About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2021
>>
[2021] ZASCA 56
|
|
Bobroff and Another v National Director of Public Prosecutions (194/20) [2021] ZASCA 56; [2021] 3 All SA 1 (SCA); 2021 (2) SACR 53 (SCA) (3 May 2021)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 194/20
In
the matter between:
RONALD
BOBROFF FIRST
APPELLANT
DARREN
RODNEY BOBROFF
SECOND APPELLANT
and
THE
NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS
RESPONDENT
Neutral
citation:
Bobroff and Another v The National Director of
Public Prosecutions
(Case no 194/20)
[2021] ZASCA 56
(3
May 2021)
Coram:
PONNAN, MBHA and MOLEMELA JJA and EKSTEEN and WEINER AJJA
Heard
:
23 February 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties' representatives via email, publication
on the Supreme Court
of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 9h45 on 3 May 2021.
Summary:
Prevention of Organised Crime Act 121 of 1998
–
jurisdiction – power of high court to make a forfeiture order
in respect of property situated in a foreign country
and belonging to
persons not presently resident in South Africa –
s 19
of the
International Co-operation in Criminal Matters Act 75 of 1996
enabling effective order – proceeds of unlawful activity
committed in South Africa – what constitutes proceeds of
unlawful activity.
ORDER
On
appeal from:
Gauteng Division of the High Court, Pretoria
(Malindi AJ sitting as court of first instance):
1
The order of the high court is amended as follows:
(a)
By the addition to para 1.2, after the word ‘Bobroff’ of
the following:
‘
,
save for the amounts of USD 256 217.84 and AUSD 284 785.32’;
and
(b)
Paragraph 3 is set aside and replaced with the following:
‘
The
balance of the proceeds in the accounts, as set out in para 1 above,
are to be paid into the Criminal Assets Recovery Account
established
under s 63 of the POCA, number 80303056, at the South African Reserve
Bank, Vermeulen Street, Pretoria.’
2
Save to the extent set out in para 1 above, the appeal is dismissed
with costs, including
the costs of two counsel, where so employed.
JUDGMENT
Eksteen
AJA (Ponnan, Mbha and Molemela JJA and Weiner AJA
concurring)
[1]
Two issues arise in this appeal. First, whether the High Court,
Pretoria (the high court) had jurisdiction
to make a forfeiture order
in terms of s 50(1)
(b)
of the Prevention of Organised Crime
Act 121 of 1998 (POCA) in respect of property situated outside the
territory of South Africa
and belonging to persons who are presently
resident in Australia? If so, second, whether the respondent, the
National Director
of Public Prosecutions (NDPP), had established that
the property forfeited was ‘proceeds of unlawful activities’
as
defined in the POCA.
[2]
On 28 July 2017 the high court granted an ex parte application for a
preservation order, in terms of
s 38 of the POCA, in respect of
credit balances and interest accrued and held in two accounts in
Israel in the name of the first
appellant, Mr Ronald Bobroff (Ronald
Bobroff) at the Bank Discount (BD), and the second appellant, Mr
Darren Bobroff (Darren Bobroff)
at the Bank Mizrahi Tefahot (BMT),
respectively.
[1]
The NDPP
contended that the credits held in these accounts were proceeds of
unlawful activities as defined in the POCA. Both Ronald
Bobroff and
Darren Bobroff (the Bobroffs), who were temporarily resident in
Australia, entered an appearance, in terms of s 39
of the POCA, to
oppose the granting of a forfeiture order. They challenged the
jurisdiction of the high court and argued that the
NDPP had failed to
establish that the credit balances constituted proceeds of unlawful
activities. An application for forfeiture
followed on 20 August 2019,
and the high court granted an order declaring the credit balances and
interest forfeit to the State,
in terms of s 50 of the POCA. The
appeal to this Court against the forfeiture order is with leave of
the high court.
[3]
The Bobroffs had been prominent attorneys practising as directors of
the firm Ronald Bobroff and Partners
Incorporated (the firm) in
Johannesburg. Ronald Bobroff had been a member of the council of the
Law Society for the Northern Provinces
(the law society) for many
years and was a chairperson of the Personal Injury Lawyers
Association in South Africa. Darren Bobroff,
Ronald Bobroff’s
son, was admitted as an attorney in South Africa in 2004 and became a
director in the firm in 2006. The
firm practiced predominantly in the
field of personal injury litigation, often acting on contingency. In
2010, allegations began
to surface that the firm had, over the
preceding three years, charged clients inflated fees exceeding the
maximum permitted in
terms of the Contingency Fees Act 66 of 1997
(the CFA). During 2011, a former client of the firm filed a complaint
against Darren
Bobroff with the law society alleging that he had been
charged inflated fees. The law society commenced a disciplinary
enquiry
against the Bobroffs in February 2012. The enquiry was
protracted and frustrated by the failure of the Bobroffs to
co-operate.
In the interim, in October 2012, Ms
Bernadine van Wyk, a bookkeeper employed by the firm, deposed to an
affidavit
pursuant to the
Protected Disclosures Act 26 of 2000
, in
which she made serious allegations of significant financial
impropriety by the Bobroffs. This prompted an investigation by
the
South African Police Service (SAPS). Eventually, on 3 March
2016, the law society filed an application to strike the Bobroffs
from the roll of legal practitioners.
[2]
The application, which eventually led to the disbarment of the
Bobroffs, was heard on 14 March 2016. This was the same day that
the
SAPS, as a result of their investigation, issued warrants of arrest
for the Bobroffs. However, on 16 March 2016, before the
warrants
could be executed, Darren Bobroff departed for Australia, and Ronald
Bobroff followed on 19 March 2016. Neither has returned
since. As a
result of their sudden departure, the SAPS caused a Red Notice to be
circulated through Interpol.
[4]
On 8 May 2017, the state attorney in Israel sent a request for
assistance in a criminal matter to the
Department of Justice and
Constitutional Development in South Africa. The request recorded that
the police in Israel were conducting
an investigation into suspected
crimes of money laundering, which had allegedly been committed by the
Bobroffs in Israel. The investigation,
it said, had arisen out of a
suspicious transaction which had been transmitted by a compliance
officer in the BMT on 12 February
2017. The compliance officer had
reported that Darren Bobroff, a non-resident of Israel, maintained a
BMT account and had given
an instruction to transfer USD 3 million
from his account at the BMT to an account in Australia. The
transaction had appeared suspicious
and the BMT accordingly declined
to execute the transfer. Darren Bobroff responded with a request to
withdraw the entire credit
of approximately USD 7 million, which he
held in the BMT account at the time. This action prompted the
compliance officer to contact
the Israel National Police for
instructions.
[5]
On 1 March 2017, the Israel National Police had received a report
from the compliance officer of BD
regarding an attempt by Ronald
Bobroff to withdraw an amount of USD 830 000 from an account in
his name at BD. The Israel
National Police thereafter learnt of the
Interpol Red Notice, hence their investigation. The accounts were
then frozen at the instance
of the Israel National Police and
litigation followed as the Bobroffs sought the release of the funds.
I
shall revert to
this litigation.
[6]
The NDPP contends, as I have said, that the credit balances in these
accounts represent proceeds of
unlawful activities in South Africa,
in particular theft, fraud, money laundering and transgressions of
the South African tax legislation.
