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[2008] ZASCA 124
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Procopos v National Director of Public Prosecutions (401/07) [2008] ZASCA 124; 2009 (1) SACR 468 (SCA) ; [2009] 1 All SA 255 (SCA) (29 September 2008)
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REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT
OF APPEAL
OF SOUTH AFRICA
Case number 401/07
In the matter between:
ANGELINA
PROCOPOS
APPELLANT
and
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
RESPONDENT
Neutral
citation:
This
judgment may be referred to as
Angelina
Procopos v National Director of Public Prosecutions
(401/07)
[2008]
ZASCA
124
(29 September 2008).
CORAM
:
FARLAM,
MTHIYANE, PONNAN et MAYA JJA et MHLANTLA AJA
HEARD
:
28
AUGUST 2008
DELIVERED
:
29
SEPTEMBER 2008
SUMMARY:
Prevention
of Organised Crime Act 121 of 1998
, Chapter 5 – restraint order
– whether ‘affected gift’ shown – whether
s
16(1)
of Act applicable.
________________________________________________________________
ORDER
________________________________________________________________
On
appeal from:
High
Court, Pretoria (R D Claassen J sitting as court of first instance).
1. Except insofar as the
order of the court
a
quo
relates
to the appellant’s banking account at the Sunnyside branch of
Absa Bank, the appeal is allowed with costs.
2. The order of the court
a quo
in
respect of the appellant insofar as it relates to her assets
mentioned in paragraphs 12.2 and 12.3 of the judgment of the court
a
quo
is
set aside and replaced by an order in the following terms:
“
It is ordered in
terms of
Rule 6(5)(g)
that the defendant and the first respondent are
to be subject to cross-examination in respect of the evidence set
forth in their
affidavits.’
3. The cross appeal is
dismissed with costs.
_____________________________________________________
JUDGMENT
FARLAM JA (MTHIYANE,
PONNAN, MAYA JJA AND MHLANTLA AJA concurring):
[1] On 24 February 2006
Rabie J, sitting in the Pretoria High Court made a provisional order
in chambers against a number of respondents
in terms of s 26 of the
Prevention of Organised Crime Act 121 of 1998 (hereinafter called
‘the Act’). One of the respondents
was the present
appellant. In so far as the order related to her it prohibited her
from dealing in any manner, except as required
or permitted by the
order, with certain of her assets which were specified in a schedule
attached to the order and all other property
of hers 'to the value of
R9 700 000, being the value of a known gift'. On 24 May 2007 R D
Claassen J confirmed this order with
costs in respect of the
following assets of the appellant, (i) her 100 per cent interest in a
close corporation called Dubec Eiendomme
CC, in whose name the house
in which she lives is registered; (ii) her 50 per cent interest in
another close corporation called
Select Bakery & Confectionery CC
(the other 50 per cent interest in this close corporation belonging
to her husband); and (iii)
her banking account at Absa Bank. The
effect of the learned judge’s order was to release all the
other assets of the appellant
from the restraint imposed by the
provisional order.
[2] The appellant, with
leave of the court
a
quo,
appealed
against the whole of this order, but during argument before this
court her counsel conceded (correctly in my view) that
the appeal
against that part of the order relating to the Absa bank account
could not succeed. The appeal need accordingly only
be considered in
so far as it relates to the appellant’s interests in the two
close corporations to which I have referred.
The respondent, the
National Director of Public Prosecutions, has cross-appealed against
the order, contending that the provisional
order should have been
confirmed, with the property covered thereby not being limited to the
assets listed in the order but encompassing
all her property up to
the value of R9 761 607 (which was the figure referred to in the
schedule attached to the provisional order).
[3] Before the facts of
this case and the contentions of the parties are summarised it will
be convenient if I set out the relevant
provisions of Chapter 5 of
the Act.
