Mngomezulu and Others v National Director of Public Prosecutions (446/05) [2007] ZASCA 11; [2007] 4 All SA 979 (SCA); 2007 (2) SACR 274 (SCA) (16 March 2007)

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[2007] ZASCA 11
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Mngomezulu and Others v National Director of Public Prosecutions (446/05) [2007] ZASCA 11; [2007] 4 All SA 979 (SCA); 2007 (2) SACR 274 (SCA) (16 March 2007)

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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO
: 446/05
In the matter between :
NGENGELEZI ZACCHEUS
MNGOMEZULU
......................
First Appellant
NONTANDO MNGOMEZULU
......................
Second
Appellant
SECTION 13 THE AUGUSTUS CC
......................
Third
Appellant
NORDIC SAGA INVESTMENTS
203 CC
......................
Fourth Appellant
SECTION 76 THE AUGUSTUS CC
......................
Fifth
Appellant
SECTION 21 ST JAMES CC
......................
Sixth
Appellant
SECTION 77 THE AUGUSTUS CC
......................
Seventh
Appellant
BASFOUR 481 (PTY) LTD
......................
Eight
Appellant
GREEN MILE INVESTMENTS 277
CC
......................
Ninth
Appellant
EMERALD DUNES INVESTMENTS
10 CC
......................
Tenth Appellant
NUMBER 17 ST JAMES COURT
CC
......................
Eleventh Appellant
SECTION 29 ST JAMES CC
......................
Twelfth
Appellant
SWZ FILLING STATION CC
......................
Thirteenth
Appellant
SWZ PROPERTIES &
DEVELOPMENT (PTY) LTD
......................
Fourteenth Appellant
and
NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
......................
Respondent
___________________________________________________________________________
Before: STREICHER, HEHER, COMBRINCK JJA, SNYDERS & MUSI AJJA
Heard: 19 FEBRUARY 2007
Delivered: 16 MARCH 2007
Summary:
Section 28
of the
Prevention of Organised Crime Act 121
of 1998
–
curator bonis
may be authorized to
alienate property under restraint in order to properly administer the
assets under his control.
Neutral citation: This judgment may be referred to as
Mngomezulu
v National Director of Public Prosecutions
[2007] SCA 11
(RSA)
___________________________________________________________________________
J U D G M E N T
___________________________________________________________________________
STREICHER JA
STREICHER JA:
[1] This is an appeal against the
confirmation by the Witwatersrand Local Division of a provisional
restraint order against the appellants.
The order had been granted
pursuant to an
ex
parte
application
in terms of s 26 of the Prevention of Organised Crime Act 121 of
1998 (POCA). Leave to appeal was granted by the
court a quo.
[2] The application for a restraint
order was directed against the first appellant as defendant and the
other appellants were joined
as respondents because of their interest
in the matter, more particularly their interest in the realisable
property sought to be
restrained. In opposition to the application
the appellants filed an answering affidavit deposed to by the first
appellant. He stated
that he had been advised that it was unnecessary
for him to deal with the merits of the application and that his
failure to respond
to any of the allegations contained in the
founding affidavit should not be construed as an admission of the
contents thereof. He
then raised two points
in
limine
. The first
was that the provisional order should be discharged as a result of
the respondent not having drawn the attention of the
judge who
granted the order to the fact that the order differed from previous
orders granted in applications for restraint orders
in terms of s 26.
The second was that paragraphs 1.7, 1.8, 1.20 and 4.3.2 of the
provisional order conferred powers on the
curator
bonis
appointed in
terms thereof which could not be conferred on him lawfully. These
were the only points argued in the court a quo and
also the only
points dealt with in the heads of argument filed on behalf of the
appellants. However, during the oral argument before
us counsel for
the appellants
1
abandoned the first point
in
limine
and
submitted that the formulation of the second point was wide enough to
accommodate a submission, advanced in the alternative, that
no case
had been made out for the appointment of a
curator
bonis
and for
conferring on such curator the powers referred to.
[3] The first appellant had been
charged with dealing in drugs in contravention of the
Drugs and Drug
Trafficking Act 140 of 1992
. In terms of
s 26
read with
s 25
of POCA
a High Court may grant an order prohibiting any person from dealing
in any manner with any property to which the order relates
when a
prosecution for an offence has been instituted against the defendant
concerned, when it appears to the court that there are
reasonable
grounds for believing that a confiscation order may be made against
the defendant and when the proceedings against the
defendant have not
been concluded. As to when a confiscation order may be made,
s 18
of POCA provides that 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 that offence and, if the court finds
that the
defendant has so benefited, the court may make an order against the
defendant for the payment to the State of any amount
it considers
appropriate, subject to the limit specified in
s 18(2).
Such an order
is referred to in POCA as a confiscation order.
[4] A restraint order may be made ‘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’.
