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[2024] ZAECMKHC 14
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Save Our Souls Security Services (Pty) Ltd and Another v S (CA&R139/2022) [2024] ZAECMKHC 14 (1 February 2024)
IN THE HIGH COURT OF
SOUTH AFRICA
[EASTERN CAPE
DIVISION: MAKHANDA]
CASE NO. CA&R139/2022
In
the matter between:
SAVE
OUR SOULS SECURITY SERVICES (PTY) LTD
First
Appellant
MASIBULELE
DONALD STURU PASIYA
Second
Appellant
and
THE
STATE
Respondent
JUDGMENT
JOLWANA J:
Introduction
[1]
The appellants were charged with 130 counts relating to the alleged
contraventions of certain pieces
of tax legislation. They were
acquitted on the main count of theft but were convicted on the
alternative counts. Appellant no.1’s
(SOS)’s sentence was
postponed for five years in terms of
Section 297(1)(a)(ii)
of
the
Criminal Procedure Act 51 of 1977
(the
CPA
). The
second appellant (Mr Pasiya) was sentenced to an effective term of
five years direct imprisonment. The appeal is against
both conviction
and sentence.
The Charges
[2]
The charges on which SOS and Mr Pasiya were convicted and sentenced
as aforesaid had as their
fons et origo
in alleged
contraventions of certain tax laws, more particularly, their alleged
contravention of the
Value Added Tax 59 of 1991
for their
failure to pay Value Added Tax (VAT) in respect of counts 1 to 33 to
the
South Africa Revenue Services (SARS).
Counts 34 to 51
concerned the alleged contraventions of certain provisions of the
Income Tax Act 58 of 1962
it being alleged that whereas the
two appellants were liable to pay remuneration to the employees of
SOS, they failed to deduct
or withhold from the said remuneration
employees’ tax commonly known as
Pay As You Earn (PAYE)
and pay it to SARS. Counts 52 to 103 concerned the alleged
contravention of certain provisions of the
Skills Development Act
97 of 1998
.
It was alleged that the appellants failed to pay
certain amounts being the
Skills Development Levies (SDL)
to
SARS. In respect of counts 104 to 130 the appellants were
charged with the alleged contraventions of the
Unemployment
Insurance Contributions Act 4 of 2002
. It was alleged that they
failed to pay certain amounts in respect of the
Unemployment
Insurance Fund
contributions (the
UIF
) to SARS. The
details in respect of each count being the dates, the tax periods and
the amount involved in respect of each count
were tabulated and
individualised in schedules attached to the charge sheet.
[3]
The prosecutor explained before the appellants were asked to plead
that it was basically being alleged
that they failed to make the said
payments although the relevant tax returns were submitted. On the
alternative charges, the prosecutor
explained that it was alleged
that the because the appellants had failed to pay monies to SARS,
those monies were therefore stolen
and were the property of SARS.
However, as the prosecutor read the individual counts to the
appellants, he on several occasions,
explained that the main counts
were theft of monies and the alternative charges were the
contraventions of the specific provisions
of the various pieces of
taxation legislation referred to earlier. It was also explained that
Mr Pasiya was being charged as an
accomplice to the crimes committed
by SOS. It was specifically alleged that he unlawfully and
intentionally engaged in conduct
whereby he furthered the commission
of the said crimes by SOS by facilitating, assisting, or encouraging
the commission of the
said crimes, giving advice concerning their
commission or making it possible for SOS to commit the said crimes.
The plea and plea
explanation
[4]
The appellants tendered a plea of not guilty. A very detailed
statement in terms of
Section 115
of the CPA
(the plea
explanation) was read into the record. I consider it necessary to
highlight some of the essential features of the said
plea
explanation. In essence, it was contended that Mr Pasiya was, at all
times relevant to the charge sheet, a co-director of
SOS together
with the erstwhile accused no.3 (Mr Mfingwana). Mr Pasiya was
responsible for managing the affairs of SOS.
In that regard he
employed financial managers to assist him with matters relating to
the financial affairs of SOS including its
tax affairs. It was
contended that failure to pay monies in respect of VAT, PAYE, SDL or
UIF constituted a debt owed to SARS
and does not constitute theft. It
was denied that Mr Pasiya had the requisite intention to appropriate
any amounts that may be
due to SARS. It was denied, in any
event, that SOS was indebted to SARS in the amounts mentioned in the
charge sheet and
that such amounts were unreliable and flawed.
[5]
In respect of VAT, it was contended that any liability would have
been due to insufficient funds to
pay VAT for the relevant periods as
in many instances the revenue generated by SOS was not even
sufficient to cover its daily operational
expenses. It was
further contended that the alleged amounts were not conciliable with
the official notice issued by SARS
known as VAT 3 on 15 February 2006
which was three months before the charges were preferred against the
appellants. The said
VAT 3 notice was attached as annexure A to
the plea explanation. It was contended that the VAT 3 notice
was an official document
issued by SARS informing SOS about the
extent of its indebtedness to it and the periods to which the debt
related. The VAT
3 notice had not been amended or withdrawn by
SARS. The comparison between the VAT 3 notice and the charge
sheet revealed
irreconcilable and material discrepancies in the
amounts and tax periods.
[6]
Furthermore, in respect of counts 1 to 11 which related to VAT
periods between 03/1998 and 11/2000
the VAT 3 notice reflected that
the VAT affairs of SOS were in order. There were also
discrepancies between the amounts in
the charge sheet and the VAT 3
notice and in some instances the returns in respect of counts 12, 13,
14,16, 17, 19, 21, 22, 25,
33, 34, 26, 27, 28. It was therefore
contended that the amounts said to be owing needed to be evaluated in
light of the unreliable
data concerning the indebtedness of SOS.
[7]
In respect of the employees’ tax or PAYE charges for the
alleged
Income Tax Act
contraventions which were about the
failure to deduct or withhold the said amounts reflected in the
charge sheet and pay them to
SARS, it was contended that SARS issued
an EMP3(u) notice to SOS on 01 February 2006 which was a notice of
outstanding tax returns
and payments in respect of employees’
tax. The copy of the said notice was attached as annexure B to
the plea explanation.
That notice had not been withdrawn.
There were material differences between the information in the charge
sheet compared
to the information in the EMP3 (u) notice. In
terms of the EMP3 (u) notice, SOS was required to submit returns and
make payments
in respect of the periods starting in May 2002 as at
February 2006. However, SOS was being charged for the alleged
contravention
of
paragraph 30 of schedule 4 of the Income Tax Act
for the period 01/99 to March 2002. During that period SARS’
own version showed that there was no outstanding amount
due to it if
regard is had to the EMP3 (u) notice. Counts 34 to 40 fell outside
the period in terms of which returns and payments
were due.
According to the EMP3 (u) notice the periods in which any amounts
would have been due would start from September
2003. In respect
of counts 41 and 42 there were discrepancies in respect of the
amounts due for October 2003 and September
2003 between the charge
sheet and the EMP3 (u) notice.
The evidence of the
state
[8]
The State called its first witness, Ms Pillay. Her evidence was
that she was a team leader for
criminal investigations and
prosecution section of SARS having been in the employ of SARS for 15
years. Her job was to investigate
various VAT vendors and
taxpayers who were suspected of committing offences in terms of the
VAT Act
and the
Income Tax Act
. She was the
investigating officer of this matter. She received a report
from their collections division that SOS submitted
VAT 201 and EMP
201 returns that were incomplete. The report indicated that the
VAT returns and the EMP 201 returns were
submitted without payment
which would have incorporated PAYE, UIF and SDL. In the process
of the investigation, her branch
manager, Ms Perks, interviewed Mr
Pasiya in her presence.