[7]
I consider, first, the question of jurisdiction. The determination of
jurisdiction involves a two stage
inquiry: it has, first, to be
established whether the court is, as a matter of principle, competent
to take cognisance of the particular
case (that is, whether a
recognised jurisdictional ground is present); and second, if a
jurisdictional ground is established, whether
an effective judgment
can be given.
[3]
[8]
Mr Subel, on behalf of the appellants, contended that neither of the
requirements for jurisdiction had
been established. In respect of the
first leg, he referred to s 21 of the Superior Courts Act 10 of 2013
(the Courts Act), which
provides for the jurisdiction of the high
courts in both civil and criminal matters. The material portion of s
21 provides:
‘
(1)
A Division has jurisdiction over all persons residing or being in,
and in relation to all causes arising and all offences triable
within, its area of jurisdiction and all other matters of which it
may according to law take cognisance . . .’
It
has been said that these provisions of the Courts Act are couched in
‘indefinite wording’, because the intention
of the
legislature obviously was to interfere as little as possible with the
common law.
[4]
Mr Subel
therefore contended that it is to the common law that we must look to
determine whether a recognised jurisdictional ground
is present. He
referred us to Erasmus, Superior Court Practice,
[5]
which records:
‘
The
jurisdictional connecting factors or
rationes jurisdictionis
recognised by the common law include residence, domicile, the
situation of the subject matter of the action within the
jurisdiction,
cause of action which includes the conclusion or
performance of a contract and the commission of a delict within the
jurisdiction.’
[9]
Mr Labuschagne, on behalf of the NDPP, on the other hand, argued that
the POCA itself provides for extraterritorial
jurisdiction in
forfeiture proceedings. He relied largely on the definition in the
POCA of ‘proceeds of unlawful activities’,
which is
defined to mean: ‘any property or any service, advantage,
benefit or reward which was derived, received or retained,
directly
or indirectly, in the Republic or elsewhere, at any time before or
after the commencement of this Act, in connection with
or as a result
of any unlawful activity carried on by any person, and includes any
property representing property so derived’.
[6]
[10]
Forfeiture proceedings under chapter 6 of the POCA are not dependent
on the institution of criminal proceedings.
The focus in such
proceedings is not on the wrongdoer, but on the property which had
been used to commit an offence or which constitutes
the proceeds of a
crime.
[7]
The proceedings are
‘in rem’ and are civil proceedings.
[8]
The property subject to forfeiture in this matter, being credit
balances in a bank account, are incorporeal moveable assets and
I
accept, for purposes of this judgment, that at common law,
jurisdiction for such an action is determined by the
forum
rei sitae
,
which is the place of residence of the debtor.
[9]
[11]
However, jurisdiction of South African courts is not determined
solely by s 21 of the Courts Act. Generally, the
jurisdiction of our
courts has three sources; statutory, common law and inherent
jurisdiction. Apart from the Courts Act, matters
of jurisdiction are
dealt with in numerous statutory provisions.
[10]
Whether the POCA provides a statutory jurisdictional ground is a
question which requires an interpretation of the POCA, and in
particular chapter 6 thereof. The interpretation of documents,
including statutes, requires a consideration of the language used,
in
the light of the ordinary rules of grammar and syntax, in the context
in which the provision appears. The apparent purpose to
which it is
directed should be considered in the light of all the material known
to those responsible for its production. Finally,
when more than one
meaning is possible, each possibility must be weighed in the light of
all the factors, and a sensible meaning
is to be preferred to one
that leads to insensible or unbusinesslike results.
[11]
[12]
It has historically been a principle of public international law that
the jurisdictional competence of a State
is primarily
territorial.
[12]
In
Kaunda
at
para 38
[13]
, Chaskalson CJ
accepted that:
‘
It
is a general rule of international law that the laws of a State
ordinarily apply only within its own territory.’
However,
this basic principle appears to be losing ground. Thus, the
Constitutional Court stated in
Basson
[14]
at para 223, in respect of criminal prosecutions:
‘
We
accept that as a general proposition our courts have declined to
exercise jurisdiction over persons who commit crimes in other
countries. This, as Dugard points out, is an aspect of sovereignty
which has given rise to a presumption against the extraterritorial
operation of criminal law.’
It proceeded, however, to
note at para 224:
‘
It
seems generally to be recognised, even by those countries which limit
their jurisdiction to crimes committed within their territories,
that
there are exceptions to the territorial rule. . . . Exceptions are
also made in respect of transnational crimes where more
than one
state may have an interest in holding the offender liable for the
crime.’
[13]
Whilst forfeiture is a civil matter, it is alleged to arise, in this
case, at least in part, from transnational
money laundering. In
modern society, internationalisation has become a feature of social
and cultural life worldwide. Falling borders,
better roads and means
of transport, relaxed legislation in some places, and advanced
electronic technology have all contributed
to the escalation of
transnational crimes. Electronic banking has made the transfer of
money across borders uncomplicated and instantaneous,
and currencies
can be changed at the drop of a hat.
[15]
Kruger
[16]
suggests that
international crime and terrorism have led to the separation between
jurisdiction and the sovereignty of States.
Rather, treaties are now
used to establish suitable jurisdiction.
[17]
With the increase in organised crime, there has been a growing
perception, internationally, that conventional penalties are
inadequate
as measures of deterrence to crime. Thus, in
National
Director of Public Prosecutions and Another v Mohamed NO and
Others
,
[18]
Ackermann
J said:
‘
It
is common cause that conventional criminal penalties are inadequate
as measures of deterrence when organised crime leaders are
able to
retain the considerable gains derived from organised crime, even
on those occasions when they are brought to justice.
. . .
Various
international instruments deal with the problem of international
crime in this regard and it is now widely accepted in the
international community that criminals should be stripped of the
proceeds of their crimes, the purpose being to remove the
incentive for crime, not to punish them. This approach has
similarly been adopted by our Legislature.’
[14]
It was against this background that the POCA was promulgated. The
preamble to the POCA recognises the rapid growth
of organised crime
and money laundering, nationally and internationally. It records that
‘no person should benefit from the
fruits of unlawful
activities’, and that legislation is necessary to provide for a
civil remedy for the preservation, seizure
and forfeiture of property
which is derived from unlawful activities. Chapter 5, which applies
where there has been a prosecution,
and 6, which applies even where
no prosecution is instituted, provide the mechanism for such
forfeiture.
[15]
Forfeiture under chapter 6 of the POCA is a two stage process. The
first step is to obtain a preservation order
as provided for in s 38
of the POCA.
[19]
The section
provides for the application to be made ex parte, and the high court
may make a preservation order if there are reasonable
grounds to
believe that the property concerned is ‘an instrumentality of
an offence referred to in schedule 1’ or ‘the
proceeds of
unlawful activities’.
[20]
For present purposes I confine myself to ‘proceeds of unlawful
activities’.
[16]
Notice to any interested party is required after the preservation
order is made, and such party is afforded an
opportunity to enter an
appearance to resist the granting of a forfeiture order.
[21]
The Bobroffs did so. While a preservation order is in force, the NDPP
may bring an application for the property to be forfeited
to the
State.