2
Realisable property is defined as:
‘
(a) any property held by the defendant
concerned; and
any property held by a person to whom that
defendant has directly or indirectly made any affected gift.’
3
[5] Where a High Court has made such
a restraint order, that court may in terms of
s 28
of POCA at any
time:
‘
(a) appoint a
curator
bonis
to do,
subject to the directions of that court, any one or more of the
following on behalf of the person against whom the restraint
order
has been made, namely –
to perform any particular act in respect of any or all the property
to which the restraint order relates;
to take care of the said property;
to administer the said property; and
where the said property is a business or undertaking, to carry on,
with due regard to any law which may be applicable, the business
or
undertaking;
(b) order the person against whom the restraint
order has been made to surrender forthwith, or within such period as
that court may
determine, any property in respect of which a
curator
bonis
has been appointed under
paragraph (a), into the custody of that
curator
bonis
.’
[6] The restraint order made against
the appellants relates to twelve immovable properties, a number of
Persian carpets, works of
art, vehicles and numerous bank accounts
specified in a schedule attached to the order. It also relates to all
other property held
by the appellants excluding clothing, bedding,
ordinary household furniture, kitchen and laundry appliances and
utensils and other
articles (other than luxuries) that the
curator
bonis
may consider
to be reasonably needed for the day to day use of the appellants. The
appellants did not contend that any of the property
so restrained did
not constitute realisable property held by the first appellant within
the meaning of POCA.
[7] In terms of the order the
appellants, and any other person with knowledge of the order, were
prohibited from dealing in any manner
with the property except as
required or permitted by the order.
4
In this regard the order provided
that the appellants had to surrender the restrained property to the
curator but that the curator
could within his discretion release any
of the property back into the custody of the person who held such
property, under such conditions
as the curator deemed appropriate,
for the proper administration and preservation thereof.
5
In the event of a full disclosure
having been made by an appellant the curator was also authorised to
release such of the realisable
property within his control as may be
sufficient to meet the reasonable current and prospective living
expenses of the appellant
concerned as well as his reasonable current
and prospective legal expenses.
6
Save as aforesaid the order did not
allow the appellants to deal with the property. Theodor Wilhelm van
der Heever of Deloitte &
Touche Trust (Pty) Ltd was appointed as
curator bonis
subject to the provisions of the
Administration of Estates Act 66 of 1965
and subject to the
supervision of the Master of the High Court.
7
He was authorized, after having
obtained letters of curatorship in terms of
s 32(1)
of POCA, to take
the property into his possession or under his control, to take care
of such property and to administer it.
8
Such powers, duties and authority as
provided for or implied in the Act and such further powers as were
specified or implied in the
order were conferred on him.
9
[8] Paragraphs 1.7, 1.8, 1.20 and
4.3.2 of the restraint order, being the paragraphs in issue, read as
follows:
‘
1.7 The particular
curator
bonis
will be
entitled to pay any expenses related to restrained assets, which
would ordinarily be carried by the estate out of any assets
under
restraint. If no liquid assets are available to the
curator
bonis
to pay
these expenses the
curator bonis
will have the power to sell assets under
restraint in order to properly administer the assets under his
control. In such case, the
owner of the relevant restrained property
has to be consulted as to which assets under restraint should be
sold.
1.8 The
curator bonis
will further be entitled to deal with any funds in
any banking accounts forming part of the property and is accordingly
authorized
to hold the necessary signing powers of such accounts and
to give directions to banking institutions and other persons in
control
of any of those funds regarding the utilization of such
funds.’
‘
1.20 In terms of Section 28(3)(c) of the Act,
the fees of the
curator bonis
and,
ex post
facto
, expenses and disbursements
reasonably incurred by the
curator bonis
in the execution of his duties which have
not been paid out of the estate in terms of paragraph 1.7
supra
,
shall be paid from the proceeds of any confiscation order that may be
made against the Defendant failing which, by the State; provided
that
the
curator bonis
is entitled to recover interest not
exceeding the prime lending rate of the major financial institutions
on such expenses and disbursements.’
‘
4 In terms of section 26(4)(a) of the Act, the
Applicant is directed forthwith to give notice of this order, by
delivering a copy
by hand, facsimile or by registered post, to the
following persons:
4.1 . . .
4.2 . . .
4.3 The Registrar of Deeds directing him to endorse the title deed of
any immovable property registered in the name of the Defendant
and
the Respondents with the following restriction, namely, the property
shall not, without the consent of this Court:
4.3.1 . . .
4.3.2 Be attached or sold in execution (subject to
the powers afforded to the
curator bonis
in paragraph 1.7 and 1.17 above);
4.3.3 . . ..’
[9] The respondent correctly stressed
in argument that :
‘
(a) Clause 1.7 merely permits the curator to
use the resources of the estate to pay expenses which meet two
requirements. They must
firstly relate to the restrained assets. They
must secondly be expenses “
which would
ordinarily be carried by the estate
”
,
that is, expenses which the estate would have incurred and paid in
the ordinary course if the confiscation order had not been made.
Clause 1.8 merely allows the curator to operate the bank accounts of
the estate under his administration. It does not in any way
extend
the purposes for which he may use the money in those accounts. He
may only use the money for purposes permitted by the remainder
of
the order. This clause does not add to them. It merely says that he
may operate the bank accounts for purposes of the performance
of his
functions.’
[10] In terms of s 28(1)(a)(i) a
High Court that has made a restraint order may authorize a curator
‘to perform any particular
act in respect of any of or all the
property to which the restraint order relates’. If interpreted
according to its ordinary meaning,
the section empowers a High Court
to authorize a curator to, inter alia, sell property. However, the
appellants argued that the section,
read in its context, should be
interpreted restrictively so as to exclude the power to alienate
restrained property. They submitted
that the purpose of a restraint
order was to preserve the property to which the order related and
that a provision in a restraint
order entitling a
curator
bonis
to sell or
encumber the restrained property would defeat the purpose of POCA.
They pointed out that even an eventual confiscation
order would not
in itself deprive the owners of property of their right of ownership
but would simply constitute an order for payment
of an amount of
money to the State.
[11] In terms of s 33 the powers
conferred upon the High Court by sections 26 to 31, or upon a
curator
bonis
appointed in
terms of s 28 are to be exercised ‘with a view to making available
the current value of realisable property for satisfying
any
confiscation order made or which might be made’. For the reasons
that follow that purpose is not defeated by the provision
entitling
the
curator bonis
to sell or encumber the restrained
property ‘in order to properly administer the assets under his
control’ and ‘to pay any expenses
related to restrained assets,
which would ordinarily be carried by the estate’.
[12] The
curator
bonis
was entrusted
with the administration of virtually the entire estate of the
appellants. Such administration would include the maintenance
of the
restrained property and the payment of expenses in respect thereof.
The appellants conceded that in order to properly administer
the
property entrusted to him the curator would have to incur expenses
but submitted that those expenses should be borne by the State.
However, s 28(3)(c) provides that a court which made an order
contemplated in subsection (1)(b) ‘may make such order relating
to
the fees and expenditure of the
curator
bonis
as it deems
fit, including an order for the payment of the fees of the
curator
bonis
–
from the confiscated proceeds if a confiscation order
is made; or
by the State if no confiscation order is made.’
Again the appellants were constrained
to argue for a restrictive interpretation
of
the phrase ‘such order . . . as it deems fit’. However, the
phrase would not have been used if the intention was that the
curator’s
expenses up to the time that a confiscation order was
made could only be recovered from the State. Furthermore, the
appellants will
be benefited by the payment of ‘expenses related to
the restrained assets, which would ordinarily be carried by the
estate out
of any assets under restraint’. In the circumstances it
is unlikely that the legislature intended to exclude an order that
the
curator’s expenses relating to the restrained assets may be
recovered from the restrained assets themselves.
[13] The legislature, by using the
phrase ‘such order . . . as it deems fit’ clearly intended to
confer a wide discretion on the
High Court as to the source from
which the curator could recover his expenditure in respect of the
administration of the property
entrusted to him. There is no reason
why the High Court in the exercise of that discretion should not, in
order to enable the
curator
bonis
to properly
administer the realisable property entrusted to him, authorize him to
utilise the liquid assets in the estate or to turn
non-liquid assets
into liquid assets to the extent that there are insufficient liquid
assets. It may be that the value of the realisable
property will as a
result diminish but the purpose of allowing the curator to utilize
and alienate assets is to restrict that diminution
in value. Should
the restrained property not be administered properly and should
expenses such as rates and taxes and expenses relating
to maintenance
not be incurred the diminution in the value of the property of the
appellants would in all probability be much greater
than the amount
expended. The power to sell assets under restraint is therefore
required to preserve the value of the property under
restraint and
serves the purpose of a restraint order.
[14] Property may also depreciate in
value at such a rate and to such an extent that the proper
administration of an estate may require
the sale thereof. Not to
allow the
curator
bonis
in these
circumstances to alienate the property so as to preserve the value
thereof would defeat the abovementioned purpose of POCA
and may be
unfair to the defendant concerned.
[15] For these reasons it is not
surprising that it has become standard practice for a court, when
appointing a curator to administer
the property of a minor or of a
person not able to manage his own affairs, to confer on the curator
the power to alienate movable
and immovable property (see
Ex
parte Hulett
1968
(4) SA 172
(D) at 175D to 176C and
Ex
parte Thompson
1983
(4) SA 392
(E) at 393E-G). Fannin J, in
Ex
parte Hulett
10
,
referred to this power as a power ‘which a curator would normally
require in order fully to administer his ward’s estate’.
