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[2020] ZAECPEHC 30
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Land and Agriculture Bank of South Africa and Others v CPAD Farm Holdings and Others (2667/2017) [2020] ZAECPEHC 30; 2020 (2) SACR 300 (ECP) (11 February 2020)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 2667/2017
Date
heard: 17 October 2019
Date delivered: 11
February 2020
REPORTABLE
In
the matter between:
LAND AND AGRICULTURAL
BANK OF SOUTH AFRICA
First
Applicant
MOOVILE (PTY) LTD
Second
Applicant
WILLEM JANSEN VAN
VUUREN Third
Applicant
And
CPAD FARM HOLDINGS
First
Respondent
MONGEZI ALFRED
MDE Second
Respondent
NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
Third Respondent
MINISTER OF RURAL
DEVELOPMENT AND
LAND REFORM
Fourth
Respondent
MIKE TIMKOE TRUSTEES
CC Fifth
Respondent
DONALD GEORGE DUKE
JACKSON Sixth
Respondent
MASTER OF THE HIGH
COURT
Seventh Respondent
REGISTRAR OF DEEDS
CAPE TOWN
Eighth Respondent
JUDGMENT
Goosen J:
[1]
The
first applicant (referred to hereinafter as the Land Bank) seeks an
order varying the terms of a forfeiture order obtained at
the
instance of the third respondent (hereinafter the NDPP) in terms of s
53(1)(a) of the
Prevention
of Organised Crime Act
(
POCA
)
[1]
.
[2]
The forfeiture order was granted by Majiki
J on 13 January 2015. In terms of paragraph 1 thereof the Honeyville
Farm in the district
of Humansdorp (hereinafter the property) was
declared forfeit to the state. Paragraph 5 thereof provided that the
fifth respondent
(hereinafter Timkoe), who was appointed AS the
curator bonis
to the first respondent (CPAD), the erstwhile owner of the property
was required “
to cause the
property to be handed back to the
[fourth
respondent (hereinafter the Department)]
for
re-allocation”
. It further
provided that “
this will be
regarded as payment to the state”
.
[3]
What the applicant now seeks is a variation
of paragraph 1 to read that the forfeiture is “
subject
to the rights of bondholders
”. It
also seeks a declaration that Timkoe be entitled to proceed with the
sale of the property subject to the rights of the
bondholders. The
effect of this latter declarator will be to negate paragraph 5 of the
forfeiture order.
[4]
Much of the factual background is common
cause between the parties. The second and third applicants were
granted leave to intervene
as applicants in the application by Van
Zyl DJP on 9 July 2019. Their particular interest in the relief
sought will emerge from
the outline of the relevant facts. Although
the facts may not be in dispute there is some contention as to the
appropriate starting
point. The Land Bank sets the starting point at
13 April 2007 on which date CPAD as registered owner of the property
caused a mortgage
bond to be registered over the property in favour
of the Land Bank. The department, on the other hand, sets the
starting
point at an earlier date, with reference to the forfeiture
application, prior to CPAD becoming the registered owner of the
property.
I shall outline the facts with reference to the Land
Bank’s chronology and return hereunder to the earlier period
when dealing
with the department’s case.
[5]
It is common cause that as at 13 April 2007
CPAD was the registered owner of the property. On that day a mortgage
bond was registered
in favour of the Land Bank. In 2008 the Land Bank
commenced legal action against CPAD to recover amounts owing to it
pursuant to
the credit facility extended to CPAD, in the amounts of
R559 401,90 and R5 216 367,03 respectively. The
judgment
included interest on the capital sums (from 31 July 2008)
and an order declaring the property executable. On 14 October 2014,
the
sheriff acting pursuant to a warrant of execution, attached the
property.
[6]
During October 2014 the NDPP launched an
application in terms of s 38 of POCA for a preservation order in
respect of the property.
A preservation order was granted and Timkoe
was appointed as curator
bonis
to take control of the property. A copy of the preservation order was
served on the Land Bank. The Land Bank instructed an attorney,
Mr
Gregory Parker (Parker) to represent it and protect its interests.
