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[2022] ZAKZPHC 76
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Director of Public Prosecutions, KwaZulu-Natal v A.P (AR336/2021) [2022] ZAKZPHC 76; 2023 (1) SACR 203 (KZP) (25 November 2022)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Appeal
Case No: AR336/2021
In
the matter between:
DIRECTOR
OF PUBLIC PROSECUTIONS, KWAZULU-NATAL
APPELLANT
and
A[....]
P[....]
RESPONDENT
ORDER
The
following order is made:
1.
The appeal of
the State against sentence is upheld.
2.
The sentences
imposed by the magistrates’ court on 27 June 2019 in respect of
each of the 16 convictions of fraud are set
aside.
3.
The following
sentences are imposed in substitution for those set aside.
(a)
On counts 1 to
9 (taken as one for the purpose of sentence) the accused is sentenced
to twelve (12) years imprisonment, four years
of which are suspended
for a period of five (5) years on condition that the accused is not
convicted of fraud committed during
the period of suspension.
(b)
On counts 16
to 19 (taken as one for the purpose of sentence) the accused is
sentenced to twelve (12) years imprisonment, four years
of which are
suspended for a period of five (5) years on condition that the
accused is not convicted of fraud committed during
the period of
suspension.
(c)
On counts 26
to 28 (taken as one for the purpose of sentence) the accused is
sentenced to twelve (12) years imprisonment, four years
of which are
suspended for a period of five (5) years on condition that the
accused is not convicted of fraud committed during
the period of
suspension.
(d)
The sentence
imposed in respect of counts 16 to 19, and the sentence imposed in
respect of counts 26 to 28, shall run concurrently
with the sentence
imposed on counts 1 to 9. The effect is a composite sentence of
twelve (12) years imprisonment, four (4)
years of which are suspended
on the aforementioned conditions.
J
U D G M E N T
OLSEN
J (BALTON J concurring)
[1]
With leave granted by this court the Director of Public Prosecutions,
KwaZulu-Natal,
appeals in terms of
s 310A(1)
of the
Criminal
Procedure Act, 1977
, against the sentence imposed on the respondent
by the regional court, sitting as the Specialised Commercial Crime
Court, on 16
counts of fraud. The magistrate sentenced the
respondent to eight (8) years imprisonment wholly suspended for a
period of
five (5) years. The structure of the sentence is not
perfectly clear. It seems that the sentence was imposed in
respect
of each count on the basis that all the sentences would run
concurrently.
[2]
The respondent was originally also charged with nine counts of
forgery and nine counts
of uttering, all of which were related to or
formed part of the events giving rise to the 16 counts of fraud.
The State withdrew
those charges and the respondent pleaded guilty to
the 16 counts of fraud.
[3]
The complainants were three banks. Counts 1 to 9 relate to ABSA
Bank; counts
16 to 19 to First National Bank; and counts 26 to 28 to
Mercantile Bank. The fraud counts involved the submission by
the
accused on behalf of a company, Biotrace Trading 221 (Pty)
Limited (“Biotrace”), of false documents purporting to
reflect
the financial condition of Biotrace, with a view to securing,
on each occasion, more credit for Biotrace from the bank concerned
than would have been granted if the true position had been revealed
to the banks.
[4]
The amounts involved appear in the schedule annexed to the charge
sheet. If
one adds them up the total amount involved is
R109 056 000. Credit was granted by the three banks
in that sum during
the period March 2011 to December 2013. Mr
Howse SC, who appeared for the respondent before us and in the court
a quo
, argued that, in assessing what was involved, in the
case of credit granted on overdraft the court should not have regard
to the
total amount of overdraft granted on the occasion of each
fraudulent misrepresentation, but rather to the increase in the
overdraft
limit generated on each occasion, when measured against the
overdraft limit set on the earlier occasion, which was of course also
induced by fraud. The argument is only superficially
attractive. What was solicited by way of credit on overdraft on
each occasion directly as a result of fraudulent misrepresentation
was the difference between the overdraft the bank acceded to,
and the
one which the bank would or might have granted if the true position
had been presented to it by the respondent. The
respondent
chose not to put this information before the trial court.
Nevertheless, following counsel’s argument in
the case of the
10 counts which involved credit extended on overdraft, the sum of the
amounts fraudulently secured under the 16
counts is R70 906 000.
Given the paucity of information the respondent chose to disclose to
the trial court concerning
the course of his business, this amount
appears to be, from the respondent’s perspective, the most
favourable estimate that
can be made of the potential prejudice
caused to the three banks involved as a result of the fraudulent
conduct of the respondent.