[4] Section 18(1), which
deals with confiscation orders, reads as follows:
'Whenever
a defendant is convicted of an offence the court convicting the
defendant may, on the application of the public prosecutor,
enquire
into any benefit which the defendant may have derived from –
(a) that
offence;
(b) any
other offence of which the defendant has been convicted at the same
trial; and
(c) any
criminal activity which the court finds to be sufficiently related to
those offences,
and,
if the court finds that the defendant has so benefited, the court
may, in addition to any punishment which it may impose in
respect of
the offence, make an order against the defendant for the payment to
the State of any amount it considers appropriate
and the court may
make any further orders as it may deem fit to ensure the
effectiveness and fairness of that order.'
[5] Section 20 deals with
amounts which might be realized when a confiscation order is made.
Subsection (1) is in the following
terms:
'For
the purposes of section 18 (2)
(b)
or
21 (3)
(a),
the
amount which might be realised at the time of the making of a
confiscation order against a defendant shall be the amount equal
to
the sum of –
(a)
the
values at that time of all realisable property held by the defendant;
and
(b)
the
values at that time of all affected gifts made by the defendant,
less
the sum of all obligations, if any, of the defendant having priority
and which the court may recognise for this purpose.'
[6] Section 13 provides
that confiscation proceedings are civil, not criminal. Subsection (1)
reads as follows:
'For
the purposes of this Chapter proceedings on application for a
confiscation order or a restraint order are civil proceedings,
and
are not criminal proceedings.'
[7] The topic of
realisable property is dealt with in s 14(1), which reads:
'
. . . (T)he following property shall be realisable in terms of this
Chapter, namely –
(a)
any
property held by the defendant concerned; and
(b)
any
property held by a person to whom that defendant has directly or
indirectly made any affected gift.'
[8] Section 12(1)
contains a definition of the expression ‘affected gift’,
which as far as is material, reads:
'In
this Chapter, unless the context indicates otherwise –
“affected gift” means any gift –
(a)
made
by the defendant concerned not more than seven years before the fixed
date. . . . .'
[9] Section 12(1) also
contains a definition of ‘fixed date’, which as far as is
material reads as follows:
'"fixed
date” in relation to a defendant –
(a) if
a prosecution for an offence has been instituted against the
defendant, means the date on which such prosecution has been
instituted . . . .'
[10] The term ‘defendant’
means a person against whom a prosecution for an offence has been
instituted.
[11] Although the Act
does not contain a definition of the expression ‘gift’,
it does contain a provision, s 16(1),
which deems a transfer of
property to be a gift in certain circumstances. It reads as follows:
'For
the purposes of this Chapter, a defendant shall be deemed to have
made a gift if he or she has transferred any property to
any other
person directly or indirectly for a consideration the value of which
is significantly less than the value of the consideration
supplied by
the defendant.'
[12] The material
portions of s 26, which deals with restraint orders, read as follows:
'(1) The
National Director may by way of an
ex
parte
application
apply to a competent 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 to which the
order relates.
(2) A
restraint order may be made –
(a)
in
respect of such realisable property as may be specified in the
restraint order and which is held by the person against whom the
restraint order is being made;
(b)
in
respect of all realisable property held by such person, whether it is
specified in the restraint order or not;
(c)
in
respect of all property which, if it is transferred to such person
after the making of the restraint order, would be realisable
property.
(3)
(a)
A
court to which an application is made in terms of subsection (1) may
make a provisional restraint order having immediate effect
and may
simultaneously grant a rule nisi calling upon the defendant upon a
day mentioned in the rule to appear and to show cause
why the
restraint order should not be made final.’
[13] In the founding
affidavit in this matter, which was made by Ms Nomonde Mngqibisa, a
deputy director of public prosecutions,
it was stated that the
respondent’s primary objective in seeking the restraint order
was to secure and restrain the property
of the appellant’s
daughter and eight other persons. The appellant’s daughter had
been convicted on 100 charges of
fraud, ‘to the value’,
as it was put in the affidavit, of ‘R26 500 000’ as well
as contraventions of the
Stock Exchange Act 1 of 1985, the Financial
Markets Control Act 55 of 1989, the Harmful Business Practices Act 71
of 1988, the
Companies Act 61 of 1973, the Banks Act 94 of 1990 and a
section of the
Prevention of Organised Crime Act itself
. She was ‘the
defendant’ to whom the proceedings related. The property of the
eight other persons, one of whom was
the appellant, against whom the
order was sought, was described as being ‘such property as is
held by any other person to
whom the defendant has directly or
indirectly made any affected gifts as defined in section 12 of the
Act as is likely to satisfy
a confiscation order that has been sought
against the defendant in terms of section 18 of the Act’.
[14] Under the heading
“PROPERTY TO BE RESTRAINED’, Ms Mngqibisa deals first
with the realisable property of the the
defendant, and thereafter,
under the sub-heading ‘Realisable property: Affected gifts’,
with amounts which it appeared
from investigations done by Mr Adriaan
Prakke, a chartered accountant who investigated a so-called
investment scheme operated by
the defendant, had been received by the
appellant and the seven other respondents in the restraint
application. In respect of the
appellant it appeared, said Ms
Mngqibisa, that she had received R9 761 607 as an affected gift from
the defendant. The money was
directly deposited by the investors into
the appellant’s account number 905 108 1634 at the Sunnyside
branch of ABSA bank.
The averment that the money in question had been
received by the appellant as an affected gift was made as a
conclusion of law
without any supporting factual averments to
substantiate the allegation.
[15] It appears from the
affidavit made by Mr Prakke that the fraudulent investment scheme in
respect of which the defendant was
convicted was operated by a close
corporation, Two Ferns Financials CC, of which the defendant was the
only member. The close corporation
never had its own banking account
and funds received from the investors totaling R52 947 117,29 were
either deposited into the
banking account of a business owned by the
defendant known as Pronell Computing CC or into the bank account of
the appellant at
the Sunnyside branch of ABSA bank.
[16] Mr Prakke also
stated in his affidavit that of the total of R9.7 million deposited
into the appellant’s bank account
the appellant, according to
the bank’s records, withdrew R2 343 389,34 in cash on different
occasions. At the date of the
criminal trial, which took place in
November 2004, there was no money left in the account and on 24
November 2005 there was only
R10 000 therein.
[17] The appellant
opposed the confirmation of the provisional restraint order. In her
affidavit she referred to an affidavit made
by the defendant and
confirmed its contents insofar as they related to her. In this
affidavit the defendant denied that any members
of her family had
benefited, directly or indirectly, at any stage from the offences
which she had committed, and to which she had
pleaded guilty. As far
as the appellant was concerned she said the following:
‘
I
went so far as to use my mother’s good faith and belief in me,
as her child, to open a bank account in her own name in order
for me
to do my business. It is thus in the course and scope of my business
that I transferred monies to the value of almost ten
million rands
through this account, and understand that she is now being held
liable therefor. My mother had absolutely nothing
to do with the
monies flowing into and out of her account. My mother merely set this
account in place at my request, as I misled
her into believing that I
was doing honest business and needed an account in order to be able
to practise properly.
I
reiterate the fact that at no stage whatsoever did my mother ever
derive any benefit and/or receive any of the monies which went
through her account, as the total amounts were used by myself in the
running of my business.
I
did however, on various occasions, request my mother to transfer
monies from her account to other accounts on my behalf, and at
all
times furnished her with the necessary information to do so. My
mother was never involved in business, and as a result it can
not be
expected of her to know about any legislation or anything of that
type, pertaining to business.’
[18] Later in her
affidavit she specifically denied that the appellant (and some of the
other respondents in the restraint application)
‘received any
gifts and/or benefit directly and/or indirectly from [my] dealings’.
[19] In her affidavit the
appellant stated that the defendant requested her ‘to open an
account at the bank in my name, in
order for her to do business and
have a bank account into which monies could be deposited. At no stage
was I aware that the defendant
did not run an honest business, as
this would not have been tolerated.’
[20] She said that she
was requested on various occasions by the defendant to transfer
monies from her account to other accounts,
and she confirmed what the
defendant had said that she did not benefit from any transactions
conducted by her.
[21] In reply, affidavits
were filed made by Ms Mngqibisa and Mr Prakke. In her affidavit Ms
Mngqibisa asked the court to confirm
the interim restraint order and
to reject the version of the facts put up,
inter
alia,
in the affidavits of the appellant and the defendant. She requested
the court, if it was not prepared to reject the statements
made by
the appellant and the defendant as far fetched and highly improbable,
to order their cross-examination so that the veracity
of their
versions could be determined and stated that the grounds for her
doubting the truth of their versions were set out more
fully in Mr
Prakke’s affidavit. Mr Prakke attached to his affidavit a
schedule of cash withdrawals from the Pronell account
at Nedbank and
the appellant’s ABSA account. He contended that a comparison of
the cash withdrawals from these two accounts
reveals that in many
instances substantial cash withdrawals were made from both accounts
on the same day although there was a sufficient
balance on the
Pronell account after the withdrawal was made for the amount taken
from the appellant’s account to be withdrawn
therefrom. This,
he said, rendered the appellant’s version suspect because it
was reasonable to infer that the appellant’s
withdrawals were
not solely for the defendant’s business but for the private
purposes of the appellant and her family.
[22] He also referred to
the fact that the appellant had no record of the substantial cash
withdrawals she made and cannot explain
what happened to the amounts
withdrawn. This inability to account for the cash withdrawals gives
rise, he contended, to a belief
that she is concealing affected gifts
by feigning ignorance.
[23] Lastly, Mr Prakke
made the point that the buying and selling of financial assets and
the use of advanced computer technology
(about which the defendant,
according to her affidavit, told her parents) does not require the
withdrawal of large amounts of cash.
The large withdrawals of cash
should have alerted the appellant to the fact that something was
amiss and the fact that she did
not question the defendant cannot, so
Mr Prakke contended, be believed. He accordingly submitted that the
explanation of the transactions
on the appellant’s bank account
given by the defendant and the appellant is implausible and falls to
be rejected.
[24] The learned judge in
the court
a
quo
held
that the probabilities were strong that the appellant received ‘at
least some of the money, no matter how little’
for herself, not
merely as a conduit. In the light of this finding he found it
unnecessary to decide on the correctness of a submission
advanced
before him on behalf of the appellant to the effect that the
appellant ‘was [as it was put] purely a conduit and
acted
solely on the instructions of Defendant.’ Stating that it was
apparent on the papers that the appellant’s assets
were a
directorship in a company (which it was common cause ‘was worth
nothing’),and the 100 per cent and 50 per cent
interests in the
close corporations referred to in para [1] above, he held that the
restraint order had to be confirmed as regards
these interests and
the ABSA bank account insofar as there was any money left in it.
[25] Counsel for the
appellant contended before us that the court
a
quo
should
have found that the appellant’s account at the Sunnyside branch
of Absa Bank was used by the defendant as a conduit
through which she
channelled investments and that she did not receive any ‘affected
gift’ as defined in s 12(1) of
the Act. Before a gift can be an
‘affected gift’, so he contended, it must be a gift. The
expression ‘gift’,
he pointed out, is not defined in the
Act and should, he submitted, be given its ordinary meaning, which
‘denotes permanency’.
A conduit, he submitted further,
has no intention to keep or hold the object which is channelled
through him or her, or, for that
matter, his or her savings account.
I shall summarise his other contentions after I have set out the
submissions advanced on behalf
of the respondent.
[26] The respondent’s
counsel submitted that the court should not accept that the appellant
merely acted as a conduit. He
submitted that on the probabilities she
appropriated for herself at least the total of the amounts withdrawn
in cash. He also contended
that the amounts paid into the appellant’s
bank account were at least deemed gifts in terms of s 16(1) of the
Act. In this
regard he submitted that the appellant provided the
defendant with consideration the value of which was significantly
less than
the amounts paid into her account. He pointed out that on
the version of the appellant and the defendant the latter could not
obtain
access to a bank account and she needed an account into which
she could direct the funds of investors. The appellant, he argued,
allowed her name, her credit worthiness and her facilities at the
bank to be used by the defendant and she paid the bank charges
accompanying the management of, the transfer from and the withdrawals
from the account. It was contended that by doing so the appellant
provided what counsel called ‘considerations the value of which
was significantly less than the property received’.
This
property, ie, the amounts paid into the account, amounts to a ‘gift’.
As the ‘gift’ was made not more
than seven years before
the prosecution against the defendant was instituted it amounts to an
‘affected gift’, as defined.
[27] In the alternative,
and on the assumption that the appellant did not receive an affected
gift, it was submitted that as the
appellant held assets to the value
of R9 761 607 on behalf of the defendant. Insofar as this amount
represented in the appellant’s
hands, so it was argued, the
benefits arising from the unlawful proceeds of crime, the restraint
order against the appellant was
appropriate.
[28] In the further
alternative it was submitted that the cash withdrawn from the account
should be held to be an affected gift
and the balance in the account,
which was transferred to other persons, should be held to be property
held on behalf of the defendant
which constituted the benefits
arising from the unlawful proceeds of crime.
[29] Alternately to this
argument, respondent’s counsel submitted that it was not
necessary for the respondent to show on
the probabilities that the
appellant received an affected gift from the defendant: it was
sufficient if he showed, as it was submitted
he had done, that there
were reasonable grounds for believing that the appellant had received
an affected gift.
[30] As far as the cross
appeal was concerned counsel for the respondent pointed out that
according to the papers the appellant
had other assets over and above
those referred to in the judgment, some of which were listed in the
interview questionnaire completed
by her and attached to her
affidavit and that the learned judge had not stated in his judgment
on what basis those assets were
excluded from the order made.
Furthermore, he contended, the court
a
quo
should
have made an order restraining the appellant’s assets to the
value of R9 761 607. If the court was not prepared to
make such an
order he asked for an order in terms of Rule 6(5)(g) that the
defendant and the appellant should be cross-examined
on the veracity
of their version.
[31] Counsel for the
appellant submitted in reply that the respondent’s contention
that the appellant is to be regarded as
having received a gift by
virtue of the operation of s 16(1) was not correct because, so he
argued, it could not be held that the
defendant had ‘transferred’
the money paid into the bank account to her because no interest in
the money could be said
to have been transferred or granted to the
appellant if the account was a conduit.
[32] He contended further
that the respondent had to show on a balance of probabilities that
the appellant had received an affected
gift or gifts. In this regard
he said that it was clear from s 25(1) that it was in respect of the
future making of a confiscation
order against the defendant that
proof that reasonable grounds existed for believing that such an
order might be made sufficed
to entitle the respondent to a restraint
order either where, as here, the defendant had been prosecuted or the
court was satisfied
that a person would be prosecuted.
[33] Counsel for the
appellant submitted further that the respondent’s first
alternative argument could not be upheld (except
in relation to the
money in the ABSA bank account, which on the appellant’s
version, was money held for and on behalf of
the defendant in which
she had an interest) because the relief sought against the appellant
was premised on the assertion that
she had received an affected gift
and that therefore property held by her constituted, in terms of s
14(b) of the Act, realisable
property which could be used to satisfy
a confiscation order. He submitted that the respondent’s
alternative arguments are
fallacious because they overlook the fact
that the appellant is not an accused person. He pointed out that the
decisions relied
on by the respondent
1
in respect of this part of the case all dealt with confiscation
orders and not restraint orders made against persons other than
defendants. He conceded that if the court was minded to accept the
arguments advanced by him he was not able to resist an order
in terms
of Rule 6(5)(g).
[34] In my opinion it is
clear from what has been said above that the following questions
arise for decision in this case:
(a) Must the respondent
show on the probabilities that an affected gift was made to the
appellant by the defendant or is it sufficient
for it to show that
there are reasonable grounds for believing that such a gift was made?
(b) If it must be shown
on the probabilities that an affected gift was made, did the
respondent succeed on the papers in establishing
this on the facts?
(c) Does s 16(1) operate
with the result that the defendant is to be deemed to have made a
gift to the appellant?
(d) If it did not, can
its alternative arguments be upheld?
[35] I am satisfied that
the applicant in an application for a restraint order has to show
that the person against whom the order
is to be made received an
affected gift. In my view this follows from the wording of s 26(1)
and (2). The order clearly must relate
to realisable property held by
the person who is to be prohibited from dealing with such property.
It is clearly a
factum
probandum
in
such an application that the property in question ‘is held by
the person against whom the restraint order is being made’.
The
circumstances in which proof of reasonable grounds for believing a
particular fact will suffice are set out in s 25 and do
not cover a
case such as the present.
[36] I am also satisfied
that one cannot say that the version put up in their affidavits by
the appellant and the defendant was
so improbable and far fetched
that it can be rejected out of hand without their being given the
opportunity to give
viva
voce
evidence
and being subjected to cross-examination. Nor was there warrant for
holding, as the judge
a
quo
did,
that a gift of some sort was made by the defendant to the appellant.
It will be recalled in this regard that the defendant
stated that the
account was opened for use by her in conducting a business of hers.
No factual basis was adduced for inferring
that the appellant and the
defendant departed from this and caused money deposited in the
account to be paid over as a gift to
the appellant.
[37] I am also of the
view that s 16(1) of the Act does not assist the respondent. There
was no evidence to the effect that the
bank charges in respect of the
account in question were paid by the appellant from her own funds:
the likelihood is that they were
deducted by the bank from the funds
deposited into the account. Nor does it appear from the evidence of
the appellant and the defendant
that the appellant allowed what the
respondent’s counsel called her ‘credit worthiness’
to be used. It is not
suggested that overdraft facilities were
available or utilised on the account. I do not think that there is
any basis for holding
that the appellant supplied any consideration
to the defendant.
[38] In my opinion before
the deeming provided for in s 16(1) can come about there has to be
(a) a transfer of property by the defendant
to another person; (b)
the supply by such other person of some consideration to the
defendant; and (c) proof that such counter-consideration
was worth
significantly less than the property in respect of which it is
transferred. I am accordingly satisfied that it was not
shown that s
16(1) came into operation.
[39] As far as the
alternative arguments advanced on behalf of the respondent on the
assumption that no affected gift was made,
I agree with the
submissions advanced by the appellant’s counsel that, except
for whatever money was in the ABSA bank account,
which was property
held for and therefore by the defendant, it was not shown that any of
the assets of the appellant were realisable
property as defined and
accordingly no basis existed for making a restraint order in respect
of them.
[40] It follows that
(save for the money in the ABSA bank account) the order made by the
court
a
quo
must
be set aside. It also follows that the cross appeal must be
dismissed.
[41] In my view the order
that the court
a
quo
should
have made (which counsel for the appellant does not oppose) is one in
terms of Rule 6(5)(g) of the Uniform Rules of court
to the effect
that the appellant and the defendant be subject to cross-examination
in respect of the evidence set forth in their
affidavit.
[42] The following order
is made:
1. Except insofar as the
order of the court
a
quo
relates
to the appellant’s banking account at the Sunnyside branch of
Absa Bank, the appeal is allowed with costs.
2. The order of the court
a quo
in
respect of the appellant insofar as it relates to her assets
mentioned in paragraphs 12.2 and 12.3 of the judgment of the court
a
quo
is
set aside and replaced by an order in the following terms:
'It is ordered in terms
of Rule 6(5)(g) that the defendant and the first respondent are to be
subject to cross-examination in respect
of the evidence set forth in
their affidavits.’
3. The cross appeal is
dismissed with costs.
……………
..
IG FARLAM
JUDGE
OF APPEAL
APPEARANCES:
FOR
APPELLANT: A C Ferreira SC
Instructed
by
J
W Wessels & Partners Inc, Pretoria
Symington
& De Kok, Bloemfontein
FOR
RESPONDENT: E Labuschagne SC
E
Ndala
Instructed
by
The
State Attorney, Pretoria
The
State Attorney, Bloemfontein
1
Some of which may in any event require
reconsideration in the light of the recent decision of the House of
Lords in
R v May
[2008]
UKHL 28
;
[2008] Crim L.R. 737
(H.L.).