Being a
power which a curator would normally require in order fully to
administer his ward’s estate the legislature probably intended
to
empower the High Court to confer this power on a
curator
bonis
appointed in
terms of s 28.
11
[16] The appellants placed reliance
on the provisions of s 30 of POCA. That section provides that a High
Court may, on the application
of the National Director, authorise the
curator bonis
to realise any realisable property
when a confiscation order has been made, when such confiscation order
is no longer subject to review
or appeal and when the proceedings
against the defendant concerned have not been concluded. The order
may, however, only be made
if all persons known to have an interest
in the property concerned have been afforded an opportunity to make
representations to the
court in connection with the realisation of
that property. The court may also allow a person directly affected by
the confiscation
order or a person who suffered damage to or loss of
property or injury as a result of an offence or related criminal
activity committed
by the defendant concerned, to make
representations. They submitted that the fact that these
qualifications are not to be found in
s 28 indicated that the
intention was not that a
curator
bonis
could be
empowered to alienate restrained property.
[17] It is true that the provisions
referred to are not to be found in s 28. However, the section
contains other safeguards against
abuse of his powers by a curator.
Notice of a restraint order has to be given to persons affected by
the order
12
and in terms of s 28 any person
affected by an order for the surrender of property into the custody
of a curator may apply for the
variation of the terms of the
appointment or for the discharge of the curator. In addition the
actions of a curator are at all times
subject to the directions of
the court.
13
[18] Confirmation that a
curator
bonis
appointed in
terms of s 28 may be authorised to alienate or utilize property
which he has been appointed to administer is to
be found in the
Administration of Estates Act 66 of 1965
.
Section 32(2)
of POCA
provides that save as is otherwise provided in Chapter 5, ie
sections
12
to
36
thereof, the provisions of the
Administration of Estates Act
shall
with the necessary changes apply in respect of a
curator
bonis
appointed
under the Chapter.
Section 80
of the
Administration of Estates Act
provides
as follows:
‘
80(1) No natural guardian shall alienate or
mortgage any immovable property belonging to his minor child, and no
tutor or curator
shall alienate or mortgage any immovable property
which he has been appointed to administer, unless he is authorized
thereto by the
Court or by the Master under this section or, in the
case of a tutor or curator, by any will or written instrument by
which he has
been nominated.’
Section 82(c)(ii)
of the
Administration of Estates Act provides
that every curator, whenever
he receives any money belonging to the person concerned from any
person other than the Master, must
forthwith pay the money into the
hands of the Master except, inter alia, if the money is immediately
required for the preservation
or safe custody of any property of the
other person.
[19] For these reasons I am of the
view that a High Court may in terms of
s 28(1)(a)
authorize a
curator
bonis
appointed in
terms of that section to alienate property under restraint in order
to properly administer the assets under his control.
It follows that
the attack on clauses 1.7 and 1.8 was correctly dismissed by the
court a quo. The appellants confined their attack
on clauses 1.20 and
4.3.2 to their reference to clause 1.7. Inasmuch as clause 1.7 has
been held to be valid the attack on clauses
1.20 and 4.3.2 similarly
has to fail.
[20] The appellants submitted in the
alternative that the respondent, in his founding affidavit, had not
made out a case for the appointment
of a
curator
bonis
and for
conferring on the
curator
bonis
the powers
referred to. However, the respondent did make out a case for the
granting of a restraint order in respect of virtually
all of the
first appellant’s realisable property including a number of
immovable properties, movable property and numerous bank
accounts and
stated that it would be in the interests of justice for the court to
appoint a
curator
bonis
to administer
the restrained property. In terms of the restraint order sought the
appellants were prohibited from dealing with the
restrained property
which constituted almost the entire estate of the appellants. The
nature of the restrained property is such that
it requires
administration. The restraint order therefore necessitated the
appointment of a
curator
bonis
to administer
the property and the conferral on him of the powers referred to.
[21] The appeal is dismissed with costs including the
costs of two counsel.
___________________
P E STREICHER
JUDGE OF APPEAL
CONCUR
:
HEHER JA)
COMBRINCK JA)
SNYDERS AJA)
MUSI AJA)
1
Advocate
Brassey SC had by then taken over as the leading counsel.
2
Section
26(2)(a).
3
">
3
Section
14.
4
">
4
Para
1.3 of the order.
5
Paras
1.21 and 1.26.
6
Paras
1.35 and 1.36.
7
Para
1.4 of the order.
8
Para
1.5 of the order.
9
Para
1.6 of the order.
10
At
175C.
11
Cf
Hughes and others v Customs and Excise
Commisioners
[2002] EWCA Civ 734
;
[2002] 4 All ER 633
(CA)
at 648h-i.
12
Section
26(4)(a).
13
">
13
Section
28(1)(a).