[9]
The purpose of the interview was to advise Mr Pasiya that SARS had
concluded the investigation against
SOS and its directors in respect
of the VAT 201 and EMP 201 returns submitted to SARS without
payment. As a registered taxpayer
for VAT and PAYE, SOS had an
obligation to make the full payment which should accompany the
returns when they were submitted to
SARS. There were,
therefore, offences in terms of
the VAT Act, Income TAX Act
,
the
UIF Act
and the
SDL Act.
The interview was
also intended to provide Mr Pasiya an opportunity to explain how it
occurred that tax returns were submitted
without payment. Mr Pasiya
said that he did not want to discuss the matter without legal
representation as he was a lay person.
He also requested a
letter setting out the charges. Those documents were provided
to an employee of SOS called Francis together
with minutes of the
meeting and a letter indicating the charges Mr Pasiya would face.
[10]
Ms Pillay explained that a person or entity registered for VAT has an
obligation, as an agent of SARS, to
calculate VAT owing on a monthly,
bi-monthly, or six-monthly basis. In the case of SOS it was on
a bi-monthly basis.
It is a self-assessment tax. This
meant that the taxpayer collected the VAT paid directly to him and
was required to pay
it to SARS. It is the vendor who works out
its tax liability to SARS and pays it immediately with the VAT
returns.
The PAYE is also a self-assessment tax in which the
owner of the business would calculate the PAYE that is owed, the UIF
and the
SDL and pay it over to SARS. The SDL was also collected
on an agency basis at one percent of an employee’s salary.
The UIF is two percent of the wages. Returns were submitted for
SOS and most of them were signed by Mr Pasiya.
[11]
Ms Pillay explained that she had computer-printouts for VAT returns
that were submitted. SARS had
a policy of destroying tax
returns that were older than 5 years and as a result, the original
returns could not be located.
The original returns that were
submitted were captured on the SARS data base. Some of the
returns were completed and submitted
by Mr Pasiya but others were
completed and submitted by an administrator in the employ of SOS.
Counsel for Mr Pasiya placed
on record that as far as the original
returns were concerned, they could be handed up. However, he
had problems with the
submission of the computer- printouts of the
returns without the originals. Accordingly, these could be
submitted provisionally
on the basis that they were going to be
proved through relevant expert evidence confirming that they came
from the SARS system.
The prosecutor indicated that in respect
of counts 1 to 18 there were computer-printouts. They were
therefore provisionally
admitted and marked exhibit C1-C18. The
returns from count 19 to count 33 were originals and were marked
exhibit D1 to D15
being original VAT 201 returns.
[12]
The case was then rolled over to the following day, the 19 March 2013
and the court record reflects that
the trial indeed resumed on that
day. It also indicates a faulty recording resulting in the
proceedings of the 19 March 2013
not being part of the record.
Thereafter the proceedings resumed on 11 November 2013 with the
prosecutor indicating that
the matter was postponed for
cross-examination. This means that a large portion of Ms
Pillay’s evidence-in-chief is
not part of the appeal record. I
deal with the issue of the incompleteness of the trial record later
in this judgment.
[13]
Under cross-examination, the statement made by Ms Pillay in which she
recommended that criminal charges
be preferred against the appellants
was handed up and marked exhibit E. Ms Pillay testified that as
an investigator she had
recommended possible charges of theft in her
statement. She confirmed that her role was that of
investigating, she was not
involved in raising the assessments, in
the collection of the outstanding debts or in how the debt against
SOS was pursued as she
did not conduct the collections. Her
functions as an investigator would depend on the information gathered
by various departments
such as the collections, assessments, and the
audit departments. She explained that Ms Perks, whom she had
mentioned during
her evidence-in-chief, no longer worked for SARS.
She attended the meetings Ms Perks had with Mr Pasiya, in particular,
the
meeting of 5 April 2005 to which she had invited Mr Pasiya.
He was not provided with an agenda regarding what the meeting
entailed. In that meeting it was herself, Ms Perks and Ms Wood
who was the debt collector. Mr Pasiya was told that there
were
criminal investigations that were being pursued against SOS and
himself and in that context he indicated his desire to seek
legal
advice. In respect of counts 1 to 8 she testified that
she could not confirm that the amounts emanated from tax
returns that
were submitted to SARS.
[14]
Ms Pillay confirmed that VAT is declared on the invoices issued by a
vendor. SOS would issue an invoice
to a supplier. SOS
would issue invoices to its clients during a particular period and
such invoices would be declared.
SOS would collect the invoices
which it would claim as input tax. Calculations, that is output
VAT minus input VAT gives
the self-assessment liability for that
period. SOS would then be required to pay the balance as VAT
for that month.
She confirmed that vendors that are registered
on an invoice basis do issue invoices to their clients. When
they have not
been paid sometimes, they are still required to pay
VAT. Often vendors would experience cash flow problems and
those vendors
would end up having a debt to SARS. The collections
department would require arrangements to be made for the payment of
the debt.
She refused to comment on the proposition put to her
that not in all cases is it that a vendor refused to pay when they
could.
She confirmed that SOS was registered on an invoice
basis.
[15]
It was put to her that during certain periods that form part of the
charge sheet, SOS paid the taxes due.
She said that she did not
know if there were payments made by SOS during the period of
investigation. It was further put
to her that an accounting
exercise should have to be undertaken to determine whether a taxpayer
refused to pay a particular amount
or whether the taxpayer was unable
to pay before a conclusion of a refusal to pay was made. She
confirmed that an accounting
analysis would have to be conducted to
make such a determination. She confirmed that she did not do an
analysis. It
was further put to Ms Pillay that, such an
accounting exercise would require the person who is doing the
analysis to check the
bank statements of the entity over the period
when the taxes were due. She confirmed that the debt collection
division would
be required do that.
[16]
Ms Pillay confirmed that a reference to bank statements to determine
the liquidity of the business and determining
whether there is
ability to pay or not could be done but she would not confirm if that
exercise was done in this matter.
She explained that in respect
of PAYE the employer deducts a certain portion from an employee’s
salary and pays it over as
PAYE, UIF and SDL to SARS. This is
done every month. She confirmed that if there are sufficient
funds to pay all the
salaries of all the employees per month,
calculations would be done for PAYE, SDL and UIF. It was put to
her that the returns
showed very little PAYE and higher SDL and UIF
because most security guards who were employees of the business fell
below the PAYE
threshold. She testified that she was not able
to comment on that as she did not scrutinize the earning capacity in
the industry
or that of SOS. It was further put to her that
even in respect of PAYE the same exercise, as with the VAT analysis
referred
to earlier, would need to be undertaken to determine if the
entity had funds from which it could pay the salaries and make
deductions.
[17]
It was put to her that the entity sometimes had to borrow money to
finance the salaries of its employees
to which she glibly responded
that the entity should obtain an overdraft from the bank.
It was put to Ms Pillay that
SOS had cash flow problems which she
could not confirm or deny this as she did not do the analysis.
It was put to her that
financial statements would show that SOS ran
at a loss for a long period of time. Finally, it was put to her
that the failure
to pay either VAT, PAYE, SDL or UIF was largely due
to cash flow difficulties to which she responded that she did not do
a cash
flow analysis as she did not feel it was a necessary part of
the investigation.
[18]
The next witness for the State was Gail Dawn Wood (Ms Wood).
Her evidence was that she was employed
by SARS for 34 years at the
time of her testimony and a team member in debt
management. Her job was to recover
outstanding debt from a
taxpayer. The taxpayer would submit tax returns. They
would receive a debt analysis book from
their head office. A
case would be allocated to a team member who would start the recovery
process. She would first
acquaint herself with the background
of the tax type of the entity concerned and ascertain if all
outstanding returns on all tax
types have been submitted.
Thereafter, a brief investigation into assets and liabilities of the
taxpayer would follow before
the taxpayer was contacted. In this case
she contacted Mr Pasiya as he was the public officer of SOS.