[22]
Section 50 empowers
the high court to make an order of forfeiture, subject to the
provisions of s 52, provided that it finds on
a balance of
probabilities that the property concerned is ‘the proceeds of
unlawful activities’.
[17]
The definition of ‘proceeds of unlawful activities’
strikes at any property ‘derived, received
or retained,
directly or indirectly, in the Republic or elsewhere’.
‘Property’, is defined in the POCA to mean,
‘money
or any other movable, immovable, corporeal or incorporeal thing and
includes any rights, privileges, claims and securities
and any
interest therein and all proceeds thereof’.
[23]
The purpose of s 50(1) of the POCA, as read with the definition of
‘proceeds of unlawful activities’, in the context
of the
known developments worldwide in relation to transnational crime, is
to strip offenders of the proceeds of their crime wherever
they may
retain it. I am fortified in this conclusion by the provisions of the
International Co-operation in Criminal Matters Act
75 of 1996 (the
ICCM Act). The purpose of the ICCM Act, as recorded in the preamble
to the Act, is, amongst others:
‘
To
facilitate . . . the confiscation and transfer of the proceeds of
crime between the Republic and foreign States; and to provide
for
matters connected therewith.’
Section
19 of the ICCM Act provides for South Africa to request a foreign
State to assist it in the enforcing of a confiscation
order.
[24]
The ICCM Act was promulgated approximately two years prior to the
POCA, however, it is not insignificant that the definition of
a
‘confiscation order’ contained in the ICCM Act was
amended in 1998, simultaneously with the promulgation of the POCA,
to
mean:
‘
A
confiscation or forfeiture order made under the Prevention of
Organised Crime Act, 1998 (Act No. 121 of 1998).’
When
s 50 and the definition of ‘proceeds of unlawful activities’
in the POCA are viewed together with the amendment
of the ICCM Act,
the ineluctable conclusion to which I am driven is that they are
directed at enlisting international assistance
in the enforcement of
a forfeiture order made under the POCA in respect of property held in
another country. Therefore, the first
leg of the jurisdictional
enquiry must be determined in favour of the NDPP.
[18]
As adumbrated earlier, Mr Subel argued that, even if the court were
able to take cognisance of the dispute, the
NDPP failed on the second
leg of the jurisdictional enquiry, because this Court is unable to
give an effective judgment; that is,
one which could be enforced at
the instance of the court. It has often been said that effectiveness
is the basis of jurisdiction.
Thus, in
South
Atlantic Islands Development Corporation Ltd
[25]
Diemont J stated:
‘
If
the accent is to be laid on the question of relief it is because the
Court is concerned with the effectiveness or otherwise of
its
judgment. Where the relief asked for is such that it will not be
enforceable, the judgment becomes illusory and the Court should not
undermine its authority by giving such a judgment. This no doubt is
why it has been repeatedly stated that the principle of effectiveness
is the basis of jurisdiction.’
[19]
Traditionally, effectiveness would be achieved by an arrest
ad
fundandum jurisdictionis
,
or an attachment of property to found jurisdiction. The purpose of
the attachment to found jurisdiction was, thereby, to enable
the
court to pronounce a not altogether ineffective judgment.
[26]
An arrest to found jurisdiction has now been held to be
unconstitutional and no longer finds application in South Africa.
[27]
In respect of attachment, this Court in
Bid
Industrial
stated with reference to effectiveness, at para 57:
‘
As
to the principle of effectiveness, despite its having been described
as “the basic principle of jurisdiction in our law”,
it
is clear that the importance and significance of attachment has been
so eroded that the value of attached property has sometimes
been
“trifling”.’
These
comments have led some commentators to consider that it is doubtful
whether the doctrine of effectiveness can survive scrutiny.
[28]
[20]
Considering the rationale for the principle of effectiveness as the
basis for jurisdiction in
Bid
Industrial
,
this Court observed that the jurisdictional principles at issue
originated, ‘because courts have always sought to avoid
having
to try cases when their judgments will, or at least could, prove
hollow because of the absence of any possibility of meaningful
execution in the plaintiff’s jurisdiction’.
[29]
Whilst it may be that execution cannot be achieved within the
jurisdiction of the court, this is not a case where there is no
reasonable possibility of execution. Section 19 of the ICCM Act is
specifically directed at achieving the effectiveness of a forfeiture
order made in respect of assets abroad. Whilst it does not guarantee
the satisfaction of the forfeiture order, it does provide
a mechanism
for the achievement thereof, which has a reasonable prospect of
success. In the final analysis, as this Court remarked
in
Bid
Industrial
,
‘the responsibility for achieving effectiveness, absent
attachment, is essentially that of the parties, and more especially
the plaintiff. Economic considerations will dictate whether a South
African judgment has prospects of successful enforcement abroad
. .
.’.
[30]
[21]
The high court ordered that ‘authorised persons of Bank Mizrahi
Tefahot, Israel and Bank Discount, Israel
are directed to deposit the
balance of the proceeds in the aforementioned accounts into the
Criminal Assets Recovery Account’
established under the POCA.
In doing so, it purported to exercise jurisdiction over persons not
resident under its jurisdiction
and over whom it has no authority. As
adumbrated earlier, the mechanism for the enforcement of a forfeiture
order in respect of
property in a foreign State is by s 19 of the
ICCM Act. Accordingly, paragraph 3 of the high court order requires
amendment.
[22]
I have alluded earlier to the litigation in Israel which may have an
impact on the prospects of a successful execution,
depending on the
orders which may ultimately be made by the Israeli Courts. The facts
relating to that issue are not before us
and I am unable to make any
finding in that regard. I accordingly conclude that the high court
did have jurisdiction to entertain
the application for forfeiture,
for the reasons set out earlier.
[23]
I turn to the merits of the application. The first inquiry is whether
an offence has been committed. The NDPP relied
on theft, fraud, money
laundering and contraventions of the tax legislation. By virtue of
the conclusion to which I have come,
it is not necessary to consider
the aspects relating to tax contraventions.
[24]
The allegations of theft, fraud and money laundering arise
from two sources of alleged misconduct. Firstly, the NDPP
contended
that the Bobroffs had been guilty of overreaching their clients
through the abuse of contingency fee agreements from
2007 to 2016.
Secondly, they relied on the affidavit of Ms van Wyk, referred to
earlier. I shall revert to her affidavit.
[25]
It is necessary, first, to set out the context in which the
contingency fee agreements came to be concluded. As
I have said, the
Bobroffs practised predominantly in the field of personal injury
litigation and often on a contingency basis.
At common law a
practitioner was entitled to charge a reasonable fee for work
actually done. A contingency fee agreement between
a litigant and his
attorney, in terms of which the latter would take a percentage of the
award made, was unlawful.
[31]
In the 1990s, attorneys in South Africa expressed an interest to act
on behalf of clients on a contingency basis, comparable to
that
utilised in the United States of America, where a percentage of the
award would be taken in lieu of professional fees, and
some thought
that they might be entitled to do so at common law. Accordingly, in
1992, the Natal Law Society sought the guidance
of the then Chief
Justice Corbett. He responded:
‘
I
am prima facie of the view that any [contingency fee agreement]
between an attorney and his client . . . would be unlawful at
common
law. I list some common law authorities which I have consulted in
this regard and also some case law (I do not claim that
my somewhat
hurried research has been at all exhaustive): Voet 2.14.18;
Kersteman-Woordenboek; S V Conditie van Triumphe; Grotius
3.1.41 and
Schorer’s Note CCIXXV; Van der Keessel Praelectiones 3.1.41;
Van Leeuwen RD Law 5.4.2;
Incorporated
Law Society v Reid
(1908) 25 (SC) 612;
Goolam
Mohamed v Janion
(1908) 29 (NLR) 304;
Hollard
v Zietsman
(1885) 6 (NLR) 93, a judgment of Connor CJ containing a full review
of the common law authority;
Campbell
v Welverdiend Diamonds Limited
1930 (DPD) 287, where a number of the cases are [reviewed]. See also
Christie, the Law of Contract 2 ed, 420. It is true that the
decision
of
Patz
v Salzburg
(1907) (TS) 526 appears to run counter to the general trend, but this
did not concern an arrangement between an attorney and client.’
[32]
Notwithstanding
these observations, there was growing recognition that indigent
persons, frequently victims who had sustained personal
injury, were
unable to generate sufficient funds to pay for litigation to recover
compensation for their injuries. The CFA was
accordingly promulgated
in 1997. The CFA permits practitioners to charge up to double their
usual rate, subject to a maximum of
25 per cent of the award made, in
accordance with a written agreement entered into prior to litigation.
[26]
Notwithstanding the CFA, and the weight of the common law authority,
attorneys practising under the auspices of
the law society obtained
an opinion from counsel that attorneys were entitled to raise a fee,
at common law, under a contingency
fee agreement, which would not be
limited to the 25 per cent stipulation. In July 2002, the law society
approved the opinion and
endorsed the practice. Notwithstanding their
endorsement, they understood that common law contingency fee
agreements were controversial
and might yet be held to be unlawful.
They accordingly advised their members to enter into additional fee
agreements with their
clients, either under the CFA or an agreement
to charge a reasonable fee in terms of the common law. Whilst there
is some dispute
as to the frequency with which the Bobroffs used
common law contingency fee agreements between 2002 and 2014 to take
more than
25 per cent of an award made to their clients, they
acknowledged that they did so. Ronald Bobroff explained that they
entered into
additional fee agreements with clients, as recommended
by the law society, as a ‘fall back’, in case the common
law
contingency fee agreement might be declared invalid.
[27]
In due course some clients, including Ms de la Guerre, challenged the
lawfulness of the common law contingency
fee agreement. Her matter
was pursued all the way to the Constitutional Court where, on 20
February 2014, the practice was declared
to be unlawful and the
agreement invalid.
[33]
The
Bobroffs contend that they never intentionally or fraudulently
entered into such agreements, and did not do so after the judgment
of
the Constitutional Court. However, they did not repay their
ill-gotten gains to their erstwhile clients after the final judgment.
In
S v
Graham
,
[34]
it was held that if A, mistakenly thinking that an amount is due to
B, gives B a cheque in payment of that amount and B, knowing
that the
amount was not due, deposits the cheque, B commits theft of money
although he has not appropriated money in the corporeal
sense. It is
his claim to be entitled to be credited with the amount of the cheque
that constitutes the theft.
[35]
In
Nissan
,
this Court explained:
‘
The
position can be no different where A, instead of paying by cheque,
deposits the amount into the bank account of B. Just as B
is not
entitled to claim entitlement to be credited with the proceeds of a
cheque mistakenly handed to him, he is not entitled
to claim
entitlement to a credit because of an amount mistakenly transferred
to his bank account. Should he appropriate the amount
so transferred,
ie should he withdraw the amount so credited, not to repay it to the
transferor but to use it for his own purposes,
well knowing that it
is not due to him, he is equally guilty of theft.’
[36]
A
fortiori, where money is paid to A, in terms of an agreement which A
knows may be open to challenge, and A retains and appropriates
such
money to himself after the unlawfulness of the agreement is
confirmed, he commits theft. The Bobroff’s overreaching,
coupled with their decision to retain their gains and investing or
reinvesting same for their own benefit, after 2014, knowing
that they
were not entitled to the money, constituted theft.
[28]
The second pillar on which the NDPP’s case rests is the
affidavit of Ms van Wyk. She was an experienced
legal bookkeeper
employed by the firm on 16 September 2010. As adumbrated
earlier, she attested to an affidavit as a ‘whistleblower’.
She made numerous damning allegations of financial impropriety, which
she had observed, and of misappropriation of funds. In order
to place
the legal issues in context, it is necessary to set out the thrust of
some of her observations in some detail. I record
the material
averments which she made and which are sufficient for present
purposes. When she took up employment during September
2010, she
said, the financial records of the firm were in chaos and she spent
approximately five months doing credit reconciliations
relating to
the period prior to her employment.
[29]
During October 2010, a dispute arose between Discovery Health
Insurance (Discovery), on the one hand, and the firm,
on the other,
in respect of medical and hospital expenses recovered by the firm in
litigation, on behalf of members of Discovery,
which had allegedly
not been paid over to Discovery. Ms van Wyk said that the issue at
the heart of the dispute was that the firm
had appropriated 40 per
cent of the damages recovered from the Road Accident Fund (RAF) with
the result that Discovery, and the
clients, received only 60 per cent
of the hospital and medical expenses, which had been paid to the firm
by the RAF. When the issue
arose, Ronald Bobroff requested her to
identify the Discovery members who had been represented by the firm
in the preceding three
years (from 2008 to 2010). She was able to
trace approximately 300 such clients. However, Discovery had only
identified 70 cases
and, accordingly, these 70 files had been
retrieved from the archives. Ms van Wyk noticed that many of the
files did not contain
final accounts to clients, notwithstanding that
they had been archived. She also observed that trust money was
reflected on some
files, which had not been used to settle
outstanding creditors, and fees had not been debited. In some cases
clients had not even
been paid.
[30]
Darren Bobroff, she said, took possession of the 70 files and set to
work on them. He manufactured false final
accounts to bring the files
up to date and to hide the incorrect accounting on the files. In this
regard, she noted that in many
instances the firm had appropriated
more than what they were entitled to as fees, and fictitious
disbursements had been created
and deducted. When Darren Bobroff had
completed these fictitious financial accounts, he instructed Ms van
Wyk to pass the relevant
entries so that the ledger would correlate
with the account. This, she stated, necessitated countless reversals
of fictitious disbursements.
[31]
Ms van Wyk declared that, quite apart from the Discovery issue, it
was a standard instruction from Darren Bobroff
to ‘take R15 000
to disbursements. No VAT’ in respect of
each file. When she queried the
instruction, she was told by him that
the auditor of the firm had ‘okayed it’. These
‘disbursements’ bore
no relation to any actual expenses.
[32]
Flowing from the dispute with Discovery, a formal complaint was laid
with the law society during 2011 by one Matthew
Graham, a former
client of the firm, who alleged that he had been overreached. The
complaint became the focus of Ronald Bobroff’s
attention at the
time. Attorney George van Niekerk, of the firm Edward Nathan
Sonnnenberg, represented Mr Graham and four other
clients. He
arranged to inspect the files of the firm in respect of these
clients. At the time, Ronald
Bobroff’s personal assistant put
together five files for inspection. The file notes evidencing time
spent on various attendances,
Ms van Wyk said, were fabricated and
all financial information was removed from the files. Two control
files, containing all the
material which had been removed, were
retained at the home of Ronald Bobroff, while the sanitised versions
were presented to Mr
van Niekerk for inspection.
[33]
After inspecting the files Mr van Niekerk called for proof that value
added tax (VAT) had in fact been raised,
and paid, on the fee claimed
in the Matthew Graham matter. Ronald Bobroff then instructed Ms van
Wyk to pay VAT to the South African
Revenue Service (SARS). He
contended that the earlier failure had occurred due to an oversight
by the previous bookkeeper. Thus,
he suggested, the narrative on the
ledger account should have read ‘interim fee’ and ‘paid
VAT’. However,
in fact, the account, in the records of the
firm, revealed that the fee taken by the firm, although not formally
raised, had been
paid in full into a Bidvest account. She was not
acquainted with the identity of the accountholder, but did know that
the money
was never returned from the Bidvest account to the business
account of the firm. She, accordingly, informed Ronald Bobroff that
she could not carry out his instruction until the money had first
come back into the trust account of the firm.
[34]
The allegations by Ms van Wyk speak to specific instances of
widespread theft and fraud involving the Bobroffs
from approximately
2008 (in respect of the Discovery files) to 2012. In response, the
Bobroffs attacked her character and contended
that she was dishonest,
had previously been convicted of fraud and had been recruited by
third parties to spy on the firm and leak
information. However, they
failed to engage with the very pertinent allegations of financial
impropriety. These allegations, accordingly,
stood largely
uncontested. The unsubstantiated attack upon the character of Ms van
Wyk cannot create a dispute of fact. In
Wightman
,
[37]
this Court, at para 13, said:
‘
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where a bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can therefore
be expected of
him. But even that may not be sufficient if the fact averred lies
purely within the knowledge of the averring party
and no basis is
laid for disputing the veracity or accuracy of the averment. When the
facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to provide an answer (or
countervailing evidence) if they be not true
or accurate but, instead
of doing so, rests his case on a bare or ambiguous denial the court
will generally have difficulty in
finding that the test is satisfied.
I say “generally” because factual averments seldom stand
apart from a broader matrix
of circumstances all of which needs to be
borne in mind when arriving at a decision.’
These
comments are particularly apt in the present case. The Bobroffs are,
as I have said, experienced attorneys well acquainted
with the
demands of litigation, and they have chosen not to engage with the
damaging allegations of dishonesty, theft and fraud
levelled against
them. I am therefore satisfied, on a balance of probabilities, that
these offences were established.
[35]
In respect of the alleged money laundering, Ms van Wyk became aware
of what has been described as the ‘Zunelle
account’, in
which substantial amounts of the firm’s money had been
deposited. It purported to be an investment account
established in
terms of s 78(2)
(a)
of the Attorneys Act 53 of 1979.
However, the ‘Zunelle account’ was not referred to
anywhere in the books of the firm,
nor was Zunelle a trust creditor
of the firm. Ms van Wyk was not permitted to have access to the
account, but, she said, she had
‘been advised’ that there
were multiple ‘Zunelle accounts’ at Investec Bank and
Standard Bank. These allegations
are, of course, hearsay, but the
Bobroff’s response to them was not consistent.
[36]
In the affidavit in terms of s 39 of the POCA, they explain that the
shareholders of the firm, acting on the advice
of its accountant,
established a trust investment account with Investec Bank in the name
of Zunelle, which is Hebrew for ‘sons’,
as it was
intended to utilise those funds to purchase property to be owned by
the sons of the shareholders and directors of the
firm. The money
deposited therein, so it was explained, constituted surplus post fee
amounts which were due to the Bobroffs and
Mr Bezuidenhout, their
co-director. However, in the answering affidavit to the forfeiture
application they said that the ‘business
banker of the
practice’ advised that Stanlib offered the highest interest
return on moneys invested with it, but subject
to such moneys being
identified as s 78(2)
(a)
investments. Amounts that could be
invested in this manner would only have been amounts that constituted
trust funds paid, by a
client, into the trust account of an attorney,
whereafter the interest that accrued thereon would have to be paid to
the client
concerned. This ‘Zunelle account’ was opened
at Stanlib and the Bobroffs admitted that an amount in excess of R32
million
was deposited therein. They candidly acknowledged that the
money did not constitute trust funds held on behalf a client. Of the
‘Zunelle account’ at Investec there was no word. Ronald
Bobroff alleged that the account at Stanlib was eventually
disclosed
to the SARS and closed. The money, he said, was returned to the
practice account. However, he provided no banking records
in support
thereof, did not disclose when this allegedly occurred, and did not
take the court into his confidence in respect of
the amount of money
which was returned to the business account of the firm.
[37]
That brings me to a consideration of the money invested in the BMT.
Darren Bobroff initially contended that these
funds were primarily
from money legitimately earned by him from the firm. I shall revert
to this issue. However, significantly,
he frankly affirmed that the
money did not always flow directly to the BMT from the firm’s
business account, but rather,
it flowed through other financial
institutions, which were authorised to transfer funds from South
African banking institutions,
eventually to be received by the BMT.
He proffered no explanation for this practice, nor did he reveal the
accounts through which
the funds were channelled.
[38]
In a supplementary answering affidavit, filed at the eleventh hour,
the Bobroffs contended that they had over the
years frequently
travelled abroad, usually accompanied by their spouses, and that they
had deposited their travel allowances in
various banking accounts
abroad. To this end, they had opened and closed numerous accounts for
the reason that they had been advised
by the banks that it was a
simple matter for banking authorities in South Africa to determine
whether the travellers’ cheques
had been deposited into
international bank accounts, and to then take steps to attempt to
attach the credit amounts. The purpose
of the exercise was
accordingly to disguise the origin and identity of the money. This
practice bore all the hallmarks of money
laundering.
[39]
Mr Subel submitted that the NDPP had failed to establish that the
amounts held in the BMT constituted proceeds
of unlawful activities.
The definition of ‘proceeds of unlawful activities’,
quoted earlier, relates to any property,
benefits or reward which has
been derived, received or retained, directly or indirectly, in
connection with or as a result of any
unlawful activity, and it
includes any property representing property so derived. In order to
bring property within the ambit of
the definition, a link must be
established, on the balance of probabilities, between the identified
assets and the alleged offences.
A benefit derived ‘directly’
will include, for example, funds paid for a bribe, or amounts
actually stolen by a thief.
‘Indirect’ benefits do not
accrue directly from the commission of the offence and would, it
seems to me, include the
appreciation in value of an asset stolen,
interest accrued on embezzled funds held in a bank account, or a
stock portfolio purchased
with stolen funds. It would also include
ancillary benefits that would not have accrued but for the commission
of the offence.
This Court stated in
R
O Cook Properties
,
[38]
at para 66:
‘
It
is evident that the definition of “proceeds of unlawful
activities” is cast extremely wide, and the interpretative
caution Miller JA expressed regarding “in connection with”
in
Lipschitz
NO v UDC Bank Ltd
. . .
applies. But with
that adjustment made, we consider that the amplitude of the
definition should be approached somewhat differently
from that in the
case of “instrumentality of an offence”. This is because
the risk of unconstitutional application
is smaller.’
It
proceeded, in para 67, to state:
‘
We
therefore approach the definition on the basis that, subject to
necessary attenuation of the linguistic scope of “in connection
with”, it should be given its full ambit.’
[40]
Where proceeds of crime have been laundered with the very purpose of
disguising the origin and identity thereof,
they may be mixed with
other assets which may not be the proceeds of crime, and they may be
converted into other forms of assets
which technically are not direct
proceeds of crime. In the case of money, this would typically be the
case. The definition of the
concept in s 1 of the POCA therefore
includes ‘any property representing property so derived’.
In
Botha
,
[39]
a corrupt relationship existed between Ms Botha, at the time the head
of the Northern Cape Department of Social Services and Population
Development, and Trifecta Investment Holdings (Pty) Ltd (Trifecta).
Trifecta executed and paid for renovations to Ms Botha’s
family
home. The renovations cost R1 169 680.49. After Ms Botha
had died, the NDPP sought to recover the value of the
benefit as
proceeds of crime from her estate, in terms of s 48(1) and s 50 of
the POCA. The Constitutional
Court held that
the amount paid by Trifecta in respect of the renovations represented
the proceeds of crime, in the hands of Ms
Botha, and ordered, in
terms of s 50(1)
(b)
,
that an amount equivalent to the benefit received be paid from Ms
Botha’s estate to the State.
[41]
I revert to the credits held in the BMT. Initially, Darren Bobroff
said that the amounts held in the BMT were sourced
from:
(a)
Dividends paid to him by the firm from time to time as a shareholder;
(b)
Unutilised income from the firm arising from his employment as an
attorney and a director of the firm;
(c)
Amounts transferred from banking institutions in Australia; the
amounts being from access bond
facilities that were available to him
from the banking institutions concerned in Australia, and which
banking institutions held
registered bonds against his immovable
property in Sydney. The reason for the transfer of these funds to
Israel, he said, was that
he and Ronald Bobroff decided, towards the
end of 2011, to invest in property in Israel; and
(d)
The credit amount in an account which had been held by his sister in
Israel, and which had subsequently
been closed. The money was then
deposited into his account in the BMT. He accordingly asserted that
he held this amount in trust
on behalf of his sister in the sum of
approximately AUSD 118 563.99.
[42]
Later, as I have said, he explained that on each occasion when he
travelled abroad, he deposited his travel allowance
into accounts at
banking institutions in Israel. He revealed three banking accounts
which he had held at Bank Leumi, five at the
BD, one which had been
held either at BD or Bank Leumi, and the BMT account, which is the
subject of the forfeiture order. His
explanations regarding the
accounts are vague and unhelpful. He declared that on each occasion
when the accounts were closed ‘to
the best of [his] knowledge’
the credit balances ‘would have been transferred into one or
more of [his] Israeli bank
accounts’.
[43]
Further, in the supplementary answering affidavit, he disavowed the
earlier declaration that he held moneys in
trust on behalf of his
sister. He now suggested that it had been an error and that he had
intended to refer to his daughter. Her
age is not disclosed, nor did
Darren Bobroff say from where she obtained the money, and she did not
attest to an affidavit. Save
for these generalisations, no
explanation was provided for the source, in each instance, of the
moneys deposited into the various
accounts or the movement of money
between accounts.
[44]
Darren Bobroff graduated in 1999. He then emigrated to Australia
where he was admitted to practise as a legal practitioner
in 2001.
His sojourn in Australia was, however, short-lived, and he returned
to South Africa in March 2002. As I have said, he
was admitted to
practise here in 2004 and became a director of the firm in 2006.
After just five years of practise he held an account
with Bank Leumi
in Israel. He said that he did not recall when the account was
opened. The account had five different components;
Australian Dollars
(AUSD), Euros (EUR), Great British Pounds (GBP), United States
Dollars (USD), and Israeli Shekels (ILS).
[45]
During the period from 21 July 2010 and 2 November 2010, when the
dispute with Discovery arose at the firm, and
approximately a year
before the alleged decision to invest in property in Israel, Darren
Bobroff caused an amount of AUSD 1 184 273.84
to be
deposited into the account. No explanation for the source of these
funds was advanced and the unsubstantiated suggestion
that it
represented the surplus earnings of a junior attorney does not
commend itself to me. The account was characterised thereafter
with
regular, sometimes substantial, deposits of AUSD. The sums invested
in the other components were substantially smaller, but
the source
thereof remained equally unexplained.
[46]
In respect of the subsequent AUSD deposits, Darren Bobroff contended
that while he was in Australia in 2001 he,
and his partner, purchased
a residential unit together for the purchase price of AUSD 345 000,
which was bonded in favour
of the National Australian Bank. Their
relationship failed in 2002 and upon their separation Darren Bobroff
acquired her 50 per
cent interest in the property and assumed
responsibility for the entire bond. The property in Australia, he
said, was then let
and the rental received exceeded his bond
repayment. In this manner, his liability to the National Australian
Bank, allegedly decreased
over the years to the extent that he was
able to access the loan account up to the maximum loan amount. In
consequence of the decision
to invest in property in Israel, Darren
Bobroff transmitted the excess funds to the Bank Leumi in Israel. The
amounts withdrawn
from the bond account, he said, were first
channelled to his savings account before being transferred to the
Bank Leumi. He did
not explain why this route was followed.
[47]
In January 2002, he purchased a second property in Australia for
AUSD 650 000. This, too, was let and he contends
that his bond
liability to HSBC bank was depleted in the same manner from the
rentals received. Thus, again, he had access to the
full extent of
his credit on the bond account. On 25 February 2013, just two weeks
after the full court in Gauteng had declared
the common law
contingency fee agreement with Ms de la Guerre invalid, he withdrew
an amount of AUSD 280 000 from his
bond account, which was
deposited in the account at Bank Leumi. Again, during August 2013, he
alleged that, he withdrew an amount
of AUSD 170 000, which was
so transferred to Bank Leumi. These sums are reflected in the bank
statements provided. However,
Darren Bobroff further contended that
on 17 April 2015 an amount of AUSD 160 000 was withdrawn from
his bond account and transferred
via his savings account to Bank
Leumi. Whilst this withdrawal is reflected in his HSBC statements,
the bank statements of Bank
Leumi, reflect no deposit during April
2015.
[48]
The source and movement of the funds in the various accounts fall
within the exclusive knowledge of Darren Bobroff.
His explanation,
such as it is, falls woefully short in numerous respects of that
which one might reasonably expect of him. No
explanation was
proffered for the very considerable amounts deposited into the
account at Bank Leumi during 2010 to 2013, nor the
substantial
movement of funds from the account. This comes in the face of
allegations of significant financial impropriety on his
part at the
firm during this period, which remained entirely unanswered, and the
less than satisfactory explanations relating to
the ‘Zunelle
accounts’. The withdrawal of AUSD 160 000, which was not
channelled to Bank Leumi, as alleged, suggests
a further movement of
funds which was not explained. Whilst some funds did pass through the
bond account of Darren Bobroff at the
National Australian Bank and
the HSBC bank, it could hardly provide an explanation for the source
of the funds, particularly in
the face of his admitted banking
conduct, which, as I have said, bore all the hallmarks of money
laundering. It is the source of
the funds which is material. His
suggestions of a lucrative rental market in Australia are not backed
up by any proof of rental
agreements, nor a set of full bank
statements of his bond accounts reflecting instalments which fell
due, nor affidavits of his
bankers or rental agents.
