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[2017] ZAECPEHC 11
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Karas Auto Spares v National Director pf Public Prosecutions (618/2016) [2017] ZAECPEHC 11 (2 February 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
CASE
NO: 618/2016
DATE HEARD:
24/11/2016
DATE DELIVERED:
2/2/2017
In
the matter between
KARAS
AUTO
SPARES
APPLICANT
and
THE
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
RESPONDENT
JUDGMENT
ROBERSON
J:-
BACKGROUND
[1]
On 1 March 2016 the respondent applied for and was granted a
preservation order in terms of s 38 (1) of the Prevention of
Organised
Crime Act 121 of 1998 (POCA), in terms of which any person
was prohibited from dealing in any manner with certain motor
vehicles,
including a Mercedes Benz Sprinter truck (the Mercedes).
The four respondents in the preservation application included the
applicant in the present matter, Karas Auto Spares. It was
alleged that the applicant was the owner of the Mercedes and it
was
believed at the time the preservation order was made that the
applicant business was owned by one Zelalem Belahw (Belahw),
also
known as William or Williams. It was alleged that the vehicles
were instrumentalities of a theft which took place on
13 October
2015, during which chocolate products to the value of R16 million
were stolen from a Hestony truck. Chocolate
products to the
value of R600 000.00 were subsequently recovered. The
stolen goods were allegedly conveyed in or found
in the vehicles
which were the subject of the preservation order. Stolen
chocolate was found in the Mercedes on the night
of the theft and the
Mercedes was confiscated that night. Belahw was arrested on 29
October 2015. Six persons have
been charged with the theft,
including Belahw.
[2]
After the preservation order was made, the respondent complied with
the notice provisions contained in s 39 of POCA which provides:
“
39
Notice of preservation of property orders
(1) If a High Court makes a
preservation of property order, the National Director shall, as soon
as practicable after the making
of the order-
(a)
give
notice of the order to all persons known to the National Director to
have an interest in property which is subject to the order;
and
(b)
publish
a notice of the order in the
Gazette
.
(2) A notice under
subsection (1)
(a)
shall be served in the manner in which a summons whereby civil
proceedings in the High Court are commenced, is served.
(3) Any person who
has an interest in the property which is subject to the preservation
of property order may enter an appearance
giving notice of his or her
intention to oppose the making of a forfeiture order or to apply for
an order excluding his or her
interest in the property concerned from
the operation thereof.
(4) An appearance
under subsection (3) shall be delivered to the National Director
within, in the case of-
(a) a
person upon whom a notice has been served under subsection (1) (a),
14 days after such service; or
(b) any
other person, 14 days after the date upon which a notice under
subsection (1) (b) was published in the
Gazette
.
(5) An appearance under subsection (3)
shall contain full particulars of the chosen address for the delivery
of documents concerning
further proceedings under this Chapter and
shall be accompanied by an affidavit stating-
(a) full
particulars of the identity of the person entering the appearance;
(b) the
nature and extent of his or her interest in the property concerned;
and
(c) the
basis of the defence upon which he or she intends to rely in opposing
a forfeiture order or applying for
the exclusion of his or her
interests from the operation thereof.”
[3]
The preservation order was served on the applicant on 2 March 2016
and on 24 March 2016 the applicant delivered a notice of
opposition
in which it was stated that the applicant intended to “oppose
the abovementioned application”.
The notice did not
specify whether the making of a forfeiture order was to be opposed or
an application would be made for an order
excluding the applicant’s
interest in the Mercedes from the operation of a forfeiture order.
No affidavit accompanied
the notice of opposition, as required in
terms of s 39 (5) of POCA.
[4]
In due course the respondent applied for a forfeiture order in
respect of the vehicles, including the Mercedes, in terms of
s 48 of
POCA, which provides:
“
48
Application for forfeiture order
(1) If a
preservation of property order is in force the National Director, may
apply to a High Court for an order forfeiting to
the State all or any
of the property that is subject to the preservation of property
order.
(2) The National Director shall give
14 days notice of an application under subsection (1) to every person
who entered an appearance
in terms of section 39 (3).
(3) A notice under
subsection (2) shall be served in the manner in which a summons
whereby civil proceedings in the High Court are
commenced, is served.
(4) Any person who
entered an appearance in terms of section 39 (3) may appear at the
application under subsection (1)-
(a) to
oppose the making of the order; or
(b) to
apply for an order-
(i) excluding
his or her interest in that property from operation of the order; or
(ii) varying
the operation of the order in respect of that property, and may
adduce evidence at the hearing of
the application.”
[5]
Section 50 of POCA provides:
“
Making of
forfeiture order
(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.