[19]
They have data capturers who load information into their
system which is obtained from the tax returns that have
been
submitted by the taxpayers. Sometimes the person in debt
management would pick up an error or incorrect spelling on
the
captured returns which is then verified through the original tax
returns. There could be a case where an incorrect amount
was
captured by the data capturer resulting in an inconsistency between
the original return and the information in the system.
After a
period of three years, a tax return becomes prescribed and therefore
unavailable. In those situations, information
is extracted from
the system by obtaining a computer-printout. They would verify
the correctness of the information on the
computer-printout if an
objection from the taxpayer is received and such objection must be
lodged within three years whereafter
the amounts on the system are
deemed to be correct.
[20]
In dealing with this case, she mostly spoke to Mr Pasiya but
sometimes would leave a message with a person
responsible for tax
returns in Mr Pasiya’s absence. She contacted Mr Pasiya
and demanded payment and he requested to
enter into an arrangement to
settle the debt between 2003 and 2006. On each of the numerous
occasions, Mr Pasiya failed to
adhere to the arrangements. He
had agreed that an amount would be paid towards the settlement of the
debt. She dealt
with him or SOS’s in-house bookkeeper and
administrator. They had numerous meetings with Mr Pasiya at the
premises
of SOS in East London. He was usually present with his
bookkeeper except for one occasion when Mr Pasiya did not attend.
The meetings were held to encourage payment of the outstanding
debts. The criminal investigator, Ms Pillay, was also present
when SARS instituted the criminal case. Mr Pasiya would request
to pay a lower instalment. At one stage he offered to pay
R50 000.00
per month which he then increased to R150 000.00 but SARS rejected
these offers because they were too low based on the
debt owing and
the financial position of the company. Mr Pasiya paid erratically,
for instance, at one stage he paid R150 000.00
for three months and
then reneged on the agreement.
[21]
Ms Wood was referred to exhibit C1 to C18 which were
computer-printouts of the returns that had been submitted.
She
indicated that those documents were retrieved either by herself or Ms
Pillay. She explained that the documents related
to VAT which
is a self-assessed tax. The original returns were destroyed
after the three-year period elapsed as after three
years the taxpayer
may no longer object. The prosecutor indicated to the court
that in respect of the SDL tax returns and
the UIF, the original tax
returns were available, but the relevant investigator was on leave
and that those original returns would
be submitted later.
Accordingly, copies thereof were provisionally accepted as Exhibit
F. Thereafter the State concluded
Ms Wood’s
evidence-in-chief.
[22]
Under cross-examination, Ms Wood confirmed that she was still in the
debt management section of SARS and
also did accounts management
which is the reconciliation and correction of accounts. She is
a specialist team member in debt
management. She confirmed that
besides debt collection, which is where she worked, there is also an
investigations department,
where Ms Pillay was positioned, and their
functions are different. She confirmed that there is also the
audit department,
an assessing department and portfolio maintenance
department whose functions are also different to hers. There is
also return
maintenance which is also different from the portfolio
maintenance and data capturers would fall under portfolio and return
maintenance.
Data capturers would capture data as and when they
receive the returns. She only dealt with the information as
captured on
the system on the assumption that the information was
correctly captured. She had heard about capturing errors.
Unless
somebody showed that no mistakes were made during capturing,
she could not vouch for the correctness of the information captured.
[23]
She testified that she started interacting with Mr Pasiya around 2003
and held meetings with him.
However, Mr Pasiya could not attend
the meeting on 26 November 2003. There was a meeting on 3
December 2003 but Mr Pasiya
excused himself for that meeting and said
that discussions could be held with a company representative named
Zuki. Mr Mfingwana
was in Mthatha. Zuki was the
administrator and Mr Pasiya had confirmed that she was responsible
for completing and filing
tax returns with SARS. A certain Mr
Phakathi was the accountant. Ms Wood testified that she kept
minutes of the meetings.
There was a meeting on 24 November
2003 which was attended by Mr le Roux who was the auditor from Port
Elizabeth, Japie Shawnna
and Kwesi Kwishi Babawa. Mr Pasiya
sent apologies for that meeting. A further meeting took place
on 3 December 2003
as agreed on 24 November 2003 with the accountant
and Mr Pasiya. On 25 November 2003 Mr Pasiya and Zuki were
present.
On 3 December 2003 she was to meet Zuki and collect
the returns but an extension was granted until the 10 December 2003
to prepare
the returns as they were not completed.
[24]
The next meeting on 22 January 2004 was attended by Mr Pasiya and
Zuki. Thereafter the next meeting
was on 15 June 2004. Mr
Pasiya called a meeting for the 27 July 2004 which was attended by
him and one Bob. Another
meeting was convened on 5 August 2004
which was also attended by Mr Pasiya and Bob. In 2005 meetings
were arranged with the
audit section. She was asked to attend
to any tax or assessment issue that may arise. However, she did
not have minutes
of those meetings. On 11 October 2006 there
was a final meeting that was called to try and facilitate the
settlement of SOS’s
debts. That meeting was
attended by a Mr Davidson who was an audit manager from Port
Elizabeth, Mr Tshokoro who was an ADR
consultant from their head
office and Gertie Pauls who was her colleague. Mr Pasiya and
his attorney failed to attend.
[25] I
pause now to comment briefly on the state of the record. The record
of the proceedings of the trial indicates
that on 03 April 2004 the
trial adjourned at 13h51 with the matter being postponed. It is
not clear to which date.
However, the record ends on 03 April
2014 at page 190. When it resumes on 10 July 2014 it resumes at
page 97. It is
unclear if there were trial proceedings that
took place and were recorded from page 1 to page 96. This
uncertainty is most
concerning.
[26]
Ms Wood further testified that she did not have the minutes of the
meeting of 05 April 2005. She had
minutes from November 2003
and April 2004. She said that on 02 April 2004 Mr Pasiya
requested a tax clearance certificate
by means of a letter but was
advised that a tax clearance certificate would not be issued but
there was no meeting. She never
met Mr Pasiya on 5 April 2004.
As far as 5 April 2005 was concerned, she made a mistake when she
mentioned that date.
She meant 5 April 2004. She went on
to say that her letter dated 5 April 2005 to Mr Pasiya should be in
Ms Pillay’s
file. She was handed a copy of her letter
dated 5 April 2004 which dealt with the issue of the tax clearance
which she signed
despite her evidence that she did not deal with tax
clearances.
[27]
She testified that the decision to decline issuing SOS a tax
clearance certificate was made by herself and
her senior manager, Mr
Slabbert or Mrs van Huysteen. The letter dated 5 April 2005 was
handed up as an exhibit and marked
G. She testified that her
final answer was that there was no meeting on 5 April 2005. If
it had taken place, she would
have had a copy of the record of it in
her file. She further explained that there were some records of
her dealings with
Mr Pasiya which she did not bring to court.
When minutes of the meeting of the 5 April 2005 were given to her,
she again
changed her evidence to acknowledge that such a meeting
which she attended with criminal investigations did take place.
It
was Mr Pasiya, the branch manager of criminal investigations Jenny
Perks, herself and the investigator Ms Pillay who attended it.
She signed the minutes on 07 April 2005 but they were drafted by Ms
Pillay. The minutes of that meeting were handed in and
marked
exhibit H.
[28]
As part of the debt collection process, at some stage she requested
bank statements of SOS and its financial
statements. Based
thereon, she would have known who the debtors of SOS were. She
confirmed that SARS has the power
to appoint any person as a third
party to collect any money due to SOS and to pay the taxes of SOS.
She confirmed that there
was nothing that prevented her from
appointing the conveyancers who transferred SOS’s property
which had been attached and
sold at the instance of its preferent
creditor, Business Partners. She confirmed that if she had done
so SARS would have
obtained the proceeds of sale of SOS’s
property in which they were trading. She confirmed that SOS did
declare an amount
of R1 241 507.00 which was owed to SOS by third
parties to SARS, but she pointed out that the declaration was
incomplete as it
had a lot of errors. The declaration was
handed up as an exhibit I. They disregarded the declaration of
debtors because
there was no proof and the declaration was not
properly completed. She however, confirmed that the appointment
of the relevant
third party to collect SOS’s debt could have
been used by SARS to recover the money owed to SOS.
[29]
Ms Wood testified that the
Asset Forfeiture Unit (
AFU
)
investigated SOS and attached Mr Pasiya’s assets including
shares. Various other items were attached and there was
money
held in the trust account of the AFU. She could not dispute
that the only reason AFU attached Mr Pasiya’s assets
was
because of the same charges that the criminal case related to.
She confirmed that she knew that Mr Pasiya and his wife’s
assets were attached by AFU. It was put to her that the assets
of Mr Pasiya’s co-director in SOS were not attached.
It
was also put to her that the reason why the debt collection process
was not followed was to frustrate Mr Pasiya by attaching
his personal
assets. She responded that SOS owed SARS and SARS was entitled
to exercise all their powers to recover the debt.
She confirmed
that during her discussions with Mr Pasiya, he always expressed his
willingness to pay and offered to make certain
payments.
[30]
The financial statements of SOS for 1999, 2000, 2002, 2003 and 2004
were handed up and marked as exhibits
J, K, L, M and N. After
being taken through those financial statements, Ms Wood confirmed
that the directors of SOS were
not paid huge amounts. She could
not dispute that those financial statements were submitted to SARS
together with the returns
as tax returns were received by a different
department to hers. She confirmed that other than the amounts
disclosed as directors’
or members’ fees in the financial
statements of SOS, she was aware that Mr Pasiya was an executive
member of the South African
Football Association and drawing a
salary. They were aware of Mr Pasiya’s other sources of
income to meet his lifestyle.
It was put to Ms Wood that some
of the charges against Mr Pasiya were theft charges in respect of
VAT, PAYE, UIF and SDL amounts
that were not paid to SARS and she
confirmed that she was aware of that. The prosecutor then put
on record that the State
would submit that some of the theft charges
were not substantiated but that some of them would be substantiated
by the evidence.
[31]
In re-examination, Ms Wood’s evidence regarding the original
tax returns was that some of the SARS
employees who captured the
returns in this case were no longer working for SARS or were
deceased. They were, however, able to tell
from the system exactly
who dealt with the returns in terms of capturing them on the system.
She further confirmed that SARS
kept the original tax returns for
five years but the ones captured in the computer system remain and
are not deleted. For
the period of May 1998 through to July
2002 there were five SARS employees that were involved. Four of
those five employees
were no longer in the employ of SARS. In
respect of most of the returns that were captured, the relevant
employee was still
at SARS. That person could still remember
capturing the information on the SARS computer system through her
personal ID that
each employee is given when they are employed.
Although she had not spoken to that employee that was still at SARS,
the human
resource department informed her that, that employee was Ms
Thobeka Monica Majokweni and that she was based at the SARS Mthatha
office.
[32]
On further questioning from appellants’ counsel, Ms Wood
testified that after five years, tax returns
were shredded.
However, if the information was still relevant to a case that was
proceeding, those returns would not be destroyed
until the case was
finalised. She has access to those policies. She was
further asked for the basis of her evidence
that the person who
captured the returns in this matter would still remember that she
captured the returns. She confirmed
that she understood that
the question was directed at her state of mind. She explained
that her reasons for saying that the
person who captured the returns
in this matter would remember without even accessing the computer
system, was because, as she put
it, “Mr Pasiya is a well-known
taxpayer to the office of SARS”. She confirmed that she
knew Ms Majokweni but
had not discussed the case with her. Upon
the defence concluding their further questioning, the witness was
excused.
The State thereafter closed its case without calling
any further witnesses.
[33]
After the State closed its case on 11 July 2014
counsel for the appellants indicated his intention to apply
for the
discharge of Mr Pasiya in terms of section 174 of the CPA
[1]
.The
prosecutor on the other hand indicated his intention to prepare and
submit his heads of argument in respect of an application
for the
admission of computer-generated evidence. As a result of the
two contemplated applications, on 11 July 2014 the case
postponed to
the 14, 15 and 16 October 2014 to enable both the State and the
defence to prepare for their respective applications.
Nonetheless,
the next court record starts on 1 July 2015 with the State indicating
that it had closed its case “the last
time”. I can
only assume that the last time could be any date starting on the 14
October 2014 to the 16 October 2014.
When the proceedings
resumed on 1 July 2015, the defence commenced with an application for
the discharge of Mr Pasiya in terms
of
Section
174 of the CPA
and his legal representative addressed the court in
respect of that application. The record does not indicate
what
became of the application for the admission of the computer-generated
evidence. I will revert to this issue when I deal
with the
state of the record of the proceedings in the court
a
quo
.
After hearing submissions on the defence’s application for the
discharge of Mr Pasiya, the matter was adjourned
to 5
July 2015, for the court’s ruling regarding the
application on which date the court refused
the
application for the discharge whereupon the defence closed its case.
The judgment a quo
[34]
Following the defence’s closure of the case for the appellants,
the prosecutor and the defence addressed
the court on the merits of
the case. In its judgment the court
a quo
, at paragraph
27 of its judgment concluded with a finding that it accepted the
computer-generated printouts formally as exhibit
C and F
respectively. It went on to say that it was satisfied that the
State proved beyond reasonable doubt that the appellants
failed to
comply with the provisions of the VAT, PAYE, SDL and UIF Acts.
Thereafter, the court convicted Mr Pasiya as follows:
“
The
main count of theft counts 1 to 130 both accused are found NOT GUILTY
on the alternative counts 1 to 130 both accused are found
GUILTY
”.
The court pronounced on
the guilt of the appellants almost as a forgone conclusion making no
real analysis of the evidence or explicit
reasoning for its finding.
This makes it difficult to discern from the judgment, the actual
basis for the conviction.
[35]
There are numerous other problems with the court
a
quo’s
judgment. I do not intend to enumerate or discuss all of them.
Nonetheless, the following are worthy of examination in some
detail
to illustrate some of the serious misdirections committed by the
court
a
quo
.
To highlight one of the many misdirections, at paragraph 13.2 of its
judgment, the court referred to the case of
Parker
[2]
in which the Supreme Court of Appeal said:
“
I
do not believe, however, that s 7(1) of the Act either expressly or
impliedly creates a relationship of trust. On the contrary,
it
is clear to me that the relationship created by the Act is one of a
debtor and creditor. At the time the respondent was
charged, s
40 of the Act was still in operation. That section pertinently
described VAT ‘when it becomes due or is
payable’ as a
debit to the State’. In addition, the section provided
for SARS to civilly sue a vendor for outstanding
VAT together with
the 10 per cent penalty (and interest) provided for in s 39.
Section 40 has since been repealed by the
Tax Administration Act 28
of 2011 (the 2011 Act) which similarly makes provision for SARS to
recover money due to it by way of
litigation (see chapters 11 and 12
of the
Tax Administration Act). Consequently
, it is clear that
the Act provides for a debtor-creditor relationship as between the
vendor and SARS. The procedures allow
the commissioner to
resort to litigation in order to recover tax debts (s169 of the 2011
Act) and even institute sequestration,
liquidation, or winding-up
proceedings, as the case may be (s177 of the 2011 Act).
Therefore, should a vendor fail to pay
any tax, penalty, or interest
(when it is due and payable) the commissioner is entitled to sue the
vendor for payment. The
vendor can also, simultaneously, be
charged in terms of s 58 of the Act for failing to comply with the
Act. Significantly,
the offences referred to in s 58 are
confined to non-compliance with the Act and do not include common law
theft.”