[49]
The second account which he revealed, was held jointly by the
Bobroffs at Bank Leumi in four denominations (account
no 60863/90).
The statements provided by the Bobroffs for this account suggest that
it was opened in 2009, in the period described
by Ms van Wyk in
respect of the Discovery files. Between 17 September 2009 and
2 October 2009, an amount of AUSD 2 167 710.80
was transferred into this account, on 17 September 2009,
USD 1 050 000, and on 4 November 2009, GBP
174 982.20.
These payments, too, predate the alleged decision to
invest in property in Israel and occurred at approximately the time
of the
impropriety described by Ms van Wyk. In the absence of a
cogent explanation, which is clearly called for, I consider that the
overwhelming
probability is that these funds are the proceeds of the
crimes relied on by the NDPP.
[50]
These amounts were invested and reinvested over the intervening years
and showed corresponding growth. Between
25 February 2016 and 13 June
2016, all these amounts were transferred to the BMT account. Mr Subel
argued that, even if the NDPP
did establish unlawful conduct, the
interest earned on these investments could not be said to have been
derived or retained ‘as
a result of’ unlawful activity,
but instead resulted from the investments. He relied for this
argument on
R O Cook
. The reliance is misplaced. In
R O
Cook
, this Court found that the interest derived from the
investment of money, which had been legitimately earned from lawful
activity,
did not constitute proceeds of unlawful activity. Once it
is shown, however, on a balance of probabilities, that the funds had
been derived from fraudulent activity, it follows, for the reasons
set out earlier, that any appreciation thereof must also be proceeds
of that activity. I am accordingly satisfied that a sufficient link
was established between the credit balance in the BMT and the
offences set out earlier.
[51]
Ronald Bobroff provided a similar explanation to that of his son for
the money in the BD. He identified eight banking
accounts which he
had conducted in Israel, America and the United Kingdom. Like Darren
Bobroff, he too, was unable to recall when
many of these accounts
were opened or closed. He, too, provided vague, speculative
explanations about the destinations of the credit
balances when the
accounts were closed.
[52]
The BD account in issue in the forfeiture application was comprised
of four denominational components being; 63 057.76
Canadian
Dollars (CAD); AUSD 284 785.32; USD 437 547.84; and GBP
99 544.23, in September 2016.
[53]
The statements provided record the transfer of CAD 61 000 into
the BD account on 11 January 2010. No attempt
has been made to
explain the source of these funds. As for the GBP component, a single
bank statement of an account at the BD held
in the name of Darren
Bobroff, opened on 5 May 2015, was provided, which reflects an
opening payment in the amount of GBP 99 396.20,
recorded to be
‘COM payment order from abroad’. Darren Bobroff explained
that ‘in all likelihood, this transfer
was from a bank account
conducted by Ronald [Bobroff] at Bank Leumi UK’. Ronald Bobroff
disclosed his bank account at Bank
Leumi UK PLC, which he contended
was opened ‘in or about 2012 and was closed in or about 2015’.
When it was closed,
he said, ‘the credit amounts, to the best
of [his] knowledge, were deposited into an account conducted by [him]
at one of
those banks referred to herein or into a bank account
conducted by Darren [Bobroff]’.
[54]
The amount of GBP 99 220 was transferred on 4 August 2015 from
the said account, in the name of Darren Bobroff,
to the account of
Ronald Bobroff at the BD.
[40]
No explanation was advanced for depositing the amount in Darren
Bobroff’s account for a period of three months, only to return
it to Ronald Bobroff.
[55]
The origin of GBP 99 220 remains unexplained, save that it may
have been channelled via an account held by
Ronald Bobroff in the UK,
and its movement accords with Darren Bobroff’s frank admission
that money which flowed from South
Africa passed through various
financial institutions in different countries to Israel. I consider
that, on a balance of probabilities,
the CAD and GBP balances were
the proceeds of unlawful activity.
[56]
The remaining two components of the BD account are different. In
respect of the AUSD investment and the USD investments,
a relatively
comprehensive set of bank statements have been provided. Ronald
Bobroff contends that he opened an account with the
BD in
approximately 1981 and deposited various amounts therein. Bank
statements commencing in 2005 have been annexed. In
respect of the USD component, there was at the end of 2005 three
separate investment amounts totalling USD 11 972.06,
USD
55 292.08 and USD 163 218.62. These amounts were
periodically reinvested until the end of 2006. At this juncture
a new
account held jointly by the Bobroffs was opened and the three
investment amounts transferred to the new account. No withdrawals
were made from this account and, save as set out hereafter, no
further deposits were made into this account. The three amounts
were
persistently reinvested together with interest thereon.
[57]
The only deposit made into the account occurred on 4 August 2015 when
an amount of USD 180 770 was transferred
into the account from
Darren Bobroff. This sum was separately invested and at the time when
the account was frozen the balance
thereof was USD 181 330.
Predictably, the source of the money was not explained and the
transfer occurred at a time when a flurry
of money transfers took
place, under Darren Bobroff’s control. In my view, in the
absence of an explanation, this amount,
too, constitutes proceeds of
unlawful activity.
[58]
Save for this single deposit, however, the account in respect of the
USD component predated the alleged offences
and remained
uncontaminated until 2016. The AUSD component may likewise be traced
through the bank statements provided. It was
comprised of two sums of
money transferred from the original BD account to the Bobroff’s
joint account in 2007. These amounts
were similarly periodically
invested and reinvested attracting interest throughout the period.
No additional
amounts were deposited into this
account and the investments appear to bear no relationship to the
offences raised by the NDPP.
[59]
Of the credits in the BD account, USD 256 217.84 and AUSD
284 785.32 have not been shown to be proceeds
of unlawful
activity. A forfeiture order involves a deprivation of property and
must be consistent with the Constitution.
[41]
The NDPP must accordingly demonstrate that the forfeiture which it
seeks is proportional to the proceeds received.
[42]
Ms van Wyk made telling allegations against both the Bobroffs which
amount to fraud and theft. Whilst the precise extent of the
theft may
not be demonstrable on the papers, it may safely be said to exceed
the amount in the BD and BMT accounts. As I have said,
Ms van Wyk
alluded to a standard instruction that all the files should be
debited with R15 000 in lieu of postage and petties.
The firm
dealt with thousands of files per annum and Ronald Bobroff ventured
an estimate of at least 6 000 matters in 2013
to 2015. The
period of misconduct testified to by Ms van Wyk extended over a
period of five years prior to 2012. A simple calculation
reveals, on
6 000 files alone, that an amount of R90 million would have been
illegitimately charged to unsuspecting clients on
this basis. Very
substantial sums thereof were moved into accounts of the Bobroffs in
2009 to 2010 upon which interest has accrued
in the interim. The
origin of the money is a matter exclusively within the knowledge of
the Bobroffs and, save as I have said,
they have made no attempt to
explain it. The conclusion is therefore that the forfeiture order
which I make is not disproportionate
to the proceeds received from
the unlawful activity proved.
[60]
In the result, the following order is made:
1
The order of the high court is amended as follows:
(a)
By the addition to para 1.2, after the word ‘Bobroff’ of
the following:
‘
,
save for the amounts of USD 256 217.84 and AUSD 284 785.32’;
and
(b)
Paragraph 3 is set aside and replaced with the following:
‘
The
balance of the proceeds in the accounts, as set out in para 1 above,
are to be paid into the Criminal Assets Recovery Account
established
under s 63 of the POCA, number 80303056, at the South African Reserve
Bank, Vermeulen Street, Pretoria.’
2
Save to the extent set out in para 1 above, the appeal is dismissed
with costs, including
the costs of two counsel, where so employed.
__________________________
J
W EKSTEEN
ACTING
JUDGE OF APPEAL
Appearances
For
appellants: A Subel SC
Instructed
by: John Joseph Finlay Cameron,
Sandton
Lovius
Block Inc, Bloemfontein
For
respondent: E C Labuschagne SC (with him S de
Villiers)
Instructed
by: The State Attorney, Pretoria
The
State Attorney, Bloemfontein
[1]
At
the time of the application the credit balances, which were held in
various currencies, equated to approximately R99 million.
[2]
The
application was also directed at striking the name of the third
director of the firm, Mr Stephen Derek Bezuidenhout, from
the role
of practitioners.
[3]
Hugo v
Wessels
1987 (3) SA 837
(A); 4
Lawsa
3 ed para 26 and E Bertelsmann and DE van Loggerenberg
Erasmus
Superior Court Practice
2 ed (2015) at A2-102.
[4]
Veneta
Mineraria Spa v Carolina Collieries (Pty) Ltd (in liquidation)
1987 (4) SA 883
(A), in respect of s 19(1) of the Supreme Court Act
59 of 1959, which read in identical terms to
s 21
of the
Superior
Courts Act.
>
[5]
E Bertelsmann and DE van Loggerenberg
Erasmus
Superior Court Practice
2 ed (2015) at A2-103 to A2-104. (Latin terms omitted.)
[6]
Section
1
of the POCA.
[7]
National
Director of Public Prosecutions v R O Cook
2004 (2) SACR (SCA).
[8]
Section
37
of the POCA.
[9]
See
Gallo
Africa Ltd and Others v Sting Music (Pty) Ltd and Others
[2010] ZASCA 96
;
2010 (6) SA 329
(SCA) at 334A-B and
MV Snow
Delta Serva Ship Ltd v Discount Tonnage Ltd
2000 (4) SA 746
(SCA) para 9-11.
[10]
See
Erasmus at A2-89.
[11]
See
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[12]
See
European Court of Human Rights,
Bankovic
and Others v Belgium and Others
ECHR 2001-XII;
[2001] ECHR 890
para 59, referred to with approval in
Okah
v S
[2003] 4 All SA 775 (SCA).
[13]
Kaunda
and Others v President of the Republic of South Africa and Others
2004 (10) BCLR 1009
(CC);
2005 (4) SA 235
(CC).
[14]
S v
Basson
2005
(12) BCLR 1192 (CC); [2005] ZACC 10; 2007 (3) SA 582 (CC).
[15]
See
Albert Kruger
Organised
Crime and Proceeds of Crime Law in South Africa
2 ed (2008) at 3 para 1.4.1 and at 4 para 1.4.4.
[16]
Kruger
fn 13 above.
[17]
Kruger
fn 13 above
at
176 fn 65.
[18]
National
Director of Public Prosecutions and Another v Mohamed NO and Others
[2002] ZACC 9
;
2002
(2) SACR 196
(CC) para 15.
[19]
Section
38(1)
provides: ‘
The
National Director may by way of an
ex
parte
application
apply to a High Court for an order prohibiting any person, subject
to such conditions and exceptions as may
be specified in the order,
from dealing in any manner with any property.’
[20]
Section
38(2)
provides for the high court to make a preservation order:
‘
If
there are reasonable grounds to believe that the property concerned-
(a)
is
an instrumentality of an offence referred to in Schedule 1;
(b)
is
the proceeds of unlawful activities; or
(c)
is
property associated with terrorist and related activities.’
[21]
Section
39.
[22]
Section
48.
[23]
Section
1
of the POCA.
[24]
Section
19(1) of the ICCM Act provides: ‘
When
a court in the Republic makes a confiscation order, such court may
on application to it issue a letter of request in which
assistance
in enforcing such order in a foreign State is sought if it appears
to the court that a sufficient amount to satisfy
the order cannot be
realised in the Republic and that the person against whom the order
has been made owns property in the foreign
State concerned.’
[25]
South
Atlantic Islands Development Corporation Ltd v Buchan
1971
(1) SA 234
(C) at 240D-E.
[26]
See
Thermo
Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd
1969 (2) SA 295
(A) at 306H-307A.
[27]
Bid
Industrial Holdings (Pty) Ltd v Strang and Others
[2007]
ZASCA 144; [2008] 2 All SA 373 (SCA).
[28]
See
4
Lawsa
3 ed replacement; D Harms
Civil
Procedure in the Superior Courts
para 27.
[29]
Bid
Industrial
para
55.
[30]
Bid
Industrial
para
55.
[31]
See
R H Christie
Law
of Contracts in South Africa
7ed
(2016) at 412.
[32]
See
De
La Guerre v Ronald Bobroff and Partners Incorporated
[2013] ZAGPPHC 33 para 13.
[33]
Ronald
Bobroff & Partners Incorporated v De La Guerre
;
South
African Association of Personal Injury Lawyers v Minister of Justice
and Constitutional Development
[2014] ZACC 2; 2014 (3) SA 134 (CC).
[34]
S v
Graham
1975
(3) SA 569 (A).
[35]
See
Nissan
South Africa (Pty) Ltd v Marnitz NO and Others
(Stand
186 Aeroport (Pty) Ltd intervening)
[2004]
ZASCA 98
;
[2006] 4 All SA 120
(SCA) at 127B-C.
[36]
Nissan
para
25.
[37]
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008]
ZASCA 6; [2008] 2 All SA 512 (SCA).
[38]
National
Director of Public Prosecutions v R O Cook Properties (Pty) Ltd
2004 (2) SACR (SCA)
;
National Director of Public Prosecutions v 37 Gillespie Street
Durban (Pty) Ltd and Another
[2004]
ZASCA 37
;
National Director of Public Prosecutions v Seevnarayan
[2004] 2 All SA 491 (SCA).
[39]
National
Director of Public Prosecutions v Botha NO and Another
[2020]
ZACC 6; 2020 (1) SACR 599 (CC); 2020 (6) BCLR 693 (CC).
[40]
The
account subject to the forfeiture order.
[41]
National
Credit Regulator v Opperman and Others
[2012]
ZACC 29
;
2013
(2) SA 1
(CC).
[42]
Prophet
v National Director of Public Prosecution
[2006]
ZACC 17
;
2007
(6) SA 169
(CC); See also s 19 of the POCA in respect of the value
of proceeds of unlawful activity.