Regiments Fund Managers (PTY) Ltd and Others v The National Director of Public Prosecutions and Another (40451/2019) [2022] ZAGPJHC 659 (1 September 2022)

80 Reportability

Criminal Law

Brief Summary

Restraint Orders — Urgent Application for Legal Expenses — Applicants sought urgent relief to access restrained assets for legal expenses pending appeal against a provisional restraint order under the Prevention of Organised Crime Act (POCA) — Curator bonis indicated insufficient assets to meet restraint value and refused to release funds — Court found urgency established as applicants required legal representation in ongoing appeal — Applicants complied with disclosure obligations under section 26(6) of POCA, and refusal to release funds by curator bonis was unjustified — Application granted, allowing access to funds for legal expenses.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment in the Gauteng Division, Johannesburg, concerned an urgent interlocutory application arising from restraint proceedings brought under Chapter 5 of the Prevention of Organised Crime Act 121 of 1998 (POCA). The application sought to compel the curator bonis (appointed under a restraint order) to release funds from restrained property to enable the applicants to pay reasonable legal expenses for pending appellate litigation.

The applicants were Regiments Fund Managers (Pty) Ltd, Regiments Securities Ltd, Ash Brook Investments 15 (Pty) Ltd, Coral Lagoon 194 (Pty) Ltd, and Kgoro Consortium (Pty) Ltd. The first respondent was the National Director of Public Prosecutions (NDPP), and the second respondent was Eugene Nel N.O., cited in his capacity as curator bonis of the applicants.

The matter followed a procedural history in which the NDPP had obtained an ex parte, in camera provisional restraint order on 19 November 2019, capped at R1,108 billion, which vested the restrained property in the curator bonis. That provisional order was later discharged in full on 28 October 2020 due to the NDPP’s failure to disclose material facts. The NDPP appealed, and on 3 May 2022 a Full Bench upheld the appeal and confirmed the provisional restraint order, with the effect that control of the applicants’ property reverted to the curator bonis.

After the Full Bench decision, the applicants delivered an application for special leave to appeal to the Supreme Court of Appeal under sections 16(1) and 17(3) of the Superior Courts Act 10 of 2013. While that process was ongoing, the curator bonis informed the applicants’ attorneys that he would not release funds for the applicants’ legal expenses (in the pending SCA process), which precipitated the present urgent application.

The general subject-matter of the dispute was whether the applicants were entitled, under section 26(6) of POCA, to have the curator bonis release restrained property to pay legal expenses, and whether the application met the procedural threshold of urgency under Uniform Rule 6(12).

2. Material Facts

On 19 November 2019, the NDPP obtained an ex parte provisional restraint order in terms of POCA against the applicants and others, capped at R1,108 billion. The effect of the restraint order was that the applicants’ property, to the value of the capped amount, vested in the curator bonis.

The confirmation of the provisional restraint order was opposed, and on 28 October 2020 the provisional restraint order was discharged in full on the basis that the NDPP had failed to disclose certain material facts. Following that discharge, the applicants resumed control of their property and the curator bonis ceased acting in that capacity. During this period, the applicants were able to fund ongoing litigation and to institute further litigation to protect their interests.

The NDPP appealed the discharge, and on 3 May 2022 the Full Bench upheld the appeal and confirmed the provisional restraint order, restoring the curator bonis’ control over the restrained property. The applicants then sought special leave to appeal to the Supreme Court of Appeal on 3 June 2022. The SCA process required further procedural steps between early and mid-July 2022.

On 14 June 2022, the curator bonis communicated that he did not have sufficient assets to meet the full restrained value of R1,108 billion and therefore could not release assets or funds to pay legal expenses for the applicants’ pending SCA appeal. The curator bonis’ position was linked to ongoing verification of disclosures.

The NDPP opposed the urgent application on two principal bases. First, it was contended that the matter lacked urgency and that any urgency was self-created by the applicants. Second, it was contended that the applicants had failed to provide supporting documentation required by section 26(6) of POCA, that full disclosure had not been made, and that sufficient unrestrained property existed to cover legal expenses. The curator bonis, however, confirmed that the applicants had complied with their disclosure obligations and that he was verifying the disclosures.

The court accepted, on the evidence before it, that the applicants had made disclosure on two occasions, during November 2019 and again during May 2022, and that the curator bonis confirmed compliance with disclosure obligations. The court also accepted that the refusal to release funds occurred at a time when the SCA process was active and required imminent steps, and that withholding funds would affect the applicants’ ability to prosecute their appellate rights with legal representation.

3. Legal Issues

The central legal questions the court was required to determine were whether the application was properly brought as urgent under Uniform Rule 6(12) and whether the applicants had satisfied the statutory preconditions for access to restrained assets for legal expenses under section 26(6) of POCA (as framed in the judgment, including the requirements of disclosure under oath and inability to meet expenses from unrestrained property).

The urgency enquiry required the court to make an evaluative determination regarding the availability of substantial redress in due course, a concept that involves the application of established procedural principles to the particular facts and timelines of the case.

The POCA enquiry involved the application of law to fact, namely whether (i) full disclosure had been made as contemplated by section 26(6), and (ii) the applicants could meet the legal expenses from unrestrained property, in circumstances where the curator bonis was verifying disclosures and the NDPP contended that further disclosure was required.

4. Court’s Reasoning

On urgency, the court applied Uniform Rule 6(12) and the associated interpretive approach reflected in precedent. The judgment reiterated that the urgent procedure is not “there for the taking” and that an applicant must explicitly set out the circumstances rendering the matter urgent and why substantial redress cannot be obtained in due course. The court referred to authority emphasising that urgency primarily concerns the abridgement of ordinary time periods and procedures, and that the extent of deviation must be proportionate to the exigency of the case.

Applying these principles, the court rejected the NDPP’s contention that urgency was self-created. It accepted that the trigger for the application was the curator bonis’ refusal to release funds at a point when the applicants were engaged in an active dispute before the Supreme Court of Appeal requiring procedural steps within a defined and imminent time window. The court considered it significant that the appellate process would proceed on its own timelines and would not wait for the outcome of a non-urgent application. It further accepted that the applicants were entitled to be properly represented in that appellate process, including by legal representatives of their choice. On this basis, the court concluded that urgency had been established because later relief would not constitute substantial redress in the context of ongoing SCA proceedings.

On the statutory requirements under section 26(6) of POCA, the court identified that the section permits a court to provide for legal expenses only on limited terms, which include full disclosure and the inability to meet expenses from unrestrained property. The judgment referred to Constitutional Court and other authority emphasising that access to restrained property for legal expenses is conditional and limited. The court summarised the essential structure of the provision as requiring disclosure and demonstrating a lack of unrestrained assets sufficient to fund the expenses.

In applying these requirements, the court placed weight on the curator bonis’ confirmation that the applicants had complied with their disclosure obligations, notwithstanding that the curator bonis was still verifying the disclosures. The court rejected the NDPP’s attempt to treat verification-in-progress as equivalent to non-compliance with the disclosure requirement. It reasoned that, given the curator bonis’ confirmation of compliance, there was no sufficient basis advanced for refusing to release the funds required for legal expenses.

The court further accepted evidence that the applicants had made full disclosure twice (in November 2019 and May 2022) and was not persuaded that further disclosure was required. It noted that it had not been provided with reasons by the respondents explaining why the disclosure was inadequate, particularly where the curator bonis had confirmed compliance. On that basis, the court concluded that the applicants were not able to meet the required legal expenses from unrestrained property, as contemplated by POCA.

Finally, the court considered the quantum and nature of the legal expenses and accepted that the expenses to be paid were market related. It directed payment in accordance with the mandates and fee agreements attached to the founding papers.

5. Outcome and Relief

The court granted the application and dispensed with the ordinary forms and service, enrolling and hearing the matter as urgent under Rule 6(12).

The court directed the curator bonis (second respondent) to release such realisable property within his control as was necessary to meet the applicants’ reasonable legal expenses in connection with the proceedings and any related criminal proceedings. It further directed that payment be made in accordance with the mandate and fee agreements attached to the founding affidavit (annexures “FA11” and “FA12”).

The NDPP (first respondent) was ordered to pay the costs of the application, including the costs of two counsel.

Cases Cited

Luna Meubels Vervaardigers (Edms) Bpk v Makin and Another 1977 (4) SA 135 (W)

Re Several Matters on the Urgent Court Roll 2013 (1) SA 549 (W)

Naidoo v National Director of Public Prosecutions 2012 (1) SACR 358 (CC); 2011 (12) BCLR 1239 (CC)

National Director of Public Prosecutions v Naidoo & Others [2011] 2 All SA 410 (SCA)

Fraser v Absa Bank Limited (National Director of Public Prosecutions as amicus curiae) [2006] ZACC 24; 2007 (3) SA 484 (CC)

Legislation Cited

Prevention of Organised Crime Act 121 of 1998 (Chapter 5; section 26(6))

Superior Courts Act 10 of 2013 (sections 16(1) and 17(3))

Rules of Court Cited

Uniform Rules of Court, Rule 6(12)

Held

The court held that the application met the requirements for urgency under Rule 6(12) because the refusal to release funds occurred during an active and time-sensitive Supreme Court of Appeal process, and because hearing the matter in the ordinary course would not afford the applicants substantial redress in light of the imminent procedural steps required in the SCA proceedings.

The court further held that the applicants had satisfied the requirements for access to restrained property for legal expenses under section 26(6) of POCA, principally because the curator bonis confirmed that the applicants had complied with their disclosure obligations, and because the respondents did not provide sufficient grounds to justify withholding funds on the basis of ongoing verification. The court accepted that the applicants could not meet the legal expenses from unrestrained property and that the claimed expenses were market related.

LEGAL PRINCIPLES

Urgency under Uniform Rule 6(12) requires more than a preference for an expedited hearing. The applicant must set out facts establishing urgency and must show why it cannot obtain substantial redress in due course. The degree of deviation from ordinary procedures must be proportionate to the exigency of the case, and urgency is assessed with reference to the practical consequences of delay.

Relief for legal expenses from restrained property under section 26(6) of POCA is available only on limited statutory conditions, including full disclosure (under oath) of interests in the restrained property and an inability to meet the expenses from unrestrained property. Where disclosure compliance is confirmed by the curator bonis, continued verification does not, without more, justify treating the disclosure requirement as unmet for purposes of determining whether legal expenses may be provided for under the section.