[36]
The magistrate thereafter stated the following in her judgment:
“
This
Court therefore concluded in the Section 174 ruling that theft is a
competent charge in the case at hand.”
This is simply incorrect
as the court
a quo
made no such finding in its
section 174
ruling even on a cursory reading thereof. On the contrary the
court
a quo
, said:
“
The
second issue relates to VAT, PAYE, SDL and UIF amounts as constitute
(sic) a debt to the State and failure to pay such amount
due does not
amount to theft. Case law was provided to me by Mr Pistorius
confirmed the submissions made by him, that the
common law charge of
theft is
not
a
competent charge in the case at a hand”.
[37]
How the same court in its verdict could say that it had concluded in
its
section 174
ruling that theft is a competent charge when
it failed to say so and, in fact said the direct opposite, is
difficult to understand.
Whatever the reason was for the court
to express itself in that manner, it is clear that in doing so a
serious misdirection resulted,
culminating in the conviction
being rendered suspect. Furthermore, the alternative
counts from count 1 to 130 were
all common law theft charges
according to some of the prosecutor’s explanations when he read
the charges to the appellants.
To make matters worse, while the
Parker
case dealt specifically with VAT related charges, the
fact of the matter is that the court
a quo
referred to “VAT,
PAYE, SDL and UIF” in its
section 174
ruling. If
that understanding of the charges as read to the appellants is
correct, the court should have acquitted the appellants
on the
alternative theft charges which it failed to do. It then
went on to convict the appellants on the very alternative
charges
from 1 to 130. As the prosecutor clearly conveyed different
things at different times during the reading of the charges,
in my
view this amounts to a serious miscarriage of justice. A
further indication that the court
a quo
did not refuse the
section174 di
scharge application based on the alternative
theft charges is contained in the ruling:
“
Now
referring to this case, provides for liability on behalf of the
vendor, and can thus not persuade this Court on the matter in
hand
.”
This shows quite clearly
that the court was no longer dealing with the alternative theft
charges but with the statutory offences
at this stage of
section
174
ruling.
[38]
Once the court pronounced itself on the alternative theft charges, it
is trite that it thereafter became
functus officio
. It
could not recant what it had said in the
section 174
application
especially as regards the discharge of the appellants. Once the
court
a quo
found that some or all of the charges were
incompetent, it had no other choice but to acquit the accused at
least on those charges.
It could not wait to see how argument
would unfold and later convict the accused on those charges
which were found to be
incompetent. It follows that the
alternative theft charges should not have featured at all during the
final verdict, yet
the court convicted the appellant on the
alternative charges. This was a serious misdirection.
[39]
In respect of the admission of computer-generated tax returns, the
court admitted those returns allegedly
based on
section 220 (1)
of the
CPA.
During the trial there was an
objection to their admission into the evidence which led to those
documents
being
provisionally admitted. The court
a quo
did not deal
with any of the provisionally admitted documents during the trial.
It was for the State to satisfy the court
that the documents should
be finally admitted, possibly after leading appropriate evidence in
support thereof. There is no indication
from the record that these
provisionally admitted documents were ever dealt with by the State
again before its case was closed.
This was despite the evidence
Ms Woods gave about one of the witnesses being still within SARS and
therefore available to testify.
The State failed to apply for
the admission thereof in terms of
Section 220 of the CPA
or
any other legal basis. It was during judgment that the
court, after analysing the provisions of
Section 220(1)
of the
CPA
said:
“
The
documents constituted best evidence which could be obtained and
should not be rejected merely on the ground that the documents
were
not in original form”.
[40]
Firstly,
section 220
of
CPA
does not have any
subsections whatsoever. Secondly, it provides that:
“
[a]n
accused or the prosecutor may in criminal proceedings admit any fact
placed in issue at such proceedings and any such admission
shall be
sufficient proof of such fact
”.
In its judgment where the
court mentions
section 220
on at least three occasions, the
court was referring to the computer-generated evidence. There was a
specific objection to the
admission of the computer-printouts of the
returns, not an admission. On the record of the trial proceedings, at
no stage were
those computer-printouts of the returns admitted by or
on behalf of the appellants. This is a very serious misdirection upon
which
the court proceeded to convict the appellants. Whilst it is not
for this court to speculate on what exactly the court
a quo
could have been referring to regarding the admission of the evidence
in question, the comments do not seem to relate to a
section 220
admission. This is yet a further illustration of the endless comedy
of errors which amounted to serious misdirections by the court
a
quo
.
[41]
The real issue is not whether those returns could
have been admitted in terms of the provisions of the CPA
or any other
legislation, but rather the court’s duty to ensure that the
accused’s’ rights to a fair trial were
not undermined by
evidence being incorrectly considered during the final judgment.
This strikes at the core of the
right to a fair trial. In
his grounds of appeal, the appellant raises the provisions of
subsections
15(3)
and
(4)
of the
Electronic
Communications and Transactions Act 25 of 2002 (the ECTA
)
[3]
.
The court did not even mention this Act in its judgment.
[42]
It was incumbent upon the State to move an application for the
admission of the electronic tax returns relying
on whatever legal
basis or provisions of any legislation it deemed appropriate
including the provisions of the ECTA. The defence
would then have
been afforded an opportunity to consider its position after hearing
the State’s application for their admission
and act
accordingly. The court would have been required to make a
ruling at that stage prior to the State closing its case.
The
computer-generated tax returns would have, on their successful
admission, become part of the States’s case.
[43]
Depending on the court’s ruling, the defence would have been in
a position, taking into account the
totality of the evidence, to
either lead evidence or close its case. The admission of the
evidence of the data messages in
the form of the computer-generated
tax returns would have clearly influenced the conduct of the defence
case. In my view,
without being pedantic, what was required of
the court represented the broader principle of a fair trial procedure
and the elimination
of any whiff of a trial by ambush. The
admission of these documents during the delivery of the finding
of the guilt
of the accused was, in my view, unfair and
undermined the appellant’s right to a fair trial.
[44] A
further illustration vitiating the fairness of the trial is how the
court
a quo
dealt with the issue of the computer-generated
printouts, more particularly, the court during judgment said:
“
Mr
Pistorius submitted that no evidence whatever was led that accused
no.2 facilitated assisted, encouraged, or advised accused
no.1 or
furthered the commission of any crime or offence. From the
documentary evidence provided it is clear that accused
no.2 completed
some of the VAT 201 returns, he attended meetings with SARS
officials, and he requested Tax Clearance Certificates
on behalf of
accused no.1.
The
submission in the plea explanation and version put to the said
witnesses was that accused no.2 was assisted by financial managers
in
dealing with the tax affairs of accused no.1, not that he was not in
any fashion involved in the financial administration of
the company
.
Findings: This court accepts the computer-generated printouts
formally as Exhibit C and F respectively. The court
is
satisfied that the State proved beyond reasonable doubt that the
accused failed to comply with the provisions of the VAT, PAYE,
SDL
and UIF Acts Order: The main count of theft counts 1 to 130,
both accused found NOT GUILTY on the alternative counts
1 to 130 both
accused are found GUILTY.”
(My
emphasis).
[45]
Nowhere in its judgment did the court explain which returns were
completed by Mr Pasiya and which ones were
not. It failed to address
the issue of the financial managers or other employees of SOS, whom
it was common cause, did complete
and submit some of the tax returns.
There was no evidence given by any of the State witnesses detailing
the returns that Mr Pasiya
personally completed. Furthermore,
the judgment is silent regarding the returns that were not completed
by the appellant.
There is no evidence indicating who completed those
returns, the person’s position in the company or the basis upon
which
Mr Pasiya was found guilty relating to the submission of the
returns completed by other persons.
