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[2015] ZAKZPHC 23
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National Director of Public Prosecutions v Ramlutchman (AR161/14) [2015] ZAKZPHC 23; 2016 (1) SACR 362 (KZP) (20 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE NO: AR 161/14
In
the matter between:
THE
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
..............................................................................................
APPELLANT
and
ISHWARLALL
RAMLUTCHMAN
.............................................................................
RESPONDENT
JUDGMENT
Date of hearing: 23
March 2015
Date
of judgment: 20 April 2015
D.
PILLAY J
[1]
‘
Benefit’
is the word in s 18(1) of the Prevention of Organised Crime Act 121
of 1998 (POCA) that holds the attention of the
court in this appeal
as it did in
S
v
Shaik
and
Others
[2008] ZACC 7
;
2008 (2) SACR 165
(CC). As the first ever decision of the CC on ch 5
of the POCA
[1]
Shaik
outlined the scheme of criminal confiscation contemplated in ch 5 of
the POCA obviating the need for this court to do so.
[2]
Rejecting a narrow interpretation of the word 'benefit' in s 18(1)
the CC pronounced unanimously as follows:
‘
[Section]
12(3) provides that a person will have benefited from unlawful
activities if he or she has received or retained any proceeds
of
unlawful activities. What constitutes a benefit, therefore, is
defined by reference to what constitutes “proceeds of unlawful
activities”. It is not possible in the light of this definition
to give a narrower meaning to the concept of benefit
in s 18,
for that concept is based on the definition of the “proceeds of
unlawful activities”. … “Proceeds”
is
broadly defined to include any property, advantage or reward derived,
received or retained directly or indirectly in connection
with
or as a result of any unlawful activity. … [S]ection
(18(2)) expressly contemplates that a confiscation
order may be
made in respect of any property that falls within the broader
definition, and is not limited to a net amount. The
narrow
interpretation of 'benefit' proposed by the appellants cannot thus
fit with the clear language of s 18 and the definition
of
“proceeds of unlawful activities”.
[3]
[2]
Counsel for the appellant submitted that
the ‘benefit’ in this case is the equivalent of the
'proceeds of unlawful activities',
which in
this case equalled the amount of the proceeds of the contract for
building schools. In defending the conclusion of the
learned
magistrate that the appellant had proved that the respondent had
benefited from fraudulent misrepresentations and corruption
but not
the amount of the benefit, Counsel for the respondent persisted that
the benefit could not be the proceeds of the contract.
At most it
would be the profit after deducting the costs of construction from
the contract price. As the appellant failed to discharge
the onus of
proving the amount of the benefit the magistrate correctly dismissed
the confiscation application. On a question primarily
of law the crux
of the controversy is this: Does 'proceeds of unlawful activities'
equal everything ‘received’; is
everything received equal
to ‘benefit’; and does benefit equal ‘proceeds’
or ‘gains’?
[3]
The evidence and submissions invite this
court to take its cue from
appellate
decisions but to interpret and apply
‘
benefit’
to circumstances different from
Shaik;
National Director
of
Public Prosecutions
v Rebuzzi
2002 (1) SACR 128
(SCA
); National
Director
of
Public
Prosecutions v
Gardener
and Another
2011 (1) SACR 612
(SCA);
Kockjeu v
National Director
of
Public Prosecutions
2013 (1) SACR 170
(ECG) but similar to
National
Director of Public Prosecutions
v
Mtungwa
2006
(1) SACR 122
(N).
[4]
The statutory context in which ‘benefit’
calls for interpretation is s 18(1)(a) which provides:
‘
(1)
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;
…
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 12(1)
defines
‘defendant’ to mean
‘
a
person against whom a prosecution for an offence has been instituted,
irrespective of whether he or she has been convicted or
not,
…’
[6]
Chapter 5 is titled ‘Proceeds of unlawful activities’
which significantly is defined in s 1 to apply to the whole of
the
POCA. ‘
[P]roceeds of unlawful activities’
means:
‘
any
property or any service advantage, benefit or reward which was
derived, received or retained, directly or indirectly, in the
Republic or elsewhere, at any time before or after the commencement
of this Act, in connection with or as a result of any unlawful
activity carried on by any person, and includes any property
representing property so derived.’
