About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Makhanda
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Makhanda
>>
2023
>>
[2023] ZAECMKHC 83
|
|
Burgess v S (CA&R58/2022) [2023] ZAECMKHC 83; 2023 (2) SACR 558 (ECMk) (8 August 2023)
IN THE HIGH COURT OF
SOUTH AFRICA
[EASTERN CAPE
DIVISION: MAKHANDA]
CASE NO. CA&R58/2022
In
the matter between:
ESTELLE
BURGESS
Appellant
and
THE
STATE
Respondent
JUDGMENT
JOLWANA J:
[1] The appellant, having
been charged with and convicted on 972 counts of fraud, was convicted
and sentenced to 15 years direct
imprisonment. She was granted
leave to appeal to this Court against that sentence. The appeal
is on the basis that
the said sentence is unduly excessive to the
extent of being disturbingly inappropriate. She also
raises, pointedly,
the court
a quo
’s reliance on hearsay
evidence without dealing with and making a ruling on its
admissibility which it was contended was a
misdirection. The
issue in this appeal is whether the evidence of the State witness, Mr
Harilal, who had been called to give
evidence in aggravation of
sentence was hearsay evidence. If so, whether there was any
misdirection in how the court
a quo
dealt with his evidence.
Finally, this Court must determine whether in any event, the sentence
of 15 years direct imprisonment
was appropriate. I start below
with the background leading up to the said sentence.
[2] The appellant was
arraigned in the Specialized Commercial Crimes Court in Gqeberha on
972 counts of fraud, alternatively theft,
all relating to her
activities as an employee of the Eastern Cape Training Centre (ECT)
where she was employed as a creditor’s
clerk. The
appellant was under the direct supervision of Mr Faisal Ackerdien,
the financial manager of ECT. Only the
two of them had access
to ECT’s online internet banking payment system. One of
her duties was to assist the financial
manager in making payments to
ECT’s creditors. This entailed the preparation of
remittance advices, creation of spreadsheets
which included the
creditors’ banking details, the names of the creditors, the
amounts that were due to them for payment
and a summary sheet with
all the invoices of the creditors.
[3] The appellant would
prepare all these documents and present them to the financial manager
who would then authorise the payments.
The financial manager,
relying on the information prepared by the appellant, would release
the payments and pay the creditors.
The modus operandi employed
by the appellant in committing these offences was that she had
several bank accounts held in her name
or under her control with all
the four major banking institutions in South Africa. She would
substitute the banking details
of ECT’s creditors with her own
banking details resulting in large amounts of money being paid to the
said bank accounts
by ECT. In so doing, the appellant ensured
that an amount in excess of R13 million was paid into her bank
accounts from March
2005 until about September 2014.
[4] The appellant,
through her legal representative, informed the court that she was
pleading guilty on all the charges preferred
against her. The
statement in terms of
section 112
of the
Criminal Procedure Act, 51
of 1977
was read into the record in terms of which she admitted all
the elements of the charges as detailed in the charge sheet and
pleaded
guilty to the almost 1000 counts of fraud committed over a
period spanning some 9 years or so. She was thereupon convicted
on the basis of her plea of guilty as set out in her
section 112
statement and was sentenced to a term of 15 years direct
imprisonment. She thereafter applied for and was granted leave
to appeal to this Court against the sentence of 15 years imprisonment
imposed by the trial court.
[5] The evolution of the
sentence proceedings preceding the sentence that was ultimately
imposed by the court was more or less the
following.
Pre-sentence reports were obtained and the court was informed that
the appellant would not testify in mitigation
of sentence. The
State then indicated that if the appellant did not testify some of
the contents of the pre-sentence reports
would constitute hearsay
evidence as they relate to information provided by the appellant to
the authors of those reports.
These were the correctional
supervision report and the probation officer’s report. Both
of these pre-sentence
reports were ruled inadmissible to the extent
that they contained information obtained by the authors thereof from
the appellant
as she was not going to testify.
[6] With respect to some
of the contents of the probation officer’s report, the State
indicated that some of the evidence
it intended to rely on in
aggravation of sentence, which was obtained during its compilation
would be covered by Mr Harilal, the
chief executive officer (CEO) of
ECT. The State accordingly asked for the provisional admission
of that evidence pending
Mr Harilal’s evidence. The State
had also obtained the appellant’s gambling records. Using
the information
contained in the gambling records, it prepared a
summary of winnings and losses in respect of the appellant’s
gambling activities
and it was indicated to the court that Mr Harilal
would also give evidence in relation to the contents of that
document.
There was no objection from the defence in the
admission of the said document which was accordingly admitted into
the record.
[7] In mitigation of
sentence the defence introduced a document which was said to be an
acknowledgment of debt by the appellant
which was made an order of
court by the High Court. A cursory look at that acknowledgment
of debt reveals that the appellant
acknowledged that she was indebted
to ECT in the sum of R2 696 859.98 in what she referred to
therein as compensation
for damage she caused ECT by reason of her
theft, fraud, dishonesty and misconduct. She explained in that
document that she
had deposited monies meant for ECT’s
creditors into her personal bank accounts from the ECT’s bank
account between
2009 and 2014. She agreed to the payment of her
Alexander Forbes Retirement Fund benefits to ECT. That document
is
dated 4 December 2014. With all the formalities having been
dealt with, the attorney for the appellant confirmed that she
was not
going to tender any evidence whatsoever, and that submissions in
mitigation of sentence would be presented on her behalf.