[46]
Regard must be had to the charges that were read to Mr Pasiya and the
fact that before the prosecutor put
the charges to him, he explained
the basis upon which he was being charged as follows:
“
No.2
is cited in his personal capacity as an accomplice to the
crimes committed by accused no.[1] as set but in counts 1 to
130 of
the foregoing Annexures, in that he unlawfully and intentionally
engaged in conduct whereby he furthered the commission
of the crimes
committed by accused no.1 by facilitating, assisting or encouraging
the commission of the said crimes giving advice
concerning their
commission or making it possible for accused no.1 to commit them.
…
Your Worship 1 to 33
is a common law charge of theft in that he failed to pay to SARS the
amounts mentioned in counts 1 to 33 and
then annexure B also the same
counts 1 to 33 is the statutory contravention of failure to pay the
Value Added Tax Your Worship.
Your Worship it reads as follows,
he is guilty of contravening subsection 58(d) read with section 1,
5(1), 28(1) and 28(2) of the
Value Added Tax 89 of 1991 as amended.
In that the accused did upon the dates mentioned in Column A of
Schedule1 and at the
offices of the South African Revenue Services in
the district of East London fail to pay the Value Added Tax mentioned
in Column
C which were in respect of the periods mentioned in Column
B.”
[47]
After reading the details of each of counts 1 to 33, the prosecutor
went on to explain that the alternative
to those counts was the
actual contravention of the VAT Act for the VAT that Mr Pasiya failed
to pay. Thereafter, he read
the main counts in respect of
counts 34 to 51 after which he explained that the alternative counts
were based on the allegation
that whilst SOS was the employer of
people, it failed to deduct money from their wages and pay it
to SARS. In respect
of counts 52 to 103, again after reading
the main counts, the prosecutor explained that the alternative to
counts 52 to 103 was
that as the employer, SOS was required in terms
of the
Skills Development Act
to
deduct monies and pay those
monies to the SARS. He went on to read the main counts in
respect of counts104 to 130 after which
he said that the State was
also alleging that he is guilty of contravening
section 17(1)
(a)
read with
section 5(2)
,
section 8(1)
and of the
Unemployment
Insurance Contributions Act 4 of 2002
.
[48]
It appears that the appellants were found guilty on the alternative
counts which it now seems were the statutory
contraventions of the
various pieces of legislation. However, the prosecutor’s
understanding of which charges were
the main charges and which ones
were the alternative charges seems to have changed several times and
he appears to have been confused
or at least uncertain. Just before
he put the charges to the accused, the prosecutor explained that the
State was alleging that
the appellants failed to comply with the Tax
Acts in that they failed to make the necessary payments although the
returns were
submitted, alternatively, “
the state was
alleging that as the accused failed to pay, those monies were stolen
which were the property of SARS
”. Confusion clearly arose
between the main and the alternative charges. Put differently, it is
uncertain as to which of the
two possible scenarios embodied in the
charges the appellant was ultimately convicted upon as the prosecutor
said different things
at different times when reading the charges.
This is hugely concerning as it could potentially have negated the
appellant’s
ability to answer to the charges and challenge the
evidence.
[49]
In its judgment, the court failed to indicate the tax period in
respect of the amounts that were not paid
to SARS. There was no
evidence by either of the two State witnesses indicating that the
invoiced amount for that tax period
in respect of VAT was in fact
received by SOS and not paid over to SARS. In respect of the
PAYE, SDL and UIF there is no
indication or evidence of any
deductions having been made from any employee by SOS which was not
paid over to SARS. Hence,
it is difficult to relate the charges
to the alleged conduct of the appellants. The offences on which
the appellants had
been charged at the time that the State closed its
case, seemed to have been that tax returns were submitted, and they
were not
accompanied by a payment. This was inconsistent with the
charges which did not relate to the completion of tax returns that
were
submitted without payment. The charges related to
monies that were deducted and not paid over to SARS or in the case
of
VAT, that the monies would have been received from SOS’s
clients and not paid over to SARS. The judgment of the
court
a
qu
o does not explain the basis of the conviction on any of the
charges.
[50]
Ultimately, the appellants were convicted with no clear indication in
the judgment of the evidence forming the
basis of the conviction. The
issue of Mr Pasiya having the requisite
mens rea
to commit the
offences cannot even arise until the evidence establishing his guilt
has been presented. Significantly, he was not
charged with having
failed to pay the amounts referred to in those counts. He was
informed that he:
“
intentionally
engaged in conduct whereby he furthered the commission of the crimes
committed by SOS by facilitating, assisting or
encouraging the
commission of the said crimes, giving advice concerning their
commission or making it possible for SOS to commit
them
”
The
judgment, however, is silent on the actions that the appellant
allegedly took or how this manifested into an intention sufficient
to
draw the inference recorded in the judgment. It appears to have
been common cause that he personally completed some
of the
tax returns but it is unclear exactly which of these returns were
completed by the appellant.
[51]
Although the appellant was the director of SOS, the commission of the
offence was based on him personally
completing the tax returns. It is
a mystery as to how he could have committed an offence relating to
tax returns completed and
submitted by other employees. The judgment
is silent on this issue and demonstrates a failure to analyse the
evidence adequately
or at all thus bringing into question whether the
State proved its case beyond a reasonable doubt.
[52]
The State had initially indicated that it,
inter alia,
relied
on
section 332(5)
which reads:
“
When
an offence has been committed, whether by the performance of any act
or by the failure to perform any act, for which any corporate
body is
or was liable to prosecution, any person who was, at the time of the
commission of the offence, a director or servant of
the corporate
body shall be deemed to be guilty of the offence, unless it is proved
that he did not take part in the commission
of the offence and that
he could not have prevented it, and shall be liable to prosecution
therefor, either jointly with the corporate
body or apart therefrom,
and shall on conviction be personally liable to punishment therefor”.
[53]
After it was brought to the attention of the court
that in
Coetzee’s
case,
[4]
section
332
(5)
of the
CPA
was declared unconstitutional by the Constitutional Court, this
appears to have thrown the State’s case into utter disarray
and
confusion, resulting in a knee-jerk reaction as the prosecutor sought
to rely on the common law crime of theft. The fact
that the
prosecutor seemed unaware of the declaration of invalidity of
section
332(5
),
is most disconcerting and, at the very least, demanded that he
reconsider the State’s position based on the available
evidence. It was incumbent upon him to satisfy himself
that
prima
facie
he
would be able to discharge the onus of proving the guilt of the
appellants beyond reasonable doubt without reliance on
section
332
(5).
[54]
The State persisted with the evidence of two witnesses and the tax
returns that it had. Their evidence did
little more than explain that
the tax returns were submitted without payment, something that was
not in dispute. They testified
regarding numerous meetings they
had with Mr Pasiya in which undertakings to pay were made, which was
not in dispute. The
reality is that none of this evidence came
close to proving the commission of any criminal offence.
Significantly, on Ms Wood’s
own version, some monies were paid
but it is not clear from the evidence for which period or tax types
these monies were allocated.
[55]
In contending that the State had failed to prove
the guilt of Mr Pasiya beyond a reasonable doubt, counsel
for the
appellants relied,
inter
alia
,
on
Van
der
Meyden
[5]
in which Nugent J explained the onus of proof that the State must
discharge with reference to the evidence and the consequential
acquittal of an accused where it is not discharged. He said:
“
The
onus of proof in a criminal case is discharged by the State if the
evidence establishes the guilt of the accused beyond reasonable
doubt. The corollary is that he is entitled to be acquitted if
it is reasonably possible that he might be innocent.
These are
not separate and independent tests, the expression of the same test
when viewed from opposite perspectives. In
order to convict,
the evidence must establish the guilt of the accused beyond
reasonable doubt, which will be so only if there
is at the same time
no reasonable possibility that an innocent explanation which has been
put forward might be true. The
two are inseparable, each being
a logical corollary of the other.”
[56]
The prosecutor seemingly oversimplified the issue
to be whether Mr Pasiya paid all the monies
that he was
required to pay in terms of the tax returns that were submitted on
behalf of SOS. On the contrary, Mr Pasiya’s
case,
as gleaned from his plea explanation and the version put to the
two State witnesses, was that there were times when
payment was not
made, notwithstanding that the tax returns were submitted on behalf
of SOS. Even if there was no plea explanation
or a version put
to State witnesses, the onus remained on the State to prove the
appellants guilty. In
Van
der Meyden
[6]
the court went on to say:
“
Purely
as a matter of logic, the prosecution evidence does not need to be
rejected in order to conclude that there is a reasonable
possibility
that the accused might be innocent. But what is required in
order to reach that conclusion is at least the equivalent
possibility
that the incriminating evidence might not be true. Evidence
which incriminates the accused, and evidence which
exculpates him,
cannot both be true – there is not even a possibility that both
might be true – the one is possibly
true only if there is an
equivalent possibility that the other is untrue. There will be
cases where the State evidence is
so convincing and conclusive as to
exclude the reasonable possibility that the accused might be
innocent, no matter that his evidence
might suggest the contrary when
viewed in isolation.”
[57]
Regrettably, in this case the State seems to have
approached its case as a
fait
accompli
as to the guilt of the appellants. Consequently, the State
failed to address the comprehensive and detailed plea explanation
with its annexures and ignored the version put on behalf of the
appellants to the State witnesses. Curiously, the State even
ignored
its own documents which were attached to the plea explanation despite
SARS ostensibly being the author thereof. The insurmountable
problem
is that the State failed to establish the guilt of the appellants,
premising its case on the assumption that as tax
returns were
submitted and not accompanied by payments, the appellants were
liable in both the civil and criminal sense until
they could
demonstrate and prove that they had paid the amounts due. This
ignores the salutary principle of our law that
the onus of proof in a
criminal case falls squarely on the State, with an accused person
having no obligation to convince or persuade
the trial court of
anything. Any suggestion to the contrary runs parallel to our very
rich jurisprudence.
[7]
[58] I
must emphasize that the standard of proof as it relates to criminal
cases remains constant despite the
essence of the charge being the
failure to pay an amount that has been assessed by SARS as being due
and payable or in respect
of which tax returns had been submitted.
Furthermore, before there can be a misappropriation of monies
collected on behalf of SARS,
those monies must have been collected
and received. I fail to understand how it can be said that a
VAT vendor misappropriated
funds that were never received. SOS
needed to have collected VAT from its customers or clients before it
could be said that
those monies were misappropriated. SARS could have
easily ascertained, as a fact, whether SOS was paid by its clients by
cross-referencing
and comparing transactions between those clients
and SOS’s bank accounts, which it failed to do. The State was
required to
prove that salaries had been paid to employees and PAYE,
SDL and UIF had been deducted from the wages of SOS employees and not
paid over to SARS. In my view, reliance could not be placed
solely on the tax returns to establish this evidence. Despite
SARS
having unlimited access to bank statements, these were never analysed
by either Ms Pillay who investigated the matter or checked
by the
prosecutor. No evidence showing monies in respect of VAT having
been received by SOS or monies that included a VAT
portion was
presented in court. Furthermore, no evidence of any employees
having been paid their salaries or deductions having
been made from
their salaries in respect of PAYE, SDL and UIF was tendered.
There was even a possibility that the employees
were not paid their
salaries during certain tax periods which was a version put to the
State witnesses. In that situation,
I fail to see how PAYE, SDL
and UIF could have been deducted. On reading the judgment of the
court
a quo
, the basis upon which the appellants were found
guilty is simply inscrutable.
The record of trial
proceedings.
[59]
The controversy of the incomplete record deserves
consideration. It is common cause that
the record of the trial
proceedings in the court
a quo
is unquestionably incomplete.
The missing parts of the record are detailed in an affidavit that was
deposed to by the
appellants’ attorney in respect of an
application which was filed in this Court on notice of motion.
The application
sought condonation for the appellants’ late
filing of the heads of argument caused by the appellants’
numerous attempts
to obtain a complete record. This application
was not opposed nor was the incompleteness of the record and the
various attempts
to obtain the missing portions of the thereof,
including some documents and exhibits, contested.
[60]
In that affidavit the following details in respect of the missing
record, documents and exhibits are stated:
1.
The evidence of the first state
witness, Ms Pillay in respect of the proceedings of the 19 March 2013
are not part of the record.
This was Ms Pillay’s portion
of her evidence in chief. It appears that those proceedings
could not be transcribed because
of a faulty recording machine.
On 26 November 2015 the case was postponed to the 5 April 2016 to
deal with an application
in terms of
section 18
of POCA. There
is no recording of the said application and the documents that were
apparently delivered to the magistrate.
On 26 October 2016 the
court made a ruling with reference to
section 18(3)
of POCA.
The court also ordered the State in terms of
section 21
of POCA to
tender a statement contemplated in
section 21(1)(A)
of POCA. On
31 July 2017 an application in terms of
section 304A
of the CPA was
made for a special review. Judgment was reserved. There
is no transcript of those proceedings and the
judgment or ruling.
On 24 July 2018 there was an application in terms of
section 18(1)
of
POCA for a confiscation order. There is no record of that
application. At page 409 of volume 3 of the record reference
is
made to a rescission application in respect of an order appointing a
curator. It appears from the record that the issue
of the
deregistration of SOS on 16 July 2010 was raised. The record
refers to annexure B to that application. On 24
July 2018 the
court made a ruling with reference to certain documents that needed
to be filed.
2.
On 28 November 2017 there was a
postponement to the 31 January 2018. The proceedings
of the 31 January
2018 are not part of the record. On 2 October
2018 a forfeiture application was dealt with in respect of which
certain documents
were to be provided to the court. The matter
was postponed to the 19 October 2018 for judgment. There is no
record
of all those proceedings or judgment. The trial court exhibit
bundle is incomplete in that exhibit B which is a plea explanation
refers to annexures A, B and C respectively. All those
annexures to the plea explanation do not form part of the exhibit
bundle or the record. The annual financial statements for the
year ended 29 February 2004 which is exhibit N has a page 12
missing. This is not an exhaustive list of the missing portions
of the record, documents and some of the exhibits that were
presented
to the court a quo. In respect of the affidavit filed in this
Court referred to above there is reference to correspondence
in the
form of email exchanges and letters to the registrar, counsel for the
State and the clerk of the criminal court. It appears
that attempts
were made by counsel for State, Mr Mahamba and Mr Van Breda,
appellants’ attorney to see the magistrate for
the assistance
she could give regarding the missing portions of the record.
That also did not yield to the denied results.
[61]
When the appeal was heard by this Court, we raised our concerns
about the state of the record with
Mr Mahamba who, incidentally, was
the prosecutor in the trial court and involved in the
applications and interlocutory applications
that were made in the
court
a quo
. Our main concern was that in the State’s
heads of argument, the issue of the incompleteness of the record was
not dealt
with and in fact, was completely ignored despite it being
raised pertinently in the appellants’ heads of argument. Mr
Mahamba
shockingly responded that he did not deal with the issue of
the incompleteness of the record because it was not raised as one of
the grounds of appeal. Counsel for the appellants completed his
submissions whereafter the tea adjournment was taken. When Mr
Mahamba, counsel for the State, commenced with his submissions, we
were dumbfounded by the revelation that he had never received
the
appellants’ heads of argument. This was particularly
disturbing considering that Mr Mahamba had not only been a
prosecutor
for a very long time but that he had been involved in this case as a
prosecutor since it commenced in 2013.