[7]
Parker wrote to Mr Warren Myburgh
(Myburgh), an attorney in the State Attorneys’ office attached
to the Asset Forfeiture Unit
and representing the NDPP in the
preservation proceedings, on 17 November 2014. Parker confirmed that
the Land Bank held a first
mortgage bond over the property and that
he held instructions to enter an appearance to exclude the Land
Bank’s interests
in the property.
[8]
On
18 November 2014 Parker met Myburgh and advocate Freda Hack, an
employee of the Asset Forfeiture Unit. Myburgh and Hack confirmed
that the Land Bank’s interest as mortgage holder would be
excluded from the forfeiture order to be obtained. This was confirmed
by email dated 19 November 2014. Parker informed Myburgh that service
of the forfeiture application could be effected on his office.
On
21 November 2014 Parker dispatched an email to Myburgh enclosing
statements reflecting the amounts owed by CPAD to the
Land Bank
[2]
.
On 13 December 2014 Parker enquired of Myburgh when the forfeiture
application might be expected. No reply was received. A forfeiture
order was granted on 13 January 2015.
[9]
On 20 November 2015 Parker wrote to Myburgh
expressing concern at the terms of the order. Myburgh replied,
expressing the view that
the order was “
subject
to bonds which rank in both time and efficacy
”.
This stance was repeated in a meeting held between Parker and Myburgh
and advocate Kingsley, representing the NDPP. It
appears that these
assurances satisfied the Land Bank.
[10]
During or about February or March 2015
Timkoe, the appointed curator
bonis
,
was approached by the third applicant who is the occupant of the
property. An offer to purchase the property was made by the third
applicant in an amount of R7. 5 million. Timkoe submitted same to
Parker who in turn submitted same to the Land Bank for approval.
After obtaining a valuation of the property the Land Bank advised
that it required a revised offer of R8 million.
[11]
It appears that Timkoe entered into
negotiations with the purchasers and on 25 May 2015 a Deed of Sale
was entered into between
Timkoe and the third applicant (Van Vuuren)
on behalf of a company to be incorporated (i.e. what came to be the
second applicant),
for a purchase consideration of R8 million.
[12]
It is the conclusion of the
Deed of Sale which sparked the need for the present application. That
is so because upon being advised
of the sale agreement, the
Department objected. The sale agreement would result in the Land Bank
receiving the full proceeds of
the sale, less any fees payable to
Timkoe. The Department, however, took the view that it was entitled
to the property as provided
in the forfeiture order.
[13]
Before setting out the issues which arise
for decision and the contentions of the various parties, it is
appropriate to touch briefly
on the period prior to 13 April 2007.
The period is not addressed in the Land Bank’s papers.
Reference is, however, made
to the preservation application in the
Land Bank’s papers. It is not annexed. It was stated in the
founding affidavit that
it would be made available at the hearing. It
was not. I did, however, call for the file from the Registrar. The
Department refers
in its answer to the fraud perpetrated upon it
being the very reason a preservation order and subsequent forfeiture
order was sought.
Accordingly, for this reason too regard necessarily
must be made to the facts giving rise to the preservation order.
[14]
What
emerges from the preservation application (and subsequent forfeiture
application) is the following. The responsibility of the
Department,
in terms of policy, is to redistribute productive commercial land to
previously disadvantaged individuals.It does so
in accordance with
several legislative provisions.
[3]
In
order to achieve these objects funds and grants are made available.
One such is the Land Redistribution and Agricultural Development
Grant (the LRAD grant).The LRAD grant is available to beneficiaries
to cover the costs of acquiring land and/or shares in agricultural
enterprises. A Special Investigation Unit investigation of fraud
and/or corruption in the Land Reform Programme identified fraud
and/or corruption in respect of the property which is the subject of
the application. In essence, it took the form of an LRAD grant
being
approved for the purchase of the property which was to be transferred
to a Trust of which 39 previously disadvantaged individuals
were the
beneficiaries. An amount of R2 617 017 was paid out in
grant funding on 2 August 2006 to acquire the property.