[8] The State, prior to
the submissions in mitigation of sentence being made, called its
witness, Mr Harilal, to testify in aggravation
of sentence. He
testified that he was the CEO of ECT having commenced his duties as
such in May 2019. He explained
that ECT is a skills development
training centre training candidates enrolled for learnerships and
artisanship in bricklaying,
carpeting, plumbing, electrical, welding
and fitting and turning. They are a registered Technical and
Vocational Education
and Training (TVET) college in the private
sector. Their funding is received mainly from the various
Sector Education and
Training Authorities (SETAs). However,
they are a non-profit organisation. They also receive some
funding from their
“blue chip” clients in the private
sector as the funding from the SETAs is not guaranteed. These
companies send
their apprentices to ECT to do their apprenticeship
for practical training which then pay for each learner or apprentice
they send.
They also have buildings that they rent out to
supplement their income. Because of the uncertainty in respect
of some of
their income streams, they built up a reserve fund to
cushion themselves in the event of a dry spell in income.
[9] Mr Harilal testified
that he had never personally met the appellant before. He said
that based on the records of ECT to
which he had regard, the
appellant started working for ECT in 2004 earning a gross salary of
R8 777.99 per month. She
received an annual increment from
2005 to 2013 and that in 2013 she earned a gross monthly salary of
R16 196.31.
[10] She resigned in
September 2014. Between 2004 when she started working for ECT,
to 2014 when she resigned the appellant
had siphoned off
R13 460 236.05. ECT became aware that something was
wrong with their finances when they needed
to place adverts for
recruitment of learners and staff in a local newspaper in 2014.
However, they were advised by the newspaper
that there was a hold
placed on their account with the said newspaper. This was
brought to the attention of the finance manager
who then conducted an
investigation. He discovered that the account of the newspaper
had not been paid. Incidentally
the appellant went on sick
leave at the time. Further investigations revealed that a lot
more creditors had not been paid.
The appellant asked for an
early retirement at that point. Her request was refused and
instead she was served with a notice
for a disciplinary hearing.
It transpired that the appellant had left for KwaZulu Natal resulting
in the disciplinary hearing
being held in her absence. She was
found guilty in absentia and dismissed.
[11] Mr Harrilal
explained that the acknowledgment of debt resulted in a court order
being obtained at the High Court against the
appellant which was for
an amount in excess of R2 million. The said amount represented
the findings of their preliminary
investigations and the figures the
appellant admitted to not having paid to their creditors which she
acknowledged to have misappropriated
from 2009 to 2014. They
later obtained the services of auditors who conducted a forensic
audit and discovered that in fact
an amount in excess of R13 million
had actually been defrauded by the appellant since 2004. The
amount they actually received
from her provident fund was
R740 037.29. The proceeds of the sale of the appellant’s
house that they received
was R550 000.00 thus recovering a total
sum of R1 290 037.29. This meant that there was a
short fall of about
R12 million in respect of the actual loss.
[12] Mr Harilal testified
that this loss had a huge impact on their finances. It placed
ECT in a very difficult position with
their creditors and suppliers
some of whom they had had good trading relations with for 38 years.
It was through those good
trading relations that good trading terms
were extended to them in the form of accounts and even trading
discounts. Those
good trading relations were jeopardised
because of the misappropriation of funds as the accounts were put on
hold as a result of
ETC’s failure to service them. In
some instances, ECT was forced to pay cash immediately after
receiving services from
the creditors instead of paying after 30 days
of being invoiced. This led to a cash flow problem as they were
required to
pay cash over the counter when goods were collected or
delivered which was previously not the case. Previously they
would
issue an order number which guaranteed payment and the goods so
ordered would be delivered or made available for collection.
As
a result of the misappropriation of funds by the appellant this
dispensation changed as they had to pay cash on placement of
the
order or on delivery in circumstances in which ECT would not have yet
been paid as SETAs paid them in arrears on a monthly
basis.
[13] Some of the impact
of the appellant’s fraudulent activities were that many
creditors or suppliers closed their accounts.
The staff could
not be granted salary increases for 2018, 2019 and 2020 as ECT simply
did not have the money. They had to
cut their expenses in order
to ensure that they were able to pay cash for their operational
expenses, which affected their employees
who could not receive salary
increases. This created a lot of unhappiness amongst their
staff. They had a complement
of 36 permanent employees and
about 20 who were employed on a project basis depending on a project
that they would be working on
until the end of that particular
project. He testified that the year 2020 was particularly hard
because of the covid 19 pandemic
which forced them to stop their
daily activities. During certain periods staff members did not
receive salaries because of
the lockdown which was resultant from the
pandemic. When the locked down eased to level 4 they could
allow staff to return
to work albeit on a 50% salary basis until
April 2021 when things began to normalize.