[62]
Before the proceedings commenced, both counsel came to Judges’
chambers to introduce themselves.
Thereafter they returned to
court together where they were together in court waiting for the
proceedings to start. There
was a tea adjournment and
thereafter the proceedings resumed. It was only at this
juncture that counsel for the State mentioned
for the first time that
he had not received the appellants’ heads of argument. It
transpired that the heads of argument had
been filed and received by
the local office of the
National Prosecuting Authority (the NPA)
on 30 October 2023, some three weeks before the hearing of this
matter. Mr Mahamba only signed the respondent’s notice
of
filing of its heads of argument on 12 November 2023. Mr Mahamba
confirmed that he never went to the local office of the
NPA in
Makhanda nor did he phone anyone there to enquire about the heads of
argument which he was aware would have been served
there.
Furthermore, he failed to call the appellants’ attorneys to
enquire about their heads of argument. To say that
we were aghast
when Mr Mahamba then sought a postponement of the proceedings, “
to
get the heads so that I can make a proper reply and research the
authorities
”, is an under-statement. This was an atrocious
handling of the matter, revealing an appalling cavalier attitude and
lack
of respect for the court process. Considering all the
circumstances, including that this matter has been on the court roll
in the
court
a quo
for a period exceeding 10 years, we refused
the application for postponement and the hearing of the appeal
continued.
[63]
It was common cause, and indeed conceded by Mr Mahamba, that the
record was incomplete. There was
a myriad of correspondence
exchanged between himself and the appellants’ attorneys dealing
with that issue in which it was
pointed out which parts of the record
and the specifics of the documents that were missing from the record.
Nonetheless, he then
argued that despite the huge chunks of the
record that were missing, including a portion of Ms Pillay’s
evidence-in-chief,
that the record was sufficient for the Court to
adjudicate upon, what he called, the real issues. He explained
that the appellants
were charged with failing to pay tax and levies.
It deserves mention that the appeal had been set down for hearing by
counsel for
State despite protestations from the appellants’
attorneys regarding the incompleteness of the record. Significantly,
even
on the date of the hearing, counsel for the State never
expressed a desire for the matter not to proceed in order that he may
deal
with the possibility of a reconstruction of the record.
[64]
Counsel for the appellants submitted that the
reconstruction of the record was impossible. This was
because
the matter took fourteen years or so in the trial court with numerous
changes in legal representation for the appellants
making any attempt
to reconstruct the record well-nigh impossible. The court was
referred to
Phakane
[8]
in which
Zondo
J
,
as he then was, expressed himself thus:
“
The
failure of the state to furnish an adequate record of the trial
proceedings or a record that reflects Ms Manamela’s full
evidence before the trial court, in circumstances in which the
missing evidence cannot be reconstructed, has the effect of rendering
the applicant’s right to a fair appeal nugatory or illusory.
Even before the advent of democracy, the law was that,
in such a
case, the conviction and sentence or the entire trial proceedings had
to be set aside. In
S
v Joubert
the then appellate
division of the Supreme Court of Appeal said:
‘
If
during a trial anything happens which results in prejudice to an
accused of such a nature that there has been a failure of justice,
the conviction cannot stand. It seems to me that if something
happens, affecting the appeal, as happened in this case, which
makes
a just hearing of the appeal impossible, through no fault on the part
of the appellant, then likewise the appellant is prejudiced,
and
there may be a failure of justice. If this failure cannot be
rectified, as in this case, it seems to me that the conviction
cannot
stand because it cannot be said that there has not been a failure of
justice.’”
[65]
In all the circumstances, it is apparent that the reconstruction of
the record is clearly impossible. I
am of the view that the absence
of the huge portions of the record which include some of the State
witnesses’ evidence-in-chief,
certain exhibits and other
crucial documents, the appellants’ right to a fair appeal
process has been irredeemably compromised
and the right to a fair
trial, which includes a fair appeal process, had been infringed. This
must lead to the quashing of the
trial proceedings.
[66]
The Constitutional Court expressed itself in this
regard in
Phakane
[9]
where the court said:
“
In
light of all the above I conclude that the full court was wrong to
hold that the applicant’s right to a fair appeal entrenched
in
s35(3) of the Constitution had not been infringed by the state’s
failure to ensure that an adequate record of his trial
proceedings
was available for his appeal. In my view, his right to a fair
appeal has been so compromised that his appeal
could not be fairly
determined. That being the case, the proper remedy is to set
aside the trial proceedings in their entirety.”
I may mention that no
submissions were forthcoming by counsel for the State that the trial
record could still be reconstructed.
He adopted the approach that it
was possible to adjudicate the issues with the incomplete record
without explaining how that could
be possible in the circumstances.
It is unfortunate that a matter of this nature was so abominably
mishandled by the State.
Worse still were the unfortunate
misdirections by the court
a quo,
unequivocally suggesting
that the conviction of the appellants seemed to have been a
pre-determined outcome for reasons that may
never be known. These
miscarriages of justice offend the principle of fair trial
jurisprudence which dates to the time even before
the advent of our
constitutional democracy most, if not all of which have been
entrenched in
Section 35 of the Constitution.
Therefore the
appeal must succeed.
[67]
In the result the following order is made:
1. The appeal is upheld.
2. The conviction and
sentence are set aside.
M.S. JOLWANA
JUDGE OF THE HIGH
COURT
I agree,
S.A COLLETT
ACTING JUDGE OF THE
HIGH COURT
APPEARANCES:
Counsel
for the Applicant
Adv
R. Liddell
Instructed
by
Changfoot
Van Breda Attorneys
c/o
Netteltons Attorneys
118A
High Street
Makhanda
Counsel
for the Respondent
Adv
Mahamba
Instructed
by
Office
of the Deputy Director of Public
Prosecutions
Makhanda
Date
heard
22
November 2023
Date
judgment delivered
01
February 2024
[1]
Section 174 provides that: If, at the close of the case for the
prosecution at any trial, the court is of the opinion
that
there is no evidence that the accused committed the offence referred
to in the charge or any offence of
which he may be
convicted on the charge, it may return a verdict of not guilty.
[2]
Director
of public Prosecutions, Western Cape v Parker
2015 (4) SA 28
(SCA);
2015 (2) SACR 109
(SCA) para 9.
[3]
1.
Section
15 of the ECTA provides
(1)
In any proceedings, the rules of the evidence must not be applied so
as to deny the admissibility of a data message, in evidence
–
(a) on the mere grounds
that it is constituted by a data message; or
(b) if it is the best
evidence that the person adding it could reasonably be expected to
obtain, on the grounds that it is not
in its original form.
(2)
Information in the form of a data message must be given due
evidential weight.
(3)
In assessing the evidential weight of a data message, regard must be
had to –
(a) the reliability of
the manner in which the data manage was generated, stored or
communicated;
(b) the reliability of
the manner in which the integrity of data message was maintained;
(c) the manner in which
its originator was identified; and
(d) any other relevant
factor.
(4) A
data message made by a person in the ordinary course of business, or
a copy or printout of or an extract from such data
message certified
to be correct by an officer in the service of such person, is on its
mere production in any civil, criminal,
administrative or
disciplinary proceedings under any law, the rules of a
self-regulatory organisation or any other law or the
common law,
admissible in evidence against any person and rebuttable proof of
the facts contained in such record, copy, printout
or extract.
[4]
S
v Coetzee and Others 1997 (1) SACR 379 (CC).
[5]
S
v Van der Meyden
1999 (1) SACR 447
(WLD) at 44paras f-g.
[6]
Note
3 supra at page 449 c-d.
[7]
S
v Jochews
1991 (1) SACR 208
[8]
S
v Phakane
2018 (1) SACR 300
(CC) at page 310 f – h.
[9]
Note
7 supra at page 311 d – e