 to 90
[6]
2014 JDR 006 NKC para 15
[7]
2012 JDR 223 (GNP) P10
[8]
NDPP V Scoltz supra
[9]
Pretoria Portland Cement Co Ltd v Competition Commission 2003 (2) SA
385 (SCA)
[10]
Superior Court Practice (1994), p 81-41-42
[11]
2002 (1) SA 419
(SCA) at 428 para [21]
[12]
2004 (1) SA 379
(SCA) at 387
[13]
At para 45 to 52
[14]
2009 (1) SA 1 (CC)
[15]
REDISA Para 47
[16]
Schlesinger v Schlesinger 1979 (4) SA 342
[17]
Superior Court Practice, Erasmus, Vol. 2 at 01-61 to 01-62.
[18]
Naidoo v Matlala NO
2012 (1) SA 143
(GNP) at 153C - E.