As a result
of certain fraudulent misrepresentations the property was transferred
to and registered in the name of the first respondent
(CPAD) of which
the third respondent (Mde) is a director. At the time of transfer a
mortgage bond was registered in favour of the
Land Bank to secure a
loan in an amount of approximately R5. 5 million. This fraudulent
conduct forms the subject of a pending
criminal prosecution of CPAD;
Mde and one Pakade, a former official in the employ of the
Department.
[15]
It is on the basis of these allegations,
which founded the NDPP’s application for a preservation and
forfeiture order, that
the Department contends that it is a victim of
the criminal conduct and, accordingly, entitled to share in the
proceeds of the
forfeited property.
[16]
Essentially two questions arise for
determination. They correspond to the form of the relief sought by
the Land Bank. The first
is whether the forfeiture order ought to
recognise the rights of the Land Bank as mortgage holder. The second
is whether the sale
of the property ought to proceed as envisaged by
the declarator.
[17]
It is common cause that the Land Bank did
not, following the granting of the preservation order, enter an
appearance in terms of
s 39(3) of
POCA
.
The section provides that:
“
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.”
[18]
The Land Bank contends that it was assured
by the representations made by Myburgh and Kingsley that it was
unnecessary since the
forfeiture of the property automatically would
cater for such rights. It is for this reason that it did not enter an
appearance
and apply for the exclusion of its interest in the
property.
[19]
It is also common cause that the Land Bank
did not receive notice of the application for the forfeiture order.
That order was granted
by default as provided by s 53 of
POCA
.
Upon becoming aware of the forfeiture order the Land Bank immediately
raised its concerns with Myburgh. It was again assured that
the
forfeiture order:
“
did
not purport to refer to any other pre-existing rights, which were
recognised throughout.”
[20]
Myburgh also indicated that the NDPP would
not oppose an amendment to the order to give effect thereto.
[21]
The
Land Bank, no doubt with its concerns assuaged, did not avail itself
of wither a variation in terms of s 47 or any other remedy
at that
stage. The reliance upon the assurances given on behalf of the NDPP
was misplaced. Mr Buchanan SC, who appeared for the
Department took
no issue with the Bank’s failure to enter appearance or
otherwise secure its interests. By this, I understood
the Department
to accept that the Land Bank was wrongly advised in light of the
assurances given. It was accordingly not the Department’s
position that the Land Bank was precluded from asserting its rights
and interests in the property. Indeed Mr Buchanan’s submissions
proceeded from the premise that both the Bank and the Department were
victims of the fraud and that they ought to benefit from
the
forfeiture in proportion to the capital losses each had incurred. It
was in support of this argument that reliance was placed
on the
judgment in
National
Director of Public Prosecutions v Levy and Others
[4]
[22]
Mr Buchanan accordingly accepted that the
forfeiture order ought to be varied to protect the Land Bank as
bondholder. It should
be recorded here that the sixth respondent is
the holder of a second mortgage bond over the property. The
application papers
cite the sixth respondent as second bondholder but
despite a reference to later paragraphs in the founding affidavit, no
averments
are made in relation to the sixth respondent. The sixth
respondent also did not participate in the proceedings.
[23]
The Department did not bring a counter
application for amendment or variation of the terms of the forfeiture
order. It sought
merely to argue that, in line with the
approach adopted in the
Levy
judgment, an appropriate order balancing the rights of the victims of
the fraud ought to be made, by ensuring that upon disposal
of the
property the proceeds should be divided
pro-rata
the capital losses incurred by the Land Bank and the Department.
[24]
Insofar as the second and third applicants
were concerned the Department’s stance was that Timkoe’s
powers as
curator bonis
are limited. He had no power to enter into a deed of sale and
accordingly such a deed is of no force and effect. To the
extent that the second and third applicants seek an order to the
contrary their application stands to be dismissed.