‘
Unlawful
activity’ is defined in s 1 to mean:
‘
conduct
which constitutes a crime or which contravenes any law whether such
conduct occurred before or after the commencement of
this Act and
whether such conduct occurred in the Republic or elsewhere.’
[7]
Necessarily
[4]
the breath of s 18(1) and the related definitions is designed to
cater for a wide range of situations in which the ‘proceeds
of
unlawful activities’ can amount to benefits of ‘unlawful
activity’. In the absence of any qualification of
‘conduct’,
‘crime’ and ‘any law’, ‘unlawful
activity’ is wider than ‘proceeds’
and ‘proceeds
of unlawful activities’. Aggregated in ‘proceeds of
unlawful activities’ no crime can escape
the reach of ch 5.
Offences relating to racketeering activities widen the net and deepen
the seriousness of conduct constituting
a 'pattern of racketeering
activity', the definition of which incorporates any offence in
Schedule 1 to the POCA. Schedule 1 lists
some 34 offences ranging
from the most serious, such as murder and rape, to less serious
offences such as malicious injury to property,
theft and fraud.
It also includes any offence under the
Prevention and Combating of
Corrupt Activities Act, 12 of 2004
.
[5]
‘
[U]nlawful
activity’ referring to conduct ‘which contravenes any
law’
is
broader than the crimes referred to in Schedule 1.
[6]
‘[D]irectly or indirectly, in the Republic or elsewhere, at any
time before or after the commencement of this Act’
and various
combinations of these terms generously sprinkled throughout the POCA
dispel any likelihood of a narrow interpretation
of the scope of POCA
in time and space.
[7]
[8]
Given
the breadth of the scope of application of the ch 5, how should it be
tempered to ensure that it complies with the
Constitution
of the Republic of South Africa, 1996.
Reflexively
foreshadowed is the risk to the right to property in s 25 of the
Constitution. In what follows it will emerge that the
tools of
constitutional and statutory interpretation have intrinsic
constraints to enable balanced outcomes. Interpretative tools
that
give effect to constitutional rights and obligations involve
considerably more than interpreting the text of the legislation
literally. Additional tools of equity,
[8]
fairness
[9]
and
proportionality
[10]
guide the
court’s exercise of its discretion. Equity is generally
accepted as being intrinsic to the Constitution.
Laws are presumed to
be equitable and fair,
[11]
especially laws following upon our democracy.
[12]
Neither equity nor fairness enjoys an independent life outside the
Constitution, in my respectful view.
[13]
The Constitution epitomises equity and fairness. To achieve balance
the CC has used proportionality ‘because the requirement
of
rationality is indeed a logical part of the proportionality test’
[14]
having its roots in the ‘relation between the limitation and
its purpose’ in s 36 of the Constitution. Specifically
s 18(1)
of the POCA imposes a statutory injunction to balance ‘effectiveness’
with ‘fairness’ in any order
for confiscation.
[9]
Adopting a purposive approach to
interpretation the court turns to the preamble of POCA. In its
introductory paragraphs the preamble
acknowledges the constitutional
rights and obligations of the State and all its people. Acknowledging
the growing threat of organised
crime worldwide the preamble bars
convicted and other persons from benefiting from the fruits of
unlawful activities in the following
paragraphs:
‘
AND
WHEREAS no person convicted of an offence should benefit from the
fruits of that or any related offence, whether such offence
took
place before or after the commencement of this Act, legislation is
necessary to provide for a civil remedy for the restraint
and
seizure, and confiscation of property which forms the benefits
derived from such offence.
AND
WHEREAS no person should benefit from the fruits of unlawful
activities, nor is any person entitled to use property for the
commission of an offence, whether such activities or offence took
place before or after the commencement of this Act, legislation
is
necessary to provide for a civil remedy for the preservation and
seizure, and forfeiture of property which is derived from unlawful
activities or is concerned in the commission or suspected commission
of an offence’.
[10]
These paragraphs inform chapters 5 and 6 of
the POCA. This application focuses only on ch 5. The jurisdictional
prerequisites for
invoking the confiscation of property under ch 5
are threefold:
1.