[14] He testified that
had the monies in excess of R13 million not been misappropriated, the
pandemic would have found them in a
stronger contingency financial
reserve position. This would have placed them in a much more
healthier liquidity position
to better deal with the effects of the
pandemic. They had to place a moratorium on staff replacements
when some staff members
retired because of their dire financial
position, and their succession planning was also negatively affected
in terms of a human
resource planning for seamless continuity.
They also had to place a moratorium on their capital expenditure.
As a result,
they could not update their technical equipment with the
result that they were not able to service some of their customers as
their
equipment was outdated. This resulted in ECT losing some
of its longstanding clients which compounded their cash flow
problems.
[15] Mr Harilal was
referred to the gambling records of the appellant which reflected
that for the period 2007 to May 2015 she made
a loss of about R4.1
million and had winnings of R10.2 million thus making net winnings of
just over R6 million. He testified
that none of those monies
were paid to ECT in the form of reimbursement save for the provident
fund of about R740 000 and
the proceeds of the sale of her house
in the sum of R550 000.00.
[16] Under
cross-examination Mr Harilal testified that as he started working for
ECT in 2019, his evidence in respect of what happened
before 2019 was
information he prepared after having discussions with different staff
members who were present at the time.
One of their difficulties
was that in 2019 they had to get an overdraft of R1 million. If
the funds that were misappropriated
were not misappropriated they
would not have needed an overdraft. At this stage of the
cross-examination the attorney for
the appellant indicated to the
court that Mr Harrilal’s evidence related to some activities
that took place before he joined
ECT based on what other people told
him and the documents he had access to. Those documents were
not made available to the
defence so that the evidence of the witness
could be tested regarding the alleged precarious financial position
of ECT.
[17] The submission went
on to suggest that there were no financial statements or bank
statements that would show that ECT was impacted
by the
misappropriation of funds by the appellant. On this aspect the
State contended quite strongly that the appellant pleaded
guilty to
having defrauded ECT an amount in excess of R13 million.
Logically that would have had an impact in the financial
liquidity of
ECT as Mr Harilal had testified. That did not need documents to
be understood. Even if bank statements
were provided for the
relevant period, so the submission continued, those documents would
be of no much use. What would be
interrogated in those
financial statements would in fact be the fraud which the appellant
acknowledged. It was further contended
by the State that even
though Mr Harilal did not work at ECT at the time the monies were
stolen, nothing changed the fact that
the loss or misappropriation
was not in dispute and appellant had pleaded guilty. Therefore,
so contended the State, contended
the documents would not assist the
defence in cross-examining Mr Harilal. The court was not
establishing her guilt as she
had been convicted already, so went the
argument. It was further argued on behalf of the appellant that
the request for documents
had nothing to do with cross-examination
but it had everything to do with the fair trial right of the
appellant. She was
being prejudiced by not being allowed to see
the documents so that the impact of the fraud Mr Harilal testified
about could be
verified.
[18] This debate soon
became more about some of the pre-sentence reports especially the
information obtained by the authors of some
of the reports to the
extent that the information contained therein was obtained from some
ECT’s employees, especially Ms
Harker. Sight should not
be lost about the fact that the State had indicated that the evidence
pertaining to the information
that was obtained from her would be
covered by Mr Harilal. I am mentioning this debate as the
question of some of Mr Harilal’s
evidence is one of the bases
of the appeal against sentence, the contention being that it was
hearsay and therefore, its admission
a misdirection. Notably,
the report included information obtained in the compilation of the
probation officer’s report
from Ms Harker who was at some
stage, an employee of ECT.
[19] That information
indicated that the offences committed by the appellant negatively
impacted ECT and how that impact was experienced
as Mr Harilal had
testified. On further cross-examination Mr Harilal confirmed
that one of the people he spoke to regarding
the evidence that he
gave was Ms Harker who was ECT’s accountant. He testified
that he did not know Ms Harker as she
was there before he joined ECT
in 2019. He explained that he did not know when Ms Harker
started working at ECT and therefore
it could be possible that she
started working there after the appellant had already left. The
issue raised was that Mr Harilal
was being led by the State to give
evidence about what Ms Harker told the probation officer.
Unfortunately, no ruling was
made by the presiding officer regarding
Mr Harilal’s evidence regard being had to its hearsay nature.
At the conclusion
of the testimony of Mr Harilal the State closed its
case in respect of the evidence in aggravation of sentence.
[20] It is clear from the
evidence of Mr Harilal that much of what he said is what he read from
the documents he had access to as
CEO of the ECT. Some of those
documents are not part of the record that was before the court a quo
when it sentenced the
appellant. One of the documents that were
admitted into the record for purposes of assisting the court in its
task of determining
an appropriate sentence was the probation
officer’s report. I consider it prudent to refer to the
portion of that document
about which it had been indicated, would be
covered by Mr Harilal when he testified especially the information
given to the probation
officer by Ms Harker to which Mr Harilal
alluded when he testified about the impact of the appellant’s
fraudulent activities
to ECT.
[21] The probation
officer’s report on victim impact statement reads:
“
According to
Ms Harker during her employment the accused upheld a professional
conduct with both her client and colleagues.
She was a loyal
and diligent employee. She further articulated that the
R13 460 236.05 was misappropriated due
to the accused
fraudulent actions and 1 290 037.29 was recovered from her
provident fund and the proceeds of the sale
of her property.
She elaborated that the accused was on sick leave during which
certain creditors queried payments.
Investigation revealed that
creditors were on payment list, but details of creditor’s
banking details were changed, and monies
instead were deposited into
accused’s bank accounts.
She indicated that the accused actions
had an extremely negative effect on the company finances, as a result
they had no contingency
funds. The company suffered cash flow
shortages, since due to the accused actions all the companies profit
flowed out of
the business. This stopped the company’s
expansion and capitalisation. In 2020 during the Covid 19
pandemic regulations
some employees left the company, while others
had to take early retirement and could not pay people to work from
home.
She further elaborated that the
remaining staff were devastated since annual increments was affected
due to financial position of
the organisation. This has also
resulted with extremely low staff morale for the remaining staff.
Ms Harker reported that the accused
actions and behaviour also lead to the company incurring more costs
as preventative measures,
however it is difficult to quantify the
cost. The company conducted forensic [investigations] and
recommendation implemented,
stricter controls with releasing funds.
The company believes that her actions
were actuated by greed and the illicit gains. Therefore, they
request the court to impose
the maximum term of imprisonment because
of the seriousness of the offence and the impact the fraud has on
company.”
[22] As the appellant’s
attorney had indicated, the appellant indeed did not tender any
evidence in mitigation of sentence.
Instead, submissions were
made on her behalf. It was submitted that the appellant would
be turning 65 years old in the following
three months.
Therefore, her chances of finding employment in which she would have
to deal with money or financial transactions
were non-existent.
The point made being that it was not necessary for her to be given a
custodial sentence. It was
submitted that she was an older
person as defined in the
Older Persons Act 13 of 2006
. She has
been unemployed since her resignation in 2014. She suffered
from hypertension and high cholesterol.
She had a clean record
as she was a first offender. She had been employed at ECT for
31 years and had agreed to reimburse
the complainant from her
provident fund and from the proceeds of the sale of her house.
[23] Indeed, the
complainant, ECT was reimbursed in the sum of R1 290 037.29.
This resulted in the appellant being
destitute with no house, no
pension, no job and no future. It was submitted that it was not
being argued that she should
not be punished for her crimes, but that
a term of imprisonment would be inappropriate. It was submitted
that in light of
her personal circumstances, a suspended sentence
would be the appropriate form of punishment. She had expressed
remorse and
regret for her actions. It was further submitted
that it was indeed so that she had stolen a lot of money which she
was not
in a position to repay as she was living on a government
grant. Furthermore, so the submission went, her gambling
problem
was admittedly an aggravating factor as was the fact that
only a fraction of the money she stole was recovered. That
being
the case, the defence persisted with the contention that the
circumstances of the case called for a suspended sentence so that if
she committed a similar offence or any offence in which dishonesty is
an element, she would then go to prison.
[24] The State’s
submissions in aggravation of sentence were the following. The
fact that the appellant was an old person
at the age of 65 or that
she was a first offender did not exempt her from direct
imprisonment. It was submitted that the
appellant’s
health conditions, that is, hypertension and hyperlipidaemia or high
cholesterol, were dealt with in the correctional
supervision report.
In that report it was indicated that if the court sentenced the
appellant to custodial sentence the correctional
facilities would be
able to make medication available for her illnesses. With
regard to her being destitute the State submitted
that she had no one
else but herself to blame for that situation. She had been
receiving annual increases in a good job that
she had when she
started committing the offences. She started with her
fraudulent activities in 2004 and continued to 2005
but in 2006 she
did not defraud her employer at all. But from 2007 onwards her
fraudulent activities escalated with the appellant
misappropriating
larger amounts of money and in 2013 alone she took R2.3 million from
her employer.
[25] There was no
explanation proferred by the appellant on why she committed those
offences as she refused to give evidence in
mitigation of sentence.
It was submitted that she did not have a gambling problem that her
gambling records revealed that
she had gambling victories in which
her gambling was more like a business. The appellant had not
explained her gambling activities
in court despite siphoning off over
R13 million from her employer over the period. The State
contended that the appellant
made money with the money she stole from
ECT. The sum of R13 million and her net winnings of over R6
million amount to about
R19 million. With that in mind the
submission about her being destitute was perplexing and she deserved
to be punished.
She indeed does have a clean record, however,
her 972 counts of fraud diminished all of that. Even the amount
of money received
from her provident fund and the proceeds from the
sale of her house leave about R12 million which she has not paid.
[26]
The State submitted that the case of
Nel
[1]
explained the legal position where gambling was a factor as follows:
“
A gambling
addiction, like alcohol or drug addition, can never operate as an
excuse for the commission of an offence. In
S
v Sithole
2003 (1) SACR 326
(SCA) this
court found that alcohol addiction cannot be an excuse for driving
under the influence of alcohol. Conradie JA
stated at 329g-h:
‘
[7] Courts
in this country have long acknowledged that alcohol addiction is a
disease and that it would be to the benefit of society
and the
offender if the condition can be cured. But it is necessary to
make it the obvious point that drunken driving is
not a disease.
One is distressingly familiar with maudlin pleas in mitigation that
the drunken driver in the dock is an alcoholic,
as if the disease
excused the crime. It does not.’
What is more, a reading of
R v
Petrovic
[1998] (supra) reveals that it does not support the
approach in
Wasserman
. That case, like
Wasserman
and this case, had to do with a pathological gambler who had
committed crimes actuated by the addiction (the offences in
Petrovic
ranged from theft to fraud). Delivering the main judgment,
Charles JA stated:
‘
20.
The fact that an offender was motivated to the commission of the
crimes in question by an addiction to gambling will, no doubt
usually
be relevant, and may be an important consideration for a judge
sentencing the offender for these crimes. But as Tagdell,
JA
said in
R v Cavallin
(…) “It is … important that the public does not
assume that a crime which is to some extent generated by a
gambling
addiction, even if it is pathological, will, on that count,
necessarily be immune from punishment by imprisonment.”
21. It is considerations such as these
which have led this Court to say more than once that it will be a
rare case indeed where
an offender can properly call for mitigation
of penalty on the ground that the crime was committed to feed a
gambling addiction;
…’
The ratio is thus clear whilst a
gambling addiction may be found to cause the commission of an
offence, even if it is pathological
(as in this case), it cannot on
its own immune an offender from direct imprisonment. Nor indeed
can it on its own be a mitigating
factor, let alone a substantial and
compelling circumstance justifying a departure from the prescribed
sentences, in the words
of Stephen Terblanche in South African
Journal of Criminal Justice (2004) 17 at 443 who, correctly in my
view, criticises the approach
in
Wasserman
.”
[27] It was submitted
that while the appellant gambled, there was no evidence of
addiction. She had successes in her gambling
activities making
herself richer using her employer’s money.
[28]
The appellant did not come before court and express her remorse by
way of giving evidence. Submissions in that regard
were made by
her legal representative. The only thing indicative of remorse,
so went the submission, was the plea of guilty.
In that regard
the court
a
quo
was referred to the case of
Landau
[2]
in which the court said:
“
Courts often
see as significant the fact that an accused chooses to ‘plead
guilty’. This is sometimes regarded
as an expression of
on the part of the accused of genuine co-operation, remorse and a
desire not to ‘waste the time of the
court’ in defending
the indefensible. In certain instances, a plea of guilty may
indeed be a factor which can and should
be taken into account in
favour of an accused in mitigation of sentence. However, where
it is clear to an accused that the
‘writing is on the wall and
that he has no viable defence, the mere fact that he then pleads
guilty in the hope of being
able to gain some advantage from that
conduct should not receive much weight in mitigation of [sentence]
unless accompanied by
genuine and demonstrable expression of remorse
…”
[29]
Relying on
Nel
,
the State argued that there was no demonstrable expression of
remorse. As the State had submitted in the court
a
quo
the repayment of the little amount that was repaid could not come to
the aid of the appellant as she was being sued. The
plea of
guilty was also of no assistance to her because the monies that were
defrauded from ECT were transferred into her bank
accounts or
accounts that were under her control. It was submitted that
neither the repayment nor the plea of guilty would
entitle her to
mitigation of the sentence. The evidence against her was
overwhelming in that the money ended up in her bank
accounts or bank
accounts that were under her control. The appellant was in a
position of trust and she committed the offences
for which she has
been convicted when she acted in breach of the trust reposed to her
by her employer. As was stated in the
case of
Rawat
[3]
where the court said that “an employee’s breach of trust
warrants severe punishment”, the fact that the appellant
was in
a position of trust vis-a-vis her employer was an aggravating factor.
[30] Lastly, the State
submitted that the impact of the appellant’s fraudulent conduct
caused devastation to her employer
which she left for others to
suffer from when she left the company. The State referred to
the cost cutting measures that
had to be embarked upon.
Innocent employees were denied annual increases which on its own
showed the effects of the appellant’s
actions on others.
Costs had to be incurred in commissioning a forensic audit in order
to determine the magnitude of the
loss caused by the appellant to her
employer. The State submitted that despite the appellant
knowing that she had been defrauding
her employer since 2004 she
signed an acknowledgment of debt in which she agreed to the amount
that was known to the employer as
having been stolen by her during
that period. She knowingly allowed the wrong impression to be
created that her fraudulent
activities started in 2009 and ended in
2014 when she resigned when the correct state of affairs was known to
her. Even for
that period she had stolen monies in excess of
R10 million. Despite that knowledge she acknowledged a paltry
R2.6 million
and thus continued with her dishonesty. In the
final analysis the State’s contention was that there was
nothing in
her personal circumstances that mitigated her punishment
and that a suspended sentence would make a mockery of the criminal
justice
system. The State argued for the imposition of a
sentence of 15 years imprisonment. It accepted that indeed she
was
a suitable candidate for correctional supervision but added that
that did not make it a suitable sentence in light of the aggravating
factors.
[31] In considering an
appropriate sentence to be imposed, the court
a
quo, inter
alia,
referred to the evidence of Mr Harilal. His evidence
has already been set out elsewhere in this judgment and therefore I
will not be recapitulating it now to avoid repetitiveness.
[32] The court
a
quo
did a commendable job in summarising the essential
features of all the personal circumstances of the appellant which
were submitted
to urge the court to pass a non-custodial sentence.
Thereafter the court correctly rejected the submission that a
non-custodial
sentence was appropriate regard being had to the
seriousness of the offence, the appellant’s continued
deviousness and the
prevalence of this type of crime in our society.
However, there are some areas of concern about how the court
a
quo
dealt with some of the issues pertinent to its conclusions
on an appropriate sentence.
[33] The first of those
issues is that of hearsay evidence. It appears from its
judgment that the court
a quo
’s approach was that the
portions of the correctional supervision and the probation officer’s
reports about which there
was agreement between the State and the
defence that they were hearsay, were, on that basis, hearsay. I
am not, at this stage,
and for the purposes of this judgment, dealing
with whether or not the parties correctly agreed about the hearsay
nature of that
evidence. The point being made is simply that,
hearsay evidence is hearsay evidence, if the person on whose
credibility it
relies is not called to testify. This has
nothing to do with the agreement
inter partes
so to speak.
Section 3 (4) of the Law of Evidence Amendment Act 45 of 1988 (the
Act) defines hearsay evidence as evidence
whether oral or in writing
the probative value of which depends upon the credibility of any
person other than the person giving
such evidence.
[34] It is clear from the
evidence of Mr Harilal that for some of his evidence he relied on
ECT’s company records which he
had access to in his capacity as
CEO. It is not in dispute that at all material times during the
commission of the offences
he was not in the employ of the company.
At the time when the creditors of ETC placed its accounts on hold,
closed its accounts
and at times ECT was forced to make over the
counter cash payments for services to be rendered, he was not with
ECT. The
question is, where did he get this information?
In his evidence, Mr Harilal answered this question by referring to
unspecified
company records. He also mentioned that he
personally spoke to some of his colleagues whom he also did not
mention by name.
In other words, it is unclear who told him
which information, what position in the company that person or those
persons held in
the company, which information was gleaned from which
records as against which information was gleaned from what other
people or
colleagues told him. What is clear from the appeal
record especially from the pre-sentence reports, is that some
information
found its way into the pre-sentence reports having been
obtained from Mrs Botha and Ms Harker.
[35] In fact, it was
argued before this Court on behalf of the State that the appellant
was aware that Mr Harilal would cover in
his evidence, the contents
of paragraph 13 of the probation officer’s report. Paragraph
13 of the probation officer’s
report deals with victim impact
statement. Therein the probation officer deals with what Ms
Harker told him. I have
already quoted the contents of the said
report above as at it relates to the impact of the appellant’s
fraudulent activities
on ECT and its employees.
[36] It seems to me that
Mr Harilal did no more than being Ms Harker’s mouth piece if
the similarities between his evidence
and the contents of the
probation officer’s report are anything to go by. In
fact, it would seem that very little,
if anything at all, was gleaned
from the company records by Mr Harilal. It may very well be
that it was in fact Ms Harker
who actually had regard to the company
records. Even worse, the information that found its way into
the pre-sentence reports
may all have been elicited from Ms Botha
who, according to the probation officer’s report, was ETC’s
human resource
officer and Ms Harker who was the finance officer.
This begs the obvious question ̶ did the probative
value
of the information contained in the probation officer’s
report depend on Mr Harilal? The answer is a resounding no.
It is unclear why the State chose to call Mr Harilal to testify. Not
only was he not at ECT when all the relevant events unfolded
but also
he never spoke to the probation officer or contributed in the
compilation of the pre-sentence reports.
[37] The two ECT’s
employees, Mrs Botha and Ms Harker who gave information to the
probation officer were surprisingly not
called. Instead, Mr
Harilal was called to deal with paragraph 13 of the probation
officer’s report in circumstances
in which he had no
contribution to the information contained therein. There is no
basis for any suggestion that he would
have had personal knowledge of
any of the things about which Mrs Botha and Ms Harker gave
information to the probation officer.
This is a classical case
of hearsay evidence being allowed without any basis for doing so.
No explanation was given by the
State why Ms Harker or Mrs Botha for
that matter, were not called to testify. This would have been
for the same reason that
the evidence of what the appellant told the
probation officer was ruled as hearsay on the basis that the
appellant was not going
to testify as the person who told the
probation officer about that relevant information which the found its
way into the report.
[38]
The fact that there may have been no objection from the defence is
irrelevant. This is because
section 3
(1) of the
Law of
Evidence Amendment Act deals
with the hearsay evidence and in doing
so, provides against its admission save under certain
circumstances
[4]
. The
basis on which the hearsay evidence of Mr Harilal’s was
admitted was not explained even as the court dealt with
Mr Harilal’s
evidence and obviously took it into account when it determined the
sentence it then imposed on the appellant.
[39]
In
Rautini
[5]
the court said:
“
It is common
cause that the respondent’s counsel made no application for any
of the hearsay evidence to be admitted in terms
of
s3
of the
Law of
Evidence Amendment Act. In
the circumstances, the full court’s
finding that material differences existed between the appellant’s
version and the
medical records regarding where he fell from the
train, the cause of his fall and his first lucid recollection after
the fall was
erroneous. The full court’s reliance on
hearsay evidence in that regard amounts to a material misdirection
that vitiates
its ultimate finding on the outcome of the appeal that
was before it.”
[40] There can be no
doubt that the court
a quo
’s admission of the hearsay
evidence of Mr Harilal was a material misdirection. That
evidence would have been considered
by the court for the purpose for
which it was led, the imposition of what it considered to be the
maximum permissible sentence
it could impose. In imposing the
sentence it did, the court
a quo
said it considered the
mitigating circumstances of the appellant and the aggravating
circumstances. It then said that it
considered the seriousness
of the offence and the impact the offence had on the company or
complainant. The court thereafter
imposed 15 years imprisonment
saying:
“
The total
amount involved here is R13 460 236.05 but there is no
individual amount above R500 000.00 where a minimum
sentence of
15 years imprisonment would have been applicable. However,
where fraud of amounts in excess of R500 000.00
whether
individual or not 15 years imprisonment should be used as a yardstick
to determine an appropriate term of imprisonment.”
[41]
In
Hewitt
[6]
the court restated the principle of our criminal jurisprudence on
sentencing as follows:
“
It is a
trite principle of our law that the imposition of sentence is the
prerogative of the trial court. An appellate court
may not
interfere with this discretion merely because it would have imposed a
different sentence. In other words, it is not
enough to
conclude that its own choice of penalty would have been an
appropriate penalty. Something more is required; it
must
conclude that its own choice of penalty is the appropriate penalty
and that chosen by the trial court is not. Thus the
appellate
court must be satisfied that the trial court committed a misdirection
of such a nature, degree and seriousness that shows
that it did not
exercise its sentencing discretion at all or exercised it improperly
or unreasonably when imposing it. So,
interference is justified
only where there exists a ‘striking’ or ‘startling’
or ‘disturbing’
disparity between the trial court’s
sentence and that which the appellate court would have imposed.
And in such instances
the trial court’s discretion is regarded
as having been unreasonably exercised.”
[42] In
casu
the
extent of the influence of the hearsay evidence led, impermissibly
so, by Mr Harilal, the only evidence in aggravation of sentence
the
State led will never be known. What is clear though is that
there was a material misdirection which contributed materially
if it
did not lead to the imposition of what the court said would have been
a minimum sentence of 15 years, which it said would
have been
applicable but for the fact that no individual amount above R500
000.00 was defrauded. That misdirection, the admission
of
hearsay evidence, with no explanation as to why it was considered to
be admissible, suggests that that evidence influenced materially,
the
court in its exercise of the sentencing discretion. That must
mean that the court improperly exercised its discretion
partly
influenced by the hearsay evidence of Mr Harilal.
[43] There is no doubt
that for serious offences such as the ones committed by the appellant
a custodial sentence is the only appropriate
sentence. I
understood Mr Hattingh, counsel for the appellant, to be conceding
that a direct sentence of imprisonment is
appropriate. That
concession was well made. He however, argued for what he called
a much shorter period of imprisonment
than the 15 years that has been
imposed. There is something else that I find concerning
regarding the sentence proceedings
in the court
a quo
.
The record shows that the attorney for the appellant tried to make
submissions in mitigation of sentence also on the basis
that the
minimum sentence was applicable. The court stopped him from
doing so on the basis that the minimum sentence was
not applicable.
[44] However, in imposing
the sentence, the court, in explaining how the sentence of 15 years
was appropriate, said that for fraud
of amounts in excess of
R500 000.00 whether individually or not, 15 years should be used
as a yardstick. If the court
considered that the considerations
in which minimum sentence of 15 years are applicable, even if as a
yardstick, it ought not to
have dissuaded the legal representative of
the appellant from making submissions on the basis that it was
applicable without an
appropriate indication that it would use that
yardstick. The interfence by the court in that regard amounted
to a serious
misdirection because the court, after not being too keen
on hearing submissions about minimum sentence considerations, it in
any
event took those considerations into account. That would have
alerted the appellant’s attorney to the approach the court
intended to adopt. He probably would have adjusted his
submissions accordingly.
[45]
In a somewhat similar situation, of course with different nuances,
Olivier JA expressed himself as follows in
Jimenez
[7]
in which the court said:
“
The problem
with the judgment of the Court
a quo
lies in that part quoted in para [9] hereof, and in particular in the
reference to
S v Homareda
1999 (2) SACR 319
(W). The point is that the sentence in
Homareda
was based upon the application of the relevant minimum sentence
provisions. In general, it is not permissible to have regard,
without the necessary caveats, qualifications and distinctions, to
sentences imposed on the strength of minimum sentence provisions
in a
case where the minimum provisions are not applicable. The point
of departure in prescribing maximum and minimum sentence
provisions
differs substantially from that applicable to cases where no such
provisions are prescribed; and equating without the
necessary
caveats, qualifications and distinctions the reasoning of the one
with the other will often not be valid. (See
also the arguments
in
S v Malgas
2001 (1) SACR 469
(SCA)
(2001 (2) SA 1222)).
In this case, the
Court
a quo
can be said to have erred and misdirected itself.
But it is trite law that a mere
misdirection is not by itself sufficient to entitle a Court of appeal
to interfere with a sentence
imposed by a lower court:
‘
(I)t must be
of such a nature, degree, or seriousness that it shows, directly or
inferentially, that the Court did not exercise
its discretion at all
or exercised it improperly or unreasonably. Such a misdirection
is usually and conveniently termed
one that vitiates the Court’s
decision on sentence. That is obviously the kind of
misdirection predicated in the last
quoted
dictum
above: (see
S v Fazzie and Others
1964 (4) SA 673
(A) at 684 (B–C) one that “dictates of
justice” clearly entitle the Appeal Court “to consider
the sentence
afresh.”’
[46] In this case the
appellant was born in 1957. Therefore, she was almost 64 years
old at the time she was sentenced.
It is not in dispute that
she suffers from hyperlipidemia and hypertension for which she is
receiving treatment. She was
a first offender at the age of
about 47 years when she started with her very serious criminal
behaviour and about 63 years old
at the time she was convicted.
It is so that she pleaded guilty. The State’s criticism
of only earlier admitting
to a lesser amount and signing an
acknowledgment of debt of R2 696 859.98 in respect of fraud
she committed between 2009
and 2014 when she knew that her criminal
conduct started about 5 years earlier in 2005 is correct. This
speaks to her deviousness
for which she deserves serious punishment.
Even the plea of guilty in circumstances in which she stood no chance
of being
acquitted anyway is not necessarily praiseworthy.
However, the approach of the court
a quo
in sentencing the
appellant is the kind of misdirection that inferentially suggests
that it did not exercise its sentencing discretion
properly. It
did not explain why the sentence of 15 years was considered
appropriate beyond the fact that that period was
suggested by the
State and that it understood 15 years to be the yardstick even though
it was inapplicable as a minimum sentence.
[47] This is in addition
to the misdirection of allowing hearsay evidence to be led and
considering it as it did when deciding which
sentence would be
appropriate. This suggests that the court
a quo
had made
up its mind that it must sentence the appellant to the sentence which
it called the yardstick. In doing so, it did
not take into
account the very relevant mitigating factors which ought to have been
factored in, in the consideration of an appropriate
sentence.
It could then reject them with an appropriate explanation for doing
so. While the offences committed by the
appellant are very
serious and prevalent in our society, that does not mean that all
accused persons who are convicted of fraud
where the amount involved
is in excess of R500 000.00, whether cumulative or individually,
must routinely be sentenced to
15 years imprisonment. That
sentence in this case induces a sense of shock and must be interfered
with. That being
the case the appeal must succeed.
[48] In the result the
following order shall issue:
1. The appeal against
sentence is upheld.
2. The sentence of 15
years imprisonment imposed by the court
a quo
is set aside and
substituted with the following sentence:
2.1. The appellant is
sentenced to 10 years imprisonment
2.2 The sentence referred
to in 2.1 above is antedated to 25 August 2021.
M.S. JOLWANA
JUDGE OF THE HIGH
COURT
I agree
L. RUSI
JUDGE OF THE HIGH
COURT
Appearances:
Counsel
for the Appellant:
A.
HATTINGH
Instructed
by:
SWARTS
ATTORNEYS
GQEBERHA
Counsel
for the Respondent:
U.
DE KLERK
Instructed
by:
DIRECTOR
OF PUBLIC PROSECUTIONS
MAKHANDA
Date
heard:
15
March 2023
Date
delivered:
08
august 2023
[1]
S
v Nel
2007 (2) SACR 481
(SCA) 51;
[2007] 4 All SA 709
(SCA) para 16.
[2]
S
v Landau
2000 (2) SACR 673
at 678 b-c.
[3]
S
v Rawat
1999 (2) SACR 398
at 402.
[4]
Section
3
(1) reads: Subject to the provisions of any other law, hearsay
evidence shall not be admitted as evidence at criminal or civil
proceedings, unless –
(a)
each party against whom the evidence is to
be adduced agrees to the admission thereof as evidence at such
proceedings,
(b)
the person upon whose credibility the
probative value of such evidence depends, himself testifies at such
proceedings; or
(c)
the court, having regard to –
(i)
the nature of the proceedings;
(ii) the nature of the
evidence;
(iii) the purpose for
which the evidence is tendered;
(iv) the reason why the
evidence is not given by the person upon whose credibility the
probative value of such evidence depends;
(v) any prejudice to a
party which the admission of such evidence might entail; and
(vi) any other factor
which should in the opinion of the court be taken into account, is
of the opinion that such evidence should
be admitted in the
interests of justice.
[5]
Rautini
v Passenger Rail Agency of South Africa (853/2020)
[2021] ZASCA 158
( 8 November 2021) para 12.
[6]
S
v Hewitt
2017 (1) SACR 309
(SCA) at para 8.
[7]
S
v Jimenez
2003 (1) SACR 507
(SCA) 517 paras 12 to 13.