(2) The High Court
may, when it makes a forfeiture order or at any time thereafter, make
any ancillary orders that it considers
appropriate, including orders
for and with respect to facilitating the transfer to the State of
property forfeited to the State
under such an order.
(3) The absence of
a person whose interest in property may be affected by a forfeiture
order does not prevent the High Court from
making the order.
(4) The validity of
an order under subsection (1) is not affected by the outcome of
criminal proceedings, or of an investigation
with a view to institute
such proceedings, in respect of an offence with which the property
concerned is in some way associated.
(5) The Registrar
of the Court making a forfeiture order must publish a notice thereof
in the
Gazette
as soon as practicable after the order is made.
(6) A forfeiture order shall not take
effect-
(a) before
the period allowed for an application under section 54 or an appeal
under section 55 has expired; or
(b)
before
such an application or appeal has been disposed
of.
[6]
The application for a forfeiture order was granted by default on 7
June 2016. Notice of the application was not given
to the
applicant, the respondent asserting in his founding affidavit that
the applicant’s notice of opposition was defective
in that
there was no compliance with the provisions of s 39 (5) of POCA.
A copy of the notice of opposition was annexed to
the founding
affidavit in the forfeiture application.
THE
PRESENT APPLICATION
[7]
The applicant has brought the present application in terms of s 54
(1) of POCA, namely that its interest in the Mercedes be
excluded
from the operation of the forfeiture order. Alternatively it
applied in terms of s 53 (3) of POCA for a variation
of the
forfeiture order to the effect that the reference to the Mercedes in
the order be deleted. These sections provide:
“
53
Forfeiture order by default
(1) If the National Director applies
for a forfeiture order by default and the High Court is satisfied
that no person has appeared
on the date upon which an application
under section 48 (1) is to be heard and, on the grounds of sufficient
proof or otherwise,
that all persons who entered appearances in terms
of section 39 (3) have knowledge of notices given under section 48
(2), the Court
may-
(a) make
any order by default which the Court could have made under sections
50 (1) and (2);
(b) make
such order as the Court may consider appropriate in the
circumstances; or
(c) make
no order.
(2) The High Court
may, before making an order in terms of subsection (1), call upon the
National Director to adduce such further
evidence, either in writing
or orally, in support of his or her application as the Court may
consider necessary.
(3) Any person
whose interest in the property concerned is affected by the
forfeiture order or other order made by the Court under
subsection
(1) may, within 20 days after he or she has acquired knowledge of
such order or direction, set the matter down for variation
or
rescission by the court.
(4) The court may,
upon good cause shown, vary or rescind the default order or give some
other direction on such terms as it deems
appropriate.
“
54
Exclusion of interests in forfeited property
(1) Any person
affected by a forfeiture order who was entitled to receive notice of
the application for the order under section
48 (2), but did not
receive such notice, may, within 45 days after the notice of the
making thereof is published in the
Gazette
,
apply for an order excluding his or her interest in the property
concerned from the operation of the order, or varying the operation
of the order in respect of such property.
(2) The application shall be
accompanied by an affidavit setting forth-
(a)
the
nature and extent of the applicant's right, title or interest in the
property concerned;
(b)
the
time and circumstances of the applicant's acquisition of the
the right, title,
or interest in the property;
(c)
any
additional facts supporting the application; and
(d)
the
relief sought.
(3) The hearing of
the application shall, to the extent practicable and consistent with
the interests of justice be held within
30 days of the filing of the
application.
(4) The High Court
may consolidate the hearing of the application with a hearing of any
other application filed by a person under
this section.
(5) At the hearing,
the applicant may testify and present evidence and witnesses on his
or her own behalf, and may cross-examine
any witness who appears at
the hearing.
(6) The National
Director or the
curator
bonis
concerned, or a person authorised in writing thereto by them, may
present evidence and witnesses in rebuttal and in defence of
their
claim to the property and may cross-examine a witness who appears at
the hearing.
(7) In addition to
the testimony and evidence presented at the hearing, the High Court
may, upon application by the National Director
or the
curator
bonis
concerned, or a person authorised in writing thereto by them, order
that the testimony of any witness relating to the property
forfeited,
be taken by commission and that any book, paper, document, record,
recording, or other material not privileged be produced
at the taking
down of such testimony by commission.
(8) The High Court may make an order
under subsection (1), in relation to the forfeiture of the proceeds
of unlawful activities,
if it finds on a balance of probabilities
that the applicant for the order-
(a) had
acquired the interest concerned legally and for a consideration, the
value of which is not significantly
less than the value of that
interest; and
(b)
where
the applicant had acquired the interest concerned after the
commencement of this Act, that he or she neither knew nor had
reasonable grounds to suspect that the property in which the interest
is held is the proceeds of unlawful activities.
(8A) The High Court may make an order
under subsection (1), in relation to the forfeiture of an
instrumentality of an offence referred
to in Schedule 1 or property
associated with terrorist and related activities, if it finds on a
balance of probabilities that the
applicant for the order had
acquired the interest concerned legally, and-
(a) neither
knew nor had reasonable grounds to suspect that the property in which
the interest is held is an instrumentality
of an offence referred to
in Schedule l or property associated with terrorist and related
activities; or
(b) where
the offence concerned had occurred before the commencement of this
Act, the applicant has since the commencement
of this Act taken all
reasonable steps to prevent the use of the property concerned as an
instrumentality of an offence referred
to in Schedule 1 or property
associated with terrorist and related activities.
(9) (a)
When a person who testifies under this section-
(i)
fails to answer fully and to the best of his or her ability any
question lawfully put to him or her; or
(ii) gives false evidence
knowing that evidence to be false or not believing it to be true, he
or she shall be guilty
of an offence.
(b)
When a person
who furnishes an affidavit under subsection (2) makes a false
statement in the affidavit knowing that statement to
be false or not
believing it to be true, he or she shall be guilty of an offence.
(c)
A person convicted
of an offence under this subsection shall be liable to the penalty
prescribed by law for perjury.”
[8]
The applicant is a close corporation and its sole member is Mr Levin
Soji Kara. Kara deposed to the founding affidavit.
The
applicant operates mainly as a scrap yard and panel beating business,
but also deals in motor vehicle parts and offers a towing
service.
Kara also sells wholesale liquor to licensed small businesses.
The applicant is the registered owner of the
Mercedes. Kara
stated that he purchased the Mercedes at an auction on 13 December
2011 for a total price of R23 461.20
and it was thereafter
registered in the applicant’s name. Proof of registration
was annexed to the affidavit in the
form of a certificate of
registration issued on 22 December 2011.
[9]
Kara stated that approximately four years ago he met a person known
to him only as William. William advised him that he
operated a
small tavern in Kleinskool, Port Elizabeth. In view of Kara’s
involvement in the sale of liquor to small
businesses, he and William
began a business relationship, which endured for some years.
William was a loyal customer who
paid his debts within a reasonable
time and was even allowed to purchase liquor on credit. Kara
would deliver liquor to William’s
business in Kleinskool.
William also ran a spaza shop. During 2014 William told Kara
that he needed a vehicle for his
business and Kara offered to sell
him the Mercedes. They concluded an oral agreement in terms of
which Kara sold the vehicle
to William for R50 000.00 payable by
way of a deposit of R20 000.00 on delivery and the balance of
R30 000.00 in
full. There was no specific agreement about
when the balance would be paid but the understanding was that it
would be within
a reasonable time and during 2014. The
applicant would remain the owner of the Mercedes until the full
purchase price had
been paid.
[10]
Shortly after the conclusion of the agreement, William took delivery
of the Mercedes and paid the R20 000.00 deposit.
Thereafter Kara experienced great difficulty in obtaining payment of
the balance of R30 000.00. He unsuccessfully tried
to
contact William telephonically on many occasions, and visited his
business premises at Kleinskool on more than one occasion,
but could
not find him there.
[11]
Kara did not know if William was involved in the theft of chocolate
or if the Mercedes was an instrumentality of the theft,
and had no
reasonable grounds to suspect that William would use the vehicle as
an instrumentality of the theft.
[12]
Kara learned of the circumstances in which the Mercedes was
confiscated after the preservation order was served on him and
he
read the founding affidavit in the preservation application.
Under the heading “Condonation: non-compliance
with
section 39 (5)”, Kara said that he was not prejudiced by the
preservation order because the Mercedes was in the custody
of the
police, and that is why he did not take any action or file any
affidavits at that stage. He decided that it would
make more
sense to oppose the forfeiture application, rather than deliver an
affidavit setting out his defence to the preservation
application,
which had already been heard. He intended to oppose the
forfeiture application but because that application
had not yet been
launched, he had no way of knowing what averments would be made in
that application. He could not answer
in advance to an
application which had not yet been launched and intended to file an
answering affidavit when the forfeiture application
was served on the
applicant. The failure to file the s 39 (5) affidavit was not
wilful but was caused by his interpretation
of POCA.
[13]
The respondent opposed the application (i) on the ground that the
applicant was not a person who was entitled to receive notice
of the
forfeiture application in terms of s 48 (2) of POCA, because it had
not complied with s 39 (5) of POCA, and (ii) on the
merits in that it
had not proved that it had an interest in the Mercedes.
NON-COMPLIANCE
WITH S 39 (5) OF POCA
[14]
It was submitted on behalf of the applicant that notice of the
forfeiture application should have been given to it, and any
other
interpretation of s 48 (2) would be absurd. If the legislature
had intended that a party had to comply with s 39 (3)
and (5), it
would have specifically referred to s 39 (5) in s 48 (2).
Alternatively, so it was submitted, even if s 39 (5)
was peremptory,
the true enquiry is whether the legislature intended non-compliance
to result in invalidity.
[15]
In my view, s 39 (3) and (5) are inextricably bound. The s 39
(5) affidavit is an integral part of a s 39 (3) notice.
A s 39
(3) notice is incomplete if not accompanied by the s 39 (5)
affidavit. A reference to s 39 (3) in s 48 (2) must therefore
envisage a notice of opposition which incorporates the s 39 (5)
affidavit. Specific reference to 39 (5) in s 48 (2) is
therefore
not necessary because the s 39 (5) affidavit is part of the
content of the s 39 (3) notice.
[16]
With regard to the alternative submission, I refer to
Steenkamp
and Others v Edcon Ltd
2016 (3) SA 251
(CC) where the following
was said at para [182] to [184] (footnotes omitted):
“
The
correct approach
[182]
The approach that the use of the word 'shall' in a statutory
provision means that anything done contrary to such a provision
is a
nullity is neither rigid nor conclusive. The same can be said of the
use of the word 'must'. Many factors must be considered
to determine
whether a thing done contrary to such a provision is a nullity. There
are cases where the performance of an act
in breach of a
statutory obligation does not necessarily result in the act being
invalid and of no force and effect. When
the question arises
whether something that was done contrary to a statutory provision is
invalid and of no force and effect, the
proper approach is to
ascertain what the purpose of the legislation is in this regard.
Sometimes the purpose of the legislation
will be to render it a
nullity. At other times the purpose will not be to render such a
thing a nullity. In each case the
legislation will need to be
construed properly to establish its purpose.
[183]
Some of the factors that should be taken into account in
the construction of the statute to establish its purpose are
the
following: the purpose of the legislation as a whole, the purpose of
the relevant section of the Act, the mischief sought to
be addressed,
whether the statute makes provision for remedies for its breach, or
whether, if the act were not held to be null
and void, it would mean
that the provision may be breached with impunity. Where the
statute does make provision for some
remedies for the breach of
the relevant provision, the court would also have to take into
account whether the remedies provided
are adequate. Where they are
adequate, there seems to be no justification for the conclusion that
the purpose of the legislation
is to visit an act committed in breach
of the provision with nullity. It would be a different case where the
remedies provided
by the statute are not adequate, particularly
if they are substantially inadequate or where such remedies cannot be
easily obtained.
[184]
This approach is consistent with that taken in
Standard
Bank
;
Metro
Western Cape (Pty) Ltd
;
Palm
Fifteen (Pty) Ltd
;
Pottie
v Kotze
; and
Swart
v Smuts
.
In
Palm
Fifteen
Miller JA said:
'The
subject-matter of the prohibition, its purpose in the context of the
legislation . . . the remedies provided in the event of
any breach of
the prohibition, the nature of the mischief which it was designed to
remedy or avoid and any cognisable impropriety
or inconvenience
which may flow from invalidity, are all factors which must be
considered when the question is whether it was truly
intended that
anything done contrary to the provision in question was necessarily
to be visited with nullity.'
This passage was
quoted with approval in
Absa Insurance Brokers (Pty) Ltd
.
In that case the Supreme Court of Appeal made the following important
point after quoting the above passage from
Palm Fifteen (Pty) Ltd
:
'In
answering the question as to whether a contract entered into in
contravention of the provisions of s 20
bis
is a nullity,
the
purpose of the section is crucial
.'
[Emphasis added.]”
[17]
In
Mohunram
and Another v National Director of Public Prosecutions and Another
[2006] ZASCA 12
;
2007 (6) BCLR 575
(CC) at para
[57]
Van Heerden AJ stated (footnotes
omitted):
“
The broader
societal purposes served by civil forfeiture under Chapter 6 of POCA
have been held to include:
•
removing
incentives for crime;
•
deterring
persons from using or allowing their properties to be used in crime;
• eliminating or incapacitating some of the means by which
crime may be committed; and
•
advancing
the ends of justice by depriving those involved in crime of the
property concerned.”