[5]
During sentencing proceedings the State called two witnesses, one
from First National
Bank and the other from Mercantile Bank.
This evidence revealed that after Biotrace had been wound-up and the
respondent
sequestrated, First National Bank had to write off R16
million and Mercantile Bank R15.2 million. No evidence was
placed
before the court as to the ultimate loss sustained by ABSA
Bank. Judging from the amounts relating to ABSA Bank which
featured
as counts 1 to 9, it seems unlikely that it suffered an
ultimate actual loss significantly different to that suffered by the
other
two banks, unless ABSA Bank was for some reason favoured by the
respondent (or by the liquidators of Biotrace or the trustees of
the
respondent’s insolvent estate).
[6]
Each of the counts on its own falls within
Part II
of Schedule 2 to
the
Criminal Law Amendment Act 105 of 1997
, rendering a sentence of
15 years imprisonment on each count compulsory in the absence of
substantial and compelling circumstances.
[7]
In support of his plea of guilty to the 16 counts of fraud the
respondent submitted
what he called a statement in terms of
s 112(2)
of the
Criminal Procedure Act. The
document has 18 paragraphs.
The first paragraph records that the respondent understands the
charges and, being legally represented
and acting of his own
volition, he pleads guilty to them.
[8]
Insofar as the merits of the case are concerned two paragraphs of the
statement dealt
with the charges relating to each of the complainants
(ie six paragraphs in all). Using the two paragraphs relating to ABSA
Bank
as an example, they read as follows.
‘
Counts
1 to 9
9.
The Accused admits that during March 2011 to December 2013 and at
Durban he wrongfully
and unlawfully misrepresented to ABSA and/or
Poovalingam Manikam that the Debtors Book and other securities of
Biotrace which he
ceded as security when applying for credit was a
true reflection of the amounts due and payable to Biotrace. By
means of
this fraudulent misrepresentation the Accused induced ABSA
Bank and/or Poovalingam Manikam to the potential prejudice of ABSA
bank
to extend credit to Biotrace in the amounts reflected in Column
2 of Schedule A on the dates reflected in Column 5 of Schedule A.
10.
The Accused knew that the Debtors Book and other securities ceded to
ABSA bank were not
a true reflection of the amounts due and payable
to Biotrace and that ABSA Bank would not have extended the credit but
for the
misrepresentation. The Accused knew at all relevant
times what he was doing and that what he was doing was unlawful.’
(It
is Column 3 of Schedule A, and not Column 2, which reflects the
amounts relating to each of the 16 counts. The error was
only
noticed during the course of the appeal argument. Nothing turns
on it.)
[9]
Unfortunately, and because they constitute the
fons et origo
of the error into which the magistrate fell when imposing sentence
upon the respondent, the remaining paragraphs of the statement
submitted by the respondent in support of his plea must be quoted.
‘
2.
At all relevant times the Accused was the director and person in
control of Biotrace Trading 221
(Pty) Ltd (Biotrace) which
specialized in the manufacturing of ink for the printing industry.
Biotrace was a successful enterprise
which generated healthy profits
and grew to become a strong business during the 1990s and the early
part of the 2000s.
3.
The Accused’s sister was a qualified medical doctor.
During 2002, while employed
by the KwaMashu Poly Clinic, she
contracted Tuberculosis MDR (Multi Drug Resistant) from the patients
she was treating.
4.
Tuberculosis MDR is a particularly dangerous strain of Tuberculosis
because of its resistance
to treatment. The Accused’s
sister’s condition deteriorated to the point where she could no
longer work and required
full time medical attention.
5.
The Department of Health which employed the Accused’s sister
refused to accept responsibility
for her condition and refused to
retain her in their employment and to pay for the very expensive
treatment required. She
was required to spend extensive periods
in hospital and the medical bills reached astronomical amounts.
These expenses were
all paid by the Accused through Biotrace.
6.
During 2011 to 2012 the Accused set up an Intensive Care Unit at his
home in order to provide
full time care for his sister. This
represented a huge expense which was met by Biotrace.
7.
Although the business of Biotrace was still profitable, it was
necessary for the Accused
to extend certain financial facilities with
the banks and/or to create new financial facilities in order to
maintain and grow Biotrace
to accommodate the additional expenses.
Against this background the Accused approached the 3 financial
institutions referred
to in the charge sheet, namely ABSA, FNB and
Mercantile Bank for credit facilities. He informed the relevant
bank officials
of his sister’s predicament.
8.
The Accused was aware that the banks in question would only extend
credit up to a particular
percentage of the value of Biotrace’s
Debtor’s Book. The Debtor’s Book however did not
sufficiently underwrite
the amounts which the Accused required.
In these circumstances the Accused fraudulently misrepresented to the
aforementioned
banks that the unencumbered debt due to Biotrace in
the Debtor’s Book was greater than was in fact the case and
thereby secured
the required finance.
Ad
all Counts
15.
When the aforementioned credit facilities were extended to Biotrace,
the Accused ensured
that all repayments to the bank were made as and
when they became due. Biotrace continued performing strongly
and the aforementioned
credit facilities were fully serviced until
all 3 banks became aware of the misrepresentation and simultaneously
terminated the
credit facilities and demanded immediate repayment of
the full amounts.
16.
Whereas Biotrace was capable of servicing the loans, it did not have
the financial capacity
to repay the full amounts especially in
circumstances where the Accused’s sister was requiring
expensive treatment.
The Accused’s sister’s illness
proved terminal and she ultimately passed away in December 2014.
17.
Biotrace was unable to meet its obligations to the bank as a
consequence, Biotrace was liquidated.
In this process the
charges of fraud were laid against the Accused.
18.
The Accused admits that his actions were wrongful and unlawful at all
material times and
he accepts full responsibility for same. The
Accused is remorseful and requires understanding that his crimes were
committed
in circumstances where his sister’s terminal illness
created the need for additional finance.’
[10]
Having considered the record of the arguments delivered in the court
a quo
, and indeed before this court, I entertain no doubt at
all that the paragraphs of the statement just quoted were put there
with
the intention thereby to avoid the respondent taking to the
witness stand during sentencing proceedings. In argument before
us counsel stated that this was legitimate given that the State
accepted the pleas of guilty made in the statement, thereby accepting
all of the facts set out in that document, not only those which
address the requirement of
s 112(2)
of the
Criminal Procedure Act,
that
the statement should be one in which “the accused sets out
the facts which he admits and on which he has pleaded guilty”.
I will revert to this issue later.
[11]
In my view the effective sentence imposed in this matter was
disproportionately low by a very
considerable margin. Given the
peculiarities of this case it is proper and instructive to traverse
some of the particular
respects in which the magistrate misdirected
herself as these misdirections obviously played a role in generating
her decision
on sentence.
[12]
In her introduction to her judgment on sentence the magistrate
undertook to look at the accused’s
personal circumstances, the
crimes of which he had been convicted and the interests of the
community. The remainder of the
judgment is devoid of any
attention to the enormity of the crimes of which the respondent was
convicted. Nothing is said
about the economic costs to society
of crimes of this nature, and of the related community interest in
seeing that appropriate
sentences are imposed in such cases.
The magistrate ignored the statement of Ms Campbell, who gave
evidence at the request
of the State and on behalf of First National
Bank, that the bank felt that there “has to be a consequence
for crime and we
feel that the maximum goal time for this matter is
required”. Given that the bank’s view of crimes of
this nature
coincides with the minimum sentencing legislation, the
magistrate was obliged to apply her mind to the victim’s
views.
Instead, the judgment on sentence, fairly assessed, is
all about the particular personal circumstances of the respondent.
[13]
The magistrate considered it appropriate to mention a fact stated in
the statement in terms of
s 112(2)
of the
Criminal Procedure Act,
that
the respondent ensured that all instalments due to the banks
were made as and when they became due, that Biotrace continued to
perform strongly, and that the credit facilities were fully serviced
until all three banks became aware of the misrepresentations
and
terminated their respective credit facilities. One suspects that this
was regarded as important by the magistrate because of
a submission
made by counsel for the respondent in his argument on sentence.
He contended that it was overwhelmingly probable,
and in accordance
with his instructions, that if the respondent’s frauds had not
been discovered, Biotrace would have continued
to service the debt
because the business was “very healthy”, and there would
not ultimately have been any actual prejudice.
Counsel hastened
to add that his submissions should not be misunderstood as casting
blame on the banks, a disavowal which was repeated
more than once
during the sentencing proceedings. The issue not addressed by
counsel for the respondent, and not dealt with
by the magistrate in
her judgment, was whether and to what extent the ability of Biotrace
to pay the required instalments was a
product of robbing Peter to pay
Paul (that figure of speech being less metaphorical in the present
context than it is in ordinary
use). When asked to address this
question in argument before us, counsel suggested that where there is
doubt about an issue
such as this, the sentencing court is obliged to
adopt the position most favourable to the accused. There are
contexts where
that principle should inform a sentencing courts
approach to one or other issue arising, but that is not a universally
applicable
principle. There is no
lis
between the State
and the accused at the sentencing stage. The presumption of
innocence has been displaced. The courts
duty is to impose a
just sentence. The duty of the State and the accused is to
place the material before the court which
each of those parties
regards as appropriate for consideration in the course of the
formulation of a sentence. (See generally,
Olivier v State
[2010] JOL 25319
(SCA) at paras [6] to [11].) In my view the
proposition that it matters that Biotrace managed to service its
loans until the respondent’s
frauds were discovered is, given
the facts of this case, of no consequence unless it can be
established that, as improbable as
it seems, none of the proceeds of
the frauds perpetrated upon any of the three banks facilitated
servicing of any of the loans
which were the product of the
fraudulent misrepresentations. No effort was made to establish that.
Much more by way of factual
information, as opposed to speculation or
opinion, was required in order to enable the court to reach its own
conclusion on the
subject. A remarkable thing about the
statement in terms of
s 112(2)
of the
Criminal Procedure Act is
that
it nowhere mentions any particular amount of money, save for the
quantum of potential prejudice as set out in the admitted
schedule to
the charge sheet.
[14]
Digressing briefly from the magistrate’s judgment, but
remaining with the subject of the
contention advanced by counsel for
the respondent that the significance of instalments having been met
up to the time when the
frauds were uncovered lies in the fact that
it renders it probable that there would have been no actual loss but
for the decisions
the banks made to “foreclose”, the
magistrate ought to have taken due notice of the response given by Ms
Campbell when
that proposition was put to her in cross-examination.
Ms Campbell’s response is worth quoting.
‘
I
don’t believe that once we had done the source payment testing
on the debtor finance facility and established that the debtor
payments weren’t in fact from the real debtors, that the client
would have been able to have continued servicing the loan
on a long
terms basis. Potentially for a couple of months maybe but from
a long terms perspective, no. … Well,
our system allows
us to do what we did, which was the source payment testing and
established that, you know, it was coming from
Mr P[....]’s
personal account and not from the real debtors. So then we had
to go back to see what were the real debtors
and the debtors book,
upon doing what we call “debt confirmations”, we could
barely validate the book. So, that
then brought into question
what the real turnover of this business was and we couldn’t
quantify that. But we knew that
it couldn’t be what it
was purported to have been.’
[15]
On the same subject, in her address on sentence, counsel for the
State made the submission that
the borrowings were based on inflated
figures, and that accordingly, in the end, Biotrace would never be
able to afford to repay
everything. In reply counsel for the
respondent said that “unfortunately, she is not allowed to say
that because she
has accepted different facts in the plea …”
He then proceeded to read from paragraphs 15 and 16 of the statement
in terms of
s 112(2)
(see above). Paragraph 15 took counsel’s
argument nowhere. Paragraph 16 of the statement is at best
ambiguous.
Where it asserts that Biotrace was “capable of
servicing the loans” was it talking about the servicing that
had already
taken place, or the servicing which would have to take
place in the future? There is certainly no clear
assertion in
the statement in terms of
s 112(2)
that, but for
foreclosure which resulted from the fact that the banks came to learn
of the respondent’s misrepresentations,
Biotrace would
inevitably have been able to pay off all the loans in instalments as
and when those instalments fell due; let alone
(a)
any assertion that this could be achieved without the financial
benefit, enjoyed throughout the material time, of additional
credit
extended by reason of fraudulent misrepresentations;
(b)
any statement of the “financial facts” which would
support a claim that Biotrace could have done so.
Exaggerated
and ultimately misleading arguments of this type served not to
advance but to obstruct the determination of an appropriate
sentence
in this case.
[16]
In her judgment the magistrate stated that it was clear that the
respondent’s crimes were
committed “in circumstances
where his sister’s terminal illness warranted a need for that
additional finance from the
accused”. It seems clear that
the “additional finance” the magistrate had in mind was
the amount from time
to time which could not be obtained otherwise
than through the making of fraudulent misrepresentations. The
implication is
that what was derived by fraud was used for the
maintenance and treatment of the respondent’s sister.
That proposition
was a theme underlying the submissions made by
counsel for the respondent when arguing the matter before the
magistrate.
At one point the contention was made expressly.
‘
My
instructions are, and this has been accepted in the plea, that this
was done for the sole reason of providing the funding necessary
to
keep her alive”.
Of
course the statement in terms of
s 112(2)
does not say that at all.