[25]
Levy
concerned
an application for a forfeiture order in terms of s 48 of
POCA
.
What was at issue in that matter was the exclusion of the interests
of certain respondents. The unlawful activity comprised the
operation
of an “
investment pyramid scheme”.
The respondents, who were investors,
sought the exclusion of their interests in the property to be
forfeited. Each of the respondents’
sought exclusion of
specified amounts, being the value of their respective interests in
the property. It is not necessary
to canvas these details. What
is of significance is the finding as to the nature of the interest
that may be excluded.
[26]
Van
Oosten J held the following
[5]
:
“
Interest”
is widely defined in the Act as “including any right”.
The forfeiture order in terms of section 50 of
the Act may only be
made subject to section 52, which provides for the exclusion of
interests in property from the operation of
a forfeiture order, on
application thereto by an interested party. Such party may either
oppose the application for a forfeiture
order or apply for an
exclusionary order.”
[27]
The
learned judge went on to find
[6]
:
“
In
my view, and again importing the aids to which I have previously
referred, a restrictive interpretation as contended for, would
truncate the overall purpose of the Act. Section 52 of the Act
permits a person with an “interest in the property”
to
intervene in the forfeiture proceedings and the Court may then
“exclude certain interests in property which is the subject
of
the order from the operation thereof”. It was clearly the
intention of the Legislature to protect the interests of innocent
third parties who have become the victims of a fraudulent activity.
The measures provided for in the Act, ie preservation and forfeiture,
are in the nature of execution in an ordinary civil action.
Ordinarily a plaintiff in a civil action, having a claim sounding in
money against the defendant would only be entitled to payment of his
or her claim once judgment has been entered in his or her
favour and
following upon the execution process. In granting the forfeiture
order in
terms of the Act, the
court, in effect, pronounces judgment declaring the property to be
executable. It is then that the rights
of interested parties become
relevant. In casu the monies of the second and third respondent were
used to pay the purchase price
of the property. Their interest in the
property accordingly is the equivalent of those amounts.”
[28]
Based on this finding the court granted a
forfeiture order but provided therein that the property be disposed
of and that the said
respondents be paid the specified value of their
interests (together with certain costs) and that the balance of the
proceeds upon
disposal be paid into Criminal Assets Recovery Account
established under s 63 of the Act. The learned judge also provided
for the
circumstance that the purchase price of the property is less
than the aggregate of the sums excluded.
[29]
Mr Buchanan enjoined the court to adopt an
approach which recognised that both the Land Bank and the Department
were innocent victims
and that they were entitled to share in the
proceeds of the disposal of the property in proportion to their
respective losses.
Mr Beyleveld SC, for the Land Bank, submitted
however, that the Department was not a victim of the unlawful
activity. It was also
submitted that the extent of the Department’s
losses are not established on the papers and that there is
accordingly no basis
to determine an amount to be excluded. Mr
Beyleveld further argued that
Levy
is, in any event, distinguishable inasmuch as the respondents in that
matter held no security (either in the form of a ranking
mortgage
bond or as judgment creditors) as in the present matter. Accordingly,
the proportional sharing of the proceeds did not
apply.
[30]
I accept that the facts in
Levy
differ. However, the approach to the determination of interests and
the underlying purpose of
POCA
,
in my view, find application in the present matter. As noted by Van
Oosten J,
POCA
seeks to protect the interests of innocent third parties who have
become the victims of a fraudulent activity. There is no reason
in
principle why an organ of state or Department of State cannot rank as
a victim of fraudulent activity alongside a private individual
or
corporate entity. The fact that forfeiture occurs to the state
does not preclude an organ or component of the state being
the holder
of a recognizable interest in the property which is worthy of
protection as against other victims or the state itself.
[31]
Forfeiture, it should be noted does not
occur into the revenue accounts of the state in general. Section 63
establishes a separate
account, namely the Criminal Assets Recovery
Account. The management of that account is regulated by Chapter 7.