[18]
It seems to me that the purpose of s 39 (5) of POCA is to enable the
respondent to know as soon as possible on what grounds
a forfeiture
order will be opposed or on what grounds an application will be made
for the exclusion of an interest in the property
concerned. These
grounds, especially in the latter case, will often be within the
exclusive knowledge of the party opposing
the forfeiture order or
applying for the exclusion of an interest in the property and the
purpose of the civil forfeiture may be
thwarted if the respondent has
insufficient time to prepare to meet the opposition or the
application. This purpose
would be negated if the absence
of the s 39 (5) affidavit did not render the s 39 (3) notice a
nullity, and would render s 39 (5)
meaningless and superfluous.
Moreover there is no remedy available to the respondent if s 39 (5)
is breached. The fact
that affidavits would be filed in
opposition to forfeiture or in support of an application to exclude
an interest, is not a remedy
in the sense alluded to in
Steenkamp
(
supra
).
If non-compliance with s 39 (5) did not render the s 39 (3) notice a
nullity, it would mean that s 39 (5) “may be
breached with
impunity.”
[19]
It follows that I am of the view that the applicant is not a person
who entered an appearance in terms of s 39 (3) of POCA
and service on
it was not required in terms of s 48 (2).
MERITS
[20]
Even if I am wrong in this conclusion, I am of the view that the
applicant did not discharge the onus on it to prove on a balance
of
probabilities that it was the owner of the Mercedes and thus failed
to prove an interest in the Mercedes. This was the
basis of the
respondent’s opposition on the merits.
[21]
Kara’s account of the sale to William, its terms, and his
attempts to recover the balance of the purchase price was most
unconvincing. It is in my view improbable that he would sell a
vehicle to a person for quite a large amount of money without
knowing
his surname. Kara on his own version is a businessman and the
applicant, of which Kara is the sole member, conducts
a number of
types of business. He produced no documentary evidence of the
sale to William. The terms for payment of
the balance of the
purchase price were extremely vague. It is improbable that he
and William did not agree on the period
within which William was to
pay the balance. The “understanding” between him
and William was very vaguely expressed
and difficult to grasp.
Kara did not say how the deposit of R20 000.00 was paid and
whether or not there was a receipt
for it in the applicant’s
books. Kara was vague about his efforts to recover the balance
of R30 000.00.
He did not reveal precisely where William’s
business premises were. He did not say that William had
abandoned his business
premises and was untraceable. He merely
said that he “could never get hold of him” and that he
unsuccessfully
tried to contact him telephonically. He did not
say for how long his efforts continued. It is probable that a
person
in his position would have taken legal action on behalf of the
applicant to recover the money, yet he did not. I find his
decision to wait for the forfeiture application before deposing to an
affidavit somewhat strange. The preservation application
contained a number of affidavits about the theft of the chocolate and
the Mercedes’ instrumentality of the theft. Kara
stated
that he had read the founding affidavit in the preservation
application so it was unlikely that he would learn anything
more from
the forfeiture application. At this stage he had obtained legal
representation and it is unlikely that his attorney
would advise him
to elect not to file an affidavit in compliance with s 39 (5) of
POCA. Finally while claiming that the applicant
was still the
owner of the Mercedes, it is significant that its last registration
was in 2011. In my view all these factors
point to the alleged
sale to William and the reservation of ownership as being a belated
fabrication. It is far more probable
that Kara on behalf of the
applicant disposed of the Mercedes and had relinquished all title to
it.
[22]
The application in terms of s 54 (1) of POCA therefore cannot
succeed.
[23]
In the alternative, in terms of s 53 (3) of POCA, the applicant was
required to show good cause why the forfeiture order should
not be
varied to exclude its interest in the Mercedes. Good cause in
this context would be what is required in an application
for
rescission of judgment at common law or in terms of Rule 31 (2) (b)
of the Uniform Rules. In addition to providing an
explanation
for its default, the applicant would have to set out a
bona
fide
defence to the forfeiture order or
bona
fide
grounds in support of a variation of the forfeiture order to exclude
the applicant’s interest in the Mercedes. Kara’s
improbable and deficient account does not disclose
bona
fide
grounds for the variation the applicant seeks, and consequently the
applicant failed to show good cause for a variation of the
forfeiture
order.
[24]
The application is dismissed with costs.
______________
J
M ROBERSON
JUDGE
OF THE HIGH COURT
Appearances:
For
the Applicant: Adv A C Barnett, instructed by Shaun Masimla
Attorneys, Port Elizabeth
For
the Respondent: Mr W Myburg, Office of the State Attorney, Port
Elizabeth