The most that can be said on this score is that the statement
asserts, and the State seems to accept,
that the condition of the
respondent’s sister required more money than was available, and
that fraud was employed in order
to get that money. The
statement was carefully crafted to avoid any estimate of the actual
costs incurred by the respondent
(or by Biotrace) in taking care of
the respondent’s sister. All the statement employs are
phrases like “very
expensive treatment”; “astronomical
amounts”; “huge expense”. Contributing even
more to the
obscureness of the plea is the statement that the
respondent had to “set up an intensive care unit at his home”.
What
does that entail? What did it cost? As already
observed earlier in this judgment, the plea is entirely devoid of any
reference to rands and cents. The actual costs of these medical
expenses was for the respondent to disclose. His failure
to do
so ought inevitably to have led to acceptance of the proposition that
it was highly improbable that the medical expenses
consumed anything
like the amount of money the respondent secured for Biotrace by
making the fraudulent misrepresentations.
Perhaps the closest
one gets to the truth of the matter is in paragraph 7 of the
statement, where it is said that it was necessary
for the accused to
do what he did “to create new financial facilities
in order
to maintain and grow Biotrace
to accommodate the additional
expenses.” What that conveys is that the proceeds of
fraud were to be utilised to the
advantage of Biotrace. It
would grow. The fact that, for so long as the respondent’s
sister was alive, Biotrace
would meet her medical expenses does not
change that primary picture.
[17]
The learned magistrate made certain further elementary errors which
presumably contributed to
her ultimate decision.
(a)
She
held that the two bank witnesses conceded that they were aware that
the respondent’s sister was terminally ill and that
the
respondent was funding her medical expenses. The evidence of
those witnesses was that they did not know that until it
came out in
the court proceedings.
(b)
The
magistrate classified the respondent as “a primary caregiver to
his children” However counsel for the respondent,
in
opening his address on sentence, said that the respondent was back in
business on a small scale selling ink products and really
only
“making ends meet”. He also disclosed that
respondent’s wife is a doctor employed by the State as
a
pathologist, and that they reside with the respondent’s
parents.
(c)
The
magistrate said that the respondent managed to pay off one of the
banks in full whilst Biotrace was still in operation.
There is
no evidence to that effect. What counsel for the respondent did
say (although it is not certain that the State accepted
it) is that
two vehicle finance loans made by ABSA were paid off. He said
nothing about the overdraft, the final limit of
which was set at R15
million in December 2013.
(d)
The
magistrate asserted that “insurance had paid the
complainants”. There is no such evidence. On the
contrary
Ms Campbell’s evidence was that the bank had insurance
for fraud committed internally, but not for “external fraud”;
ie a client committing fraud against the bank.
(e)
Near
the end of her judgment the magistrate said this.
‘
Most
of all, the accused lost his sister who was an asset to the community
of South Africa due to the accused’s failure to
maintain her
after sequestration.”
Again
there is no evidence to this effect. Respondent’s counsel
recorded in argument that the respondent’s sister
had died in
December 2014, about a year after the foreclosure. His
submission was perhaps more carefully crafted than others
he had
made.
‘
The
accused is not saying that it was because of the foreclosure, but
obviously his ability to care for her was affected and she
then
passed on.’
[18]
In her judgment the magistrate mentioned that one of the bank
witnesses (it was in fact Ms Campbell)
had said that this was a
“sophisticated matter”. The magistrate thought that
it might show that the accused was
not acting alone. But she
overlooked the answer Ms Campbell gave when she was asked to explain
her use of the word “sophisticated”.
‘
Well,
I think the sheer time it would have taken to manipulate information,
providing us with information that was untrue, creating
fictitious
debtors books, creditors’ age analyses to the financial
information, management accounts, you know we require
this
information as part of our ongoing monitoring of an account on a
fairly frequent basis. And to have sat down and
to have
done that on such a frequent basis, not just with FNB but I think
with other banks as well - I am assuming their credit
processes
aren’t the same but reasonably similar I would imagine –
must have taken a lot of time and the money that
must have been
flowing inter - bank to basically settle one loan here and then get
another loan there and then on lend that so
that it seemed like
everything was running quite normal, was sophisticated.’
The
sixteen occasions upon which the respondent’s misrepresentation
generated the grant of credit by a bank took place over
a period of
33 months. There was enough time for the respondent to reflect
on what he was doing and to consider desisting
from it, and 16
occasions when that issue ought to have been to the fore of his
mind. The magistrate failed to take into
account not just the
extent of the frauds perpetrated, but also the fact that on each
occasion the criminal intent had to have
been the product of careful
deliberation, and sophisticated manipulation of financial data.
[19]
The magistrate found that the respondent had shown remorse. She
found that issue “pivotal”.
She was satisfied that
the accused had displayed remorse by virtue of his plea of guilty and
“full disclosure”.
As to the latter, in my view the
magistrate failed to appreciate the true nature of the information
put before the court in the
statement in terms of
s 112(2).
I
regard all the information contained in the statement which goes to
the motive for committing the crimes, and which goes
to the manner in
which the proceeds of the crimes were expended, as an exercise in
obfuscation. On that obscure foundation counsel
for the respondent
made a number of remarkable submissions not actually borne out by the
facts set out in the statement in terms
of
s 112(2).
For
example he argued that although the respondent made the
misrepresentations, the respondent did not “steal the money”.
Instead he serviced the loans. And then, after conceding that
the amounts involved were “quite high”, one sees
this
submission.
‘
But
it is my submission that the amounts are not really of such massive
consequence because the bank made the election to foreclose,
knowing
the risks that were involved in that decision and again it just boils
back to the point that if it had been a little more
patient, there
would not have been that actual prejudice.’
That
attitude is hardly consistent with true remorse, and contradicts
counsel’s earlier submissions on behalf of the respondent
to
the effect that the respondent casts no blame on the banks for the
losses they suffered
[20]
In her judgment the magistrate quoted the well-known passage in the
judgment of
S v Matyityi
2011 (1) SACR 40
at para 13 on the
subject of remorse.
‘
In
order for the remorse to be a valid consideration the penitence must
be sincere and the accused must take the court fully into
his or her
confidence. Until and unless that happens, the genuineness of
the contrition alleged to exist cannot be determined.
After
all, before a court can find that an accused person is genuinely
remorseful, it needs to have a proper appreciation of,
inter alia
,
what motivated the accused to commit the deed; what has since
provoked his or her change of heart; and whether he or she does
indeed have a true appreciation of the consequences of those
actions.’
The
respondent approached the court at the sentencing stage with the
proposition that whilst fraud of the type and on the scale
which he
perpetrated would ordinarily call for a substantial sentence of
imprisonment, he should be entitled entirely to evade
that outcome,
ultimately on the basis that the end in fact justified the means; and
that what he did was done for a cognisable
good cause. That
approach contradicts entirely the proposition that the respondent has
undergone a change of heart and has
a true appreciation of the
consequences of his crimes. As the prosecutor put it in her
address on sentence in the court
a quo
“…there is
absolutely no remorse; he still justifies why he did what he did.”
The prosecutor’s argument
on the subject of remorse was one of
three which counsel for the respondent classified as impermissible,
and therefore to be ignored.
Counsel’s introduction to
his arguments on those three points went as follows.
‘
And
then the other three points – unfortunately my learned friend
has fallen into the trap now of arguing against the plea
which she
accepted.’
It
strikes me that there is more truth in these words than was perhaps
intended. Traps are not accidental phenomena. Traps
are set,
usually for the unwary. Putting that aside for the moment, counsel’s
argument is that the State accepted the condition
of remorse by
agreeing to paragraph 18 of the statement in terms of
s 112(2).
There the statement was made that the “accused is remorseful”.
In other contexts it may legitimately be
argued on behalf of the
defence that the remorse proclaimed must be taken to be that which is
a valid consideration in determining
sentence. But where, as is
the case here, the remainder of the statement is inconsistent with
valid or true remorse, that
argument cannot be sustained.
[21]
During the course of argument in this appeal the court raised with
counsel for the respondent
the issue as to whether any of the
material relating to the illness of the respondent’s sister,
expenditures on her medical
expenses, and so on, had any place in a
statement in terms of
s 112(2)
of the
Criminal Procedure Act.
Plainly
that material does not address the requirements of the
section that the statement should set out the facts which the accused
admits
and on which he has pleaded guilty. The proposition
counsel was asked to answer was whether the material in question is
relevant
only for the purposes of establishing substantial and
compelling circumstances and in mitigation, and should therefore be
placed
before the court only at the sentencing stage. It was
suggested to counsel that the sole purpose of putting such
information
in the statement, and securing the prosecution’s
acceptance of the statement, is illegitimately to confine the
sentencing
discretion of the court by limiting the scope for
examination of facts relevant to sentence. Counsel’s
answer was that
what was done here was legitimate and that indeed
(a)
it met the requirements of the law that
statements in terms of
s 112(2)
of the
Criminal Procedure Act should
not be a “mere regurgitation of the elements of the offence and
should state the factual basis upon which the acceptance
of guilt is
founded”; and
(b)
the authorities are to the effect that
if the accused seeks to rely on substantial and compelling
circumstances in relation to the
circumstances in which the offence
was committed, these should be included in the statement.
[22]
I have no difficulty with either of these propositions as long as one
understands that the “circumstances
in which the offence was
committed
” means the facts which constitute the
actus
reus
; likewise with the requirement that the statement should
record the basis upon which guilt is accepted, although
mens rea
must also be canvassed. The motive for the commission of the crime,
assuming that it constitutes a mitigatory feature of
the case, does
not in my view fall within the purview of
s 112(2)
unless the way in
which the charge is framed calls for an admission of motive, or
unless it is so closely related to the commission
of the crime that
an account of what happened cannot be given without mentioning it. At
the end of oral argument counsel undertook
to let us have a list of
the cases he relies upon for his view of the matter.
[23]
The cases to which counsel has referred us are
S v B
1991 (1)
SACR 405
(N) at 406;
S v Van Der Merwe and Others
2011 (2)
SACR 509
(FB);
S v Kekana
2019 (1) SACR 1
(SCA);
S v Moya
2004 (2) SACR 259
(W);
S v Khumalo
2013 (1) SACR 96
(KZP); and
S v Mnisi
2009 (2) SACR 227
(SCA).
[24]
I do not propose to analyse these judgments. As will be
realised from what has already
been said, in my view the statement in
terms of
s 112(2)
in this case does not achieve the respondent’s
desired end of confining the enquiry into sentence, and consequently
the court’s
sentencing discretion, to the extent that a just
sentence cannot be rendered. However I make these
observations.
(a)
Substantial and compelling
circumstances, justifying lesser sentences than the prescribed
minimums, are to be considered and addressed
at the sentencing
stage. The fact that in some cases the manner in which the
crime was actually committed may contribute
to a finding that such
circumstances exist, and must accordingly feature in a statement in
terms of
s 112(2)
, does not logically support an argument that
any and all submissions or facts going to mitigation can be cast in
stone by
inclusion in the statement.
(b)
None of the
judgments cited by counsel advance the proposition that substantial
and compelling circumstances which do not form part
of the facts
which justify a plea of guilty must appear in a statement in terms of
s 112(2).
(c)
On the other
hand, when the plea is to be advanced upon the basis that the crime
falls beyond any minimum sentencing legislation
relied upon in the
charge, or under a different heading in such legislation, the facts
relied upon for that should appear in the
statement in terms of
s
112(2).
(d)
Whilst one
appreciates the pressures under which prosecutors fulfil their
duties, great care should be taken before accepting a
statement in
support of a plea of guilty which goes beyond what is contemplated by
s 112(2)
of the
Criminal Procedure Act, lest
the result is that the
enquiry designed to reach a just sentence is compromised.
[25]
By reason of the fundamental misdirections characterising the
magistrate’s reasoning when
reaching the sentence she did, and
by reason of the fact that the briefest examination of sentencing
precedents in fraud cases
reveals that the sentence in this case is
disproportionately low, this court is at large to impose a just
sentence.
[26]
The personal circumstances of the respondent, as placed on record by
his counsel in the court
a quo
were, at the time of the trial,
as follows. He is 39 years of age. He is married and has
two children aged five years
and three years respectively. The
accused’s wife is a doctor employed by the State as a
pathologist. The family
lives with the respondent’s
parents. One should add that it does not seem to be disputed that the
respondent ran a successful
business for some years before the crimes
were committed, and that he would thereby have made a contribution to
the economy, and
provided employment. The respondent had no
previous convictions.
[27]
In his carefully crafted heads of argument on appeal counsel for the
State advanced the proposition
that in this case there are actually
no substantial and compelling circumstances justifying a departure
from the prescribed minimum
sentences on each of the counts (15 years
imprisonment). However, in argument counsel for the State took
a different view,
and proposed a lower sentence than the prescribed
minimum. I am inclined to the view that he was correct to do
so.
My reasons are largely connected to the illness which
befell the respondent’s sister and his attempts (whatever they
were)
to save her through expenditures of money. I adopt this
view not because I in any way endorse the proposition that a court
should allow what might be called a “Robin Hood defence”.
Illness and death are incidents of human life.
The vast
majority of people cannot afford medical care in excess of that
provided by the State in order to ward off the worst outcomes
of
severe illness. Those who have the wherewithal are free to
choose to spend their money to save a loved one. But
it is
another thing altogether for a court to sanction fraud, robbery or
theft as a means of acquiring the funds necessary to meet
such
expenses.
[28]
What does come through indisputably from the statement in terms of
s
112(2)
accepted by the State is that the respondent’s sister
suffered a severe and long illness, and that the respondent was
considerably
affected by it. I think that the court may take
judicial notice of the fact that circumstances like these place a
tremendous
amount of pressure on the family members of the sick, and
generate a distressed state of mind which is likely adversely to
affect
one’s judgment. Whilst I reject the argument of
counsel for the respondent that it is established that these frauds
were committed only for the purpose of accessing funds exclusively
for use in treating the respondent’s sister’s illness,
I
accept that it is established that he must have suffered a declining
state of mind by reason of his anxiety generated by the
condition of
his sister. Substantial and compelling circumstances were
present primarily for that reason.
[29]
Nevertheless we are dealing with fraudulent conduct perpetrated
repeatedly over a period of nearly
three years, and involving very
large sums of money indeed. The actual loss suffered by two of
the three complainants amounted
to R31 million. It is
unfortunate that a witness from ABSA Bank was not called by the
State. It is significant that
the respondent did not claim that
ABSA Bank had been repaid in full. The overdraft with ABSA Bank
had been elevated to R15
million in December 2013, which would have
been just before the fraud was uncovered. Clearly a substantial
sentence of imprisonment
is required. The perception that banks
can withstand such losses because of their resources must be
discounted. It
is enough, given that credit is described as the
life-blood of an economy, that the cost of credit must inevitably be
elevated
because of losses sustained by banks when honestly run
businesses fail.
[30]
The respondent was not imprisoned whilst he awaited trial.
There is no need, therefore,
to ante-date the sentence to be imposed.
It is regrettable that sentence is to be imposed so long after the
event. However, as
counsel for the respondent revealed in argument,
the trial was delayed for some five years after the respondent was
charged because
of representations made on the respondent’s
behalf concerning the potential evidence of a witness who was
referred to in
the proceedings as the “whistle blower”.
(Extensive requests for further particulars were also made.) The
delay may
have been a factor if the guilty plea had been tendered at
the outset, and rejected by the State. As counsel informed the
magistrate,
the plea was only tendered when the state insisted on
proceeding notwithstanding the respondent’s representations.
(This
delay in accepting guilt is also somewhat inconsistent with the
claim of genuine remorse.)
[31]
The amounts involved in each of the counts differ quite widely.
Given that the amounts
involved in fraud cases are of some
significance when determining sentence, it might appear inappropriate
to impose the same sentence
on each of the 16 counts. However
something approaching equilibrium is achieved if, for the purposes of
sentence, the counts
relating to each complainant are grouped
together and taken as one.
THE
FOLLOWING ORDER IS MADE.
1.
The appeal of
the State against sentence is upheld.
2.
The sentences
imposed by the magistrates’ court on 27 June 2019 in respect of
each of the 16 convictions of fraud are set
aside.
3.
The following
sentences are imposed in substitution for those set aside.
(a)
On counts 1 to
9 (taken as one for the purpose of sentence) the accused is sentenced
to twelve (12) years imprisonment, four years
of which are suspended
for a period of five (5) years on condition that the accused is not
convicted of fraud committed during
the period of suspension.
(b)
On counts 16
to 19 (taken as one for the purpose of sentence) the accused is
sentenced to twelve (12) years imprisonment, four years
of which are
suspended for a period of five (5) years on condition that the
accused is not convicted of fraud committed during
the period of
suspension.
(c)
On counts 26
to 28 (taken as one for the purpose of sentence) the accused is
sentenced to twelve (12) years imprisonment, four years
of which are
suspended for a period of five (5) years on condition that the
accused is not convicted of fraud committed during
the period of
suspension.
(d)
The sentence
imposed in respect of counts 16 to 19, and the sentence imposed in
respect of counts 26 to 28, shall run concurrently
with the sentence
imposed on counts 1 to 9. The effect is a composite sentence of
twelve (12) years imprisonment, four (4)
years of which are suspended
on the aforementioned conditions.
OLSEN
J
BALTON
J
Date
of Hearing: Friday,
14 OCTOBER 2022
Date
of Judgment:
Friday,
25
NOVEMBER 2022
For
Appellant:
Mr
TA Letsholo
Instructed
by:
Deputy Director of
Public Prosecutions
Specialised
Commercial Crime Unit: Durban
Appellant’s
Attorneys
Durban
(Ref:
???)
(Tel:
031 – 335 6600 / 6631
(Mobile:
084 874 0779
Email:
tletsholo@npa.gov.za
For
Respondent:
Mr
JE Howse SC
Instructed
by:
Manikam Govender &
Associates
Respondent’s
Attorneys
60,
Road 726
Montford
Chatsworth…KZN
(Ref:
MGA/PAT1/0001)
(Tel:
083 787 5483)
Email:
dmg@dmgassociates.co.za
)