The funds which
comprise the account may only be utilized in
accordance with s 69A. The relevant portion of s 69A provides
as follows:
“
69A
Utilisation of Account and accountability
(1) The property and
money allocated to, or standing to the credit of, the Account may be
utilised by Cabinet, after considering
the recommendations of the
Committee, for-
(a)
the allocation of property and amounts of money from the Account to
specific law enforcement agencies;
(b)
the allocation of property and amounts of money from the Account to
any institution, organisation or fund contemplated
in section 68 (c);
and
(c)
the administration of the Account.
(2) . . .
(3) (a) Whenever Cabinet
allocates property or money under subsection (1) to a specific law
enforcement agency or to an institution,
organisation or fund
contemplated in section 68 (c)-
(i)
Cabinet shall indicate the specific purpose for which that property
or money is to be utilised; and
(ii)
the Minister shall forthwith cause all particulars of such allocation
to be tabled in Parliament.
(b)
Property or money allocated under subsection (1) may not be utilised
for any other purpose than that specified in terms of paragraph
(a)
(i).”
[32]
What these provisions indicate is that the
proceeds of crime obtained by way of,
inter
alia
, forfeiture proceedings are to be
applied:
“
.
. . to be combating of organised crime, money laundering and the
financing of terrorist and related activities.”
[7]
[33]
Thus, absent the exclusion of particular
interests in confiscated property, the forfeited proceeds of criminal
activity do not become
generally available to those organs of state
or departments who may suffer loss on account of such unlawful
activity.
[34]
I am accordingly of the view that the broad
principle enshrined in the approach set out in
Levy
is no less applicable to an organ of state or state entity. That
principle is that such entities may, in accordance with the
procedures
set out in
POCA
,
obtain exclusion of their interests in property to be forfeited. It
will, of course, be necessary to establish such interest.
[35]
That brings me to the argument that the
Department failed to establish that it too has a quantifiable
interest in the property.
I am unable to agree with Mr Beyleveld that
this was not established. His submission did not, in my view, take
cognisance of that
which was before the court considering both the
preservation order and the forfeiture order. Both the Land Bank and
the Department
referred to those papers. This court, in any event,
cannot ignore that which was before the court whose order this court
is called
upon to vary.
[36]
A reading of those papers indicates that an
amount of R2. 68 million was paid out in the form of LRAD grants to
enable the beneficiaries
to acquire the property. It appears from the
copy of the charge sheet drawn against CPAD, the second respondent
and the departmental
official involved, that this amount together
with the R5. 5 million bond finance supplied by the Land Bank was
appropriated to
pay the purchase price of the property. Contrary
to the conditions of approval of the financing the property was
registered
in the name of CPAD thus excluding the identified
beneficiaries. What these allegations establish, in my view, is that
both the
Land Bank and the Department suffered losses as a result of
the fraud perpetrated upon them. They are, accordingly, both victims
of the unlawful activity.
[37]
That,
however, is not the end of the matter. I shall deal hereunder with
the procedural issues that arise. Mr Buchanan argued that
since both
the Land Bank and the Department suffered losses they should
participate in the proceeds of disposal in proportion to
such losses.
The argument does not, however, take into account that the Land Bank
holds security in the form of a mortgage bond
and that it perfected
such security by obtaining a judgment against CPAD
and
an order authorizing execution against the property. The judgment
includes both capital and interest. There is nothing in the papers
before me which quantifies this interest. The preservation
application papers refer only to the value of the mortgage bond.
[8]
I can conceive of no reason why the Land Bank’s interest in the
property should be limited in these circumstances, to the
capital
losses suffered.
[38]
In
Levy
,
Van Oosten J described the process by which property is forfeited to
the state as being the effective entry of judgment and the
authorizing of attachment and execution against the property.
[9]
That this is indeed so is to be gleaned from a careful reading of the
provisions of Chapter 6 of
POCA
which provides for civil recovery of the proceeds of unlawful
activity. Two provisions are worthy of emphasis.
[39]
Section 56, which deals with the effect of
a forfeiture order provides:
“
(1)
Where a High Court has made a forfeiture order and a curator bonis
has not been appointed in respect of any of the property
concerned,
the High Court may appoint a curator bonis to perform any of the
functions referred to in section 57 in respect of such
property.
(2) On the date when a
forfeiture order takes effect the property subject to the order is
forfeited to the State and vests in the
curator bonis on behalf of
the State.
(3)
Upon a forfeiture order taking effect the curator bonis may take
possession of that property on behalf of the State from any
person in
possession, or entitled to possession, of the property.”
[40]
Section 57, in turn, states that:
“
(1)
The curator bonis must, subject to any order for the exclusion of
interests in forfeited property under section 52 (2) (a) or
54 (8)
and in accordance with the directions of the Committee-
(a)
deposit any moneys forfeited under section 56 (2) into the Account;
(b)
deliver property forfeited under section 56 (2) to the Account; or
(c)
dispose of property forfeited under section 56 (2) by sale or any
other means and deposit the proceeds of the sale
or disposition into
the Account.
(2) Any right or interest
in forfeited property not exercisable by or transferable to the
State, shall expire and shall not revert
to the person who has
possession, or was entitled to possession, of the property
immediately before the forfeiture order took effect.
(3) No person who has
possession, or was entitled to possession, of forfeited property
immediately before the forfeiture order took
effect, or any person
acting in concert with, or on behalf of that person, shall be
eligible to purchase forfeited property at
any sale held by the
curator bonis.
(4) ......
(5)
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.”
[41]
What these sections contemplate is that the
property which is declared forfeit immediately vests in the curator
bonis
on
behalf of the state and must be disposed of and the proceeds
deposited in the Criminal Assets Recovery Account established in
terms of s 63. An order forfeiting property may, of course, exclude
an interest in such property as provided for in s 54(1).
[42]
Two important issues arise in consequence
of these provisions. Both highlight issues as to the efficacy of the
forfeiture order
which is the subject of the application. The first
concerns the interplay between paragraph 1 and paragraph 5 of the
order. On
the one hand, the property is declared forfeit to the
state, no doubt with the statutory consequences that flow from such
order
as provided by sections 56 and 57. On the other hand, the
property is to be handed back to the Department in terms of paragraph
5, and this in lieu of payment to the state. Several questions arise:
Is this to be construed as an exclusion of an interest in
the
property? Or the exclusion of property itself? If it was intended
that an interest be excluded what interest was so excluded?
Was it
the loss suffered by the Department to which reference was made in
the preservation papers or the loss suffered by the Land
Bank in the
form at least of the mortgage bond liability (to which reference was
also made)?
[43]
In my view, paragraph 5 of the order
cannot, in the light of paragraph 1, be construed as an exclusion of
interest contemplated
by s 54(1). Instead, it must be construed as an
order to which effect cannot be given. When regard is had to the
terms of the forfeiture
order sought by the NDPP, I am inclined to
hold that the order in paragraph 5 was granted in error, presumably
per
incuriam
.
[44]
The second issue is more fundamental. I
have already referred to the fact that the preservation and
forfeiture papers make no reference
to the fact that the Land Bank
had, at the time of the application, obtained judgment against CPAD
and an order declaring the property
executable. It appears from the
papers before me that a warrant of execution had been issued and that
the property was under attachment.
[45]
Given
that the forfeiture process is itself a form of attachment for
purposes of execution, the forfeiture order cannot, without
more,
override or displace a prior judicial attachment of the property.
Ordinarily once a property has been attached further or
later writs
are lodged with the sheriff. Where there are competing claims those
may be adjudicated by interpleader proceedings.
In other instances,
the Rules of Court make provision for the distribution of the
proceeds of any sale in execution.
[10]
[46]
In this instance, the forfeiture order was
granted without regard to the prior attachment of the property at the
instance of the
Land Bank. In my view, such order could not have been
made, in fulfilment of the objects of
POCA
,
without recognition of the rights and interests of the Land Bank as
mortgage holder and indeed as judgment creditor.
[47]
It follows from this that neither paragraph
1 nor 5 of the forfeiture order can stand in their present form. This
brings to the
fore the procedural questions referenced above. I have
already mentioned the fact that no appearance was entered by the Land
Bank.
There was, for this reason, no application to exclude its
interest in the property. The preservation order was sought
ex
parte
.The application was prosecuted by
the NDPP, Asset Forfeiture Unit. It does not appear that the
Department received notice of the
application. Even if it did, it did
not enter an appearance seeking to exclude its interest in the
property thereby securing recovery
of the losses it suffered. Both
the Land Bank and the Department (the latter by way of concession)
now effectively seek exclusion
of their respective interests. I say
this mindful of the fact that the Department nevertheless seeks
return of the property so
that it may be reallocated to beneficiaries
in accordance with its policy.
[48]
The procedural difficulty lies therein that
the Land Bank seeks exclusion of its interest by twofold device i.e.
an order that the
forfeiture subject to the rights, bondholders and
by
ex poste facto
authorising a disposal of the property contrary to the terms of the
forfeiture order. Equally difficult is the position of the
Department
which in effect seeks a variation (seemingly including an authorized
disposal of the property) without having framed
a counter
application.
[49]
Notwithstanding these procedural issues,
the forfeiture order in its present form must be varied not only to
properly give effect
to the provisions of
POCA
but also to facilitate the final resolution of the matter. That can
be achieved, it seems to me, by rendering forfeiture subject
to the
rights of the bondholder as was sought. It can further be achieved by
giving effect to s 57(1)(c), i.e. by authorising disposal
of the
forfeited property by sale or other means. To the extent that this
conflicts with paragraph 5 of the existing order I have
already
stated that that order is in conflict with paragraph 1 and cannot, in
the light thereof stand. Since both the Land Bank
and the Department
have established defined interests in the property such interests
ought to be excluded from the forfeited property.
[50]
In the case of the Land Bank, its interests
(indeed its rights) consist in the judgment it holds against CPAD.
That should be readily
capable of valuation. In the case of the
Department, its interests consist in the loss suffered in respect of
the payment of LRAD
grants. The papers in the preservation
application (as referenced in this application) attach a value of R2.
68 million to that
loss.
[51]
That leaves the question of the interests
of the proposed beneficiaries. As I understood it the Department
seeks to protect that
interest by return of the property so that it
may be reallocated. Whether that can be achieved by settlement
between the parties
is a matter which is not precluded by the
administration of the property in the hands of the curator
bonis
.
[52]
The final aspect for consideration concerns
the position of the second and third applicants. They intervened as
applicants in support
of the Land Bank’s variation application
and to secure the execution of the deed of sale by which they seek to
purchase the
property.
[53]
Mr Buchanan argued that the deed of sale
entered into by Timkoe, as curator, is of no force and effect since
Timkoe, pursuant to
paragraph 5 of the forfeiture order, had no
authority to concluded such sale. Timkoe conceded this.
Notwithstanding the fact that
paragraph 5 of such order conflicts
with paragraph 1 thereof it cannot be ignored. The plain meaning of
the order is that Timkoe
was not authorized to dispose of the
property by sale or other means. Accordingly, effect cannot be given
to the deed of sale concluded
with the third applicant on behalf of
the second applicant. In the light of the order I propose to make,
however, the disposal
of the property by sale to the second applicant
may yet occur.
[54]
Finally, there is the issue of costs. In
the light of the variation of the forfeiture order to exclude the
established interests
of both the Land Bank and the Department it
must be found that the Land Bank, as applicant, enjoyed substantial
success in the
application. The exclusion of the Department’s
interest in the property does not alter that. However, both the Land
Bank
and the second and third applicants have not succeeded in
securing a declarator regarding the deed of sale in respect of the
property.
In this respect, the Department successfully opposed the
relief. In this respect, therefore, the second and third applicants
were
unsuccessful and they should pay the costs of the fifth
respondent’s opposition to said relief. It will be for the
taxing
master to determine such costs. Since both the Land Bank and
the Department were partially successful an appropriate order will
be
that each bears their own costs.
[55]
I therefore make the following order:
1.
Paragraph 1 of the order of Majiki J dated
13 January 2015 is amended by the insertion at the end thereof the
phrase “
subject to the rights of
bondholders
”.
2.
Paragraph 5 of the order is hereby deleted
and replaced with the following:
“
5.
In terms of s 57 of
POCA
the curator bonis is authorized as of the date on which the
forfeiture order takes effect, to perform all the powers and
functions
specified in the Act including the following:
5.1
To dispose of the property by sale, public auction or other means
after due notice of the
proposed disposal and the terms thereof
having been given to the first applicant, and fourth and fifth
respondents’ attorneys
and further subject to the conditions
set out in paragraph 5A below.
5.2
After deduction of the curator bonis’ fees and expenditure and
further after deduction
of all related and incidental costs and
charges in respect of or relating to the sale and transfer of the
property and in terms
of the provisions of s 52(2) of the Act, to pay
from the balance of the proceeds of the sale, if any, the following
amounts:
5.2.1
to the first applicant and amount equal to the value of the first
applicant’s judgment as at the date of
disposal of the
property;
5.2.2 to
the fourth respondent an amount equal to the value of the grant funds
paid to facilitate acquisition of the
property;
and thereafter to
deposit the remaining balance of the proceeds, if any,
into the Criminal Assets Recovery Account
established in terms of s
63 of
POCA
.
5.3
To perform any ancillary acts which in the opinion of the curator
bonis are necessary but subject to any directives
of the Criminal
Assets Recovery Committee, established under s 65 of the Act”
3.
Paragraph 5A is hereby inserted in the
order:
“
5A
In the event that the
disposal of the property is for a purchase
price in an amount less
than the aggregate of the sums referred to in 5.2.1 and 5.2.2 above
then in that event the sums paid to
the first applicant and fourth
respondents shall be in proportion to the sums set out in 5.2.1 and
5.2.2 above.”
4.
The first applicant and fourth respondent
shall each pay their own costs.
5.
The second and third applicants shall pay
the fourth respondent’s costs occasioned by the opposition to
the application, such
to include the costs of two counsel.
________________________
JUDGE
OF THE HIGH COURT
Appearances:
Obo the 1
st
Applicant: Adv
A. Beyleveld SC
Instructed by
Greyvensteins Inc, 104 Park Drive, Port Elizabeth
Ref:
G Parker
Tel:
(041) 501 5500
Obo
the 2
nd
and 3
rd
Applicant: Adv T. Zietsman
Instructed
by Schoeman
Oosthuizen Inc, 167 Cape Road, Port Elizabeth
Ref:
J S Oosthuizen
Tel:
(041) 373 6878
Obo the 4
th
Respondent:
Adv R.G. Buchanan SC
/ Adv A Desi
Instructed by
State Attorney, 29 Western Road, Central, Port Elizabeth
Ref:
1263/2017/T
Tel
(041) 585 7921
[1]
Act
No. 121 of 1998
[2]
These
statements are not included in the papers.
[3]
The
Extension of Security of Tenure Act, 62 if 1997; The land Reform
(Labour Tenants) Act, 3 of 1996; The
Restitution of Land Rights Act,
22 of 1994
and the Land Reform:
Provision of Land and Assistance
Act, 126 of 1993
.
[4]
[2004]
4 ALL SA 103
(W)
[5]
Levy
(
supra
)
at 110i
[6]
At
111a-d
[7]
Preamble
to
POCA
.
[8]
No
reference is made to the judgment debt.
[9]
Levy
supra
at 111c
[10]
See
Rules 45 and 46 of the Uniform Rules of Court.