A
person must be convicted of an offence.
[15]
2.
That
person must benefit from the fruits of that offence.
[16]
3.
That
‘benefit’ must be derived, received or retained.
[17]
[11]
In
the Concise Oxford English Dictionary ‘benefit’ means ‘
an
advantage
or
profit
gained
from
something’.
[18]
‘
Benefit’
and ‘advantage’ (which is a synonym for ‘benefit’)
are incorporated in the definition of
'proceeds of unlawful
activities'.
Mathematically
speaking ‘benefit’ is a subset of 'proceeds of unlawful
activities' partially intersecting with the latter
to enrich its
meaning without ‘benefit’ losing its own meaning which
includes
‘
help’.
[19]
In defining ‘benefit’ with reference to the definition of
'proceeds of unlawful activities'
Shaik
could not have jettisoned its ordinary meaning. From the perspective
of constitutional interpretation the Constitutional Court
(CC) has
consistently applied a purposive approach
[20]
and shunned a black-letter law method
[21]
of interpreting statutes. The variety of factual circumstances in
which the ch 5 may arise for consideration would resist an inflexible
approach. To straightjacket
‘
benefit’
to mean 'proceeds of unlawful activities' only, as counsel for the
appellant asks, would mean applying a literal,
black-letter law
interpretation to s 18(1) and its application in
Shaik
.
[12]
‘
Organised crime’ is not
defined in POCA. Positioned alongside money laundering and criminal
gang activities in the preamble
it suggests that only large-scale
criminal operations are implicated, an inference drawn in
Mtungwa
, a case
relied on by the respondent. The learned judge of this division
dismissed the application, the following being one of the
grounds:
‘
As
I indicated at the outset of my discussion of the terms of the Act,
the courts, in dealing with its use and application have
turned, in
the first instance, to the clear wording of its preamble. I do not
consider that the type of offence which this respondent
has
apparently committed even if it was implicitly repetitious in nature,
can be equated to the type of grand-scale larceny for
which the Act
was designed’
[22]
[13]
Respectfully, one should not be quick to
draw such an inference given the extensive reach of the POCA outlined
above. The preamble
permits ‘no person’ to benefit from
the fruits of unlawful activity. Furthermore the definition of
‘defendant’
for the purposes of ch 5 does not distinguish
between persons prosecuted for serious or less serious offences.
Mohunram and Another v National Director
of Public Prosecutions and Another (Law Review Project as Amicus
Curiae)
[2006] ZASCA 12
;
2007 (4) SA 222
(CC) reinforces
this interpretation thus:
‘
Notwithstanding
this recurrent theme, the wording of POCA as a whole makes it clear
that its ambit is
not
in fact limited to so-called 'organised crime offences', so that
the initial impression created by the short and long titles,
as well
as by most of the paragraphs of the preamble, is incorrect. This is
misleading and more than a little unfortunate.’
[23]
Mohunram
also points out that:
‘
[t]he
criminal activities of an efficient and energetic individual
miscreant may well have a more extensive reach and a greater
negative
social impact.
[24]
Cook
Properties
Observes:
‘
[T]he
long title, as well as the ninth paragraph of the preamble…
show that the statute is designed to reach far beyond ''organised
crime, money laundering and criminal gang activities''. The Act
clearly applies to cases of individual wrongdoing.
[25]
[14]
Following
5 years after
Mtungwa,
Gardener
injects clarity into the analysis of confiscation law with its
three-stage process: First, establish that the defendant has
benefitted
from the offence for which he has been convicted. Second,
determine the value of the benefit. Third, determine the amount of
the
benefit recoverable from the defendant.
[26]
Inherently logical, applying this staged process avoids conflating
the enquiry into whether the POCA applies with what amount of
the
benefit should be confiscated. The first stage is about establishing
the three jurisdictional requirements identified above.
If any one
requirement is absent, that is the end of enquiry. The POCA would not
apply and no benefit can be confiscated.
[15]
Establishing
whether the jurisdictional prerequisites exist is usually a factual
enquiry
[27]
unless legal
interpretation is required to determine the meaning of say,
‘benefit’, ‘derived’ or ‘received’
in the context of a particular case. Proving a conviction should pose
no difficulty,
[28]
unless for
instance, a debate arises as to whether the conviction relates to the
offence that generated the benefit. For as long
as the enquiry is
purely factual, the discretion of the court is muted. If the court
has to interpret the law then it may exercise
its discretion to say,
balance competing rights and obligations in order to achieve
consistency with the Constitution or to balance
effectiveness with
fairness in the context of s 18(1). Referring to the ‘inherently
intrusive’ nature of asset forfeiture
under ch 6 of POCA
[29]
in
Prophet
v National Director of Public Prosecutions
[2006] ZACC 17
;
2006 (2) SACR 525
(CC)
(2007 (2) BCLR 140)
in para 46 the CC reminded
the courts of their obligations:
‘
to
interpret legislation such as the POCA in a manner that
''promote(s) the spirit, purport and objects of the Bill of Rights'',
to ensure that its provisions are constitutionally justifiable,
particularly in the light of the property clause enshrined in terms
of s 25 of the Constitution.’
Citing
Shaik
the
SCA also reminded of the potentially harsh consequences of a
confiscation order, the reach of which extends even to innocent
parties who may indirectly and unknowingly have benefited from the
proceeds of the offence.
[30]
[16]
Typically the CC has turned to
proportionality as a means of arriving at balanced decisions as the
following two decisions in which
the deprivation of property was at
issue. For the validity of a deprivation the Court held in
First
National Bank of SA Ltd t/a Wesbank v Commissioner
,
South African Revenue Service and
Another; First
National
Bank of SA Ltd t/a Wesbank v Minister of Finance
[2002] ZACC 5
;
2002
(4) SA 768
(CC) that:
'.
. . there must be an appropriate relationship between means and ends,
between the sacrifice the individual is asked to make and
the public
purpose this is intended to serve. It is one that is not limited to
an enquiry into mere rationality, but is less strict
than a full and
exacting proportionality examination. Moreover, the requirement of
such an appropriate relationship between means
and ends is viewed
as methodologically sound, respectful of the separation of
powers between Judiciary and Legislature …
and suitably
flexible to cover all situations. '
[31]
[17]
In
ch 6 proceedings in
Mohunram
the
CC had to balance the right not to be deprived of property
arbitrarily against civil forfeiture of assets to the State. In
distinguishing the use of the property for gambling without a licence
from the universally condemned crime of dealing in drugs
[32]
the CC stated:
‘
[T]he
purpose of the proportionality enquiry is to determine whether the
grant of a forfeiture order would amount to an arbitrary
deprivation
of property in contravention of s 25(1) of the Constitution. The
interpretation of POCA (and more particularly of 'instrumentality
of
an offence') as reaching beyond the ambit of 'organised crime' and
applying to cases of individual wrongdoing could result in
situations
of clearly disproportionate (and hence constitutionally unacceptable)
forfeiture, and courts must always be sensitive
to and on their guard
against this.’
[33]
Furthermore,
Sachs J opined:
‘
In
each case, therefore, care needs to be taken to ensure that the
purpose of deterrence that the legislation serves does not produce
a
disproportionate impact on the owner of the forfeited property. It is
for this reason that the deterrent purpose of the legislation
must be
weighed against the effect on the individual owner, in light of the
relevant offence. In this respect, the extent to which
the forfeiture
manifestly is directed towards preventing organised crime will be
highly relevant. The disjuncture between the basic
purposes of POCA
and the effect on the individual concerned should never be too
great.’
[34]
[18]
Care must be taken to avoid applying the
proportionality test indiscriminately without recognising the
fundamental differences between
confiscation of the benefits of crime
under ch 5 (which this case is about) and the forfeiture of the
'instrumentality of an offence'
under ch 6. The crucial enquiry under
s 18(1) is whether a defendant derived any benefit from any offence
under any law. Although
instruments and benefits are two sides of the
coin of crime, conceptually they differ. The legislature recognises
their differences
in two distinct chapters.
[19]
Care
should also be taken when distinguishing crimes for purposes of ch 5.
Applying proportionality to distinguish between serious
and less
serious offences for the application of ch 5 raises the spectre of
challenges based on the rule of law. Everyone is equal
before and
under the law.
[35]
An
interpretation that permits some offenders to retain the benefits of
their unlawful activity whilst others are compelled by
confiscation
orders to relinquish their ill-gotten gains is manifestly unjust,
irrational and discriminatory. It would violate
the right to equality
before and under the law.
[36]
Whether a case is serious or not depends on a range of facts not
limited to the prevalence of the offence or the value of the benefit.
From a practical point imposing an obligation on the appellant to
distinguish between serious and less serious offences confers
a
discretion that will be prone to
in
limine
challenges resulting in delays in the speedy recovery of the benefits
of crime.
[20]
The
primary purpose of s 18 also constrains its scope. It is not to
punish but to deprive the defendant of any benefit derived from
the
offence.
[37]
Although the
causa
and
the jurisdictional requisites for criminal prosecutions, civil
actions for damages to compensate victims of crime and applications
for confiscation orders differ, consequentially and incidentally they
all have some punitive and deterrent effect. Not every crime
triggers
all three processes. In some crimes such as drug dealing victims may
not be identified; thus civil claims for damages
may not be practical
or foreseeable. But a confiscation order would deprive the defendant
of the benefits of the crime.
[21]
Importantly
for the purposes of this case
Rebuzzi
[38]
reminds
as follows of a constraint on assessing the amount of the benefit:
‘
The
primary object of a confiscation order is not to enrich the State but
rather to deprive the convicted person of ill-gotten gains.
In my
view it is therefore not significant that in some cases the State
might end up receiving nothing. It is because the purpose
of such an
order is to prevent the convicted person from profiting rather than
to enrich the State that the court’s enquiry
in terms of s
18(1) is directed towards establishing the extent of his benefit
rather than towards establishing who might have
suffered loss.’
As
the primary aim is to strip the convict of his profits it would be no
impediment to confiscation if consequentially the state
is enriched.
[22]
However,
the POCA operates in tandem with the criminal law and procedure and
with civil claims for damages and loss by victims of
crimes.
Following closely upon the conclusion of the criminal trial the same
judicial officer has to switch gear into civil mode
to decide the
confiscation application.
[39]
[23]
Just
as the sentence imposed by a criminal court is irrelevant to an award
of civil damages arising from the commission of a crime,
so too it is
to an application for a confiscation order. It does not feature in
determining whether a defendant has benefitted.
Nor is it factored
into the calculation of the amount to be confiscated.
[40]
Sentencing is influenced by the impact of the crime on the victim.
Thus it would count as mitigation if an employer had competent
services from an employee who misrepresented his qualifications and
aggravation if a fraudulent tenderer constructed defective
buildings.
The impact of the crime on the victim is irrelevant to the
computation of the benefit. Section 30(5) specifically provides
for
the computation of parallel claims of victims of crime for loss or
damage they suffered. That such claims may arise does not
suspend
confiscation proceedings; it also does not give the state a
preferential claim.
[41]
[24]
In
Shaik and
others v S
[2006] ZASCA 106
;
2007 (2) All SA 150
(SCA) at
para 28 the SCA treated ‘benefit’ as the:
‘
value
of everything received by the defendant in connection with the crime
without taking account of what the defendant had to lay
out in order
to bring about a particular result.’
The
CC tempered the SCA’s approach by acknowledging in principle
that proportionality analysis applies to determine the amount
of the
benefit to be confiscated as follows:
‘
Section
18 requires a court to determine an appropriate amount. This exercise
requires a court to determine an amount in the light
of the direct
relationship between the proceeds and the criminal activity
concerned, as well as the nature of the criminal
activity and its
closeness to the purposes of the Act. The question on appeal, as I
have described above, is whether the amount
confiscated by the court
is disturbingly inappropriate. Clearly an amount that is
disturbingly inappropriate would be disproportionate
and an
appeal court would therefore interfere with such an order. It must be
emphasised that care must be taken by an appellate
court, when
applying this test, not to invade the legitimate area of discretion
of the court that made the original confiscation
order.
[42]
As
a matter of legal interpretation of the Constitution and the POCA,
Shaik
settles
the approach and meaning of ‘benefit’. Preceding
Shaik
and enjoying endorsement from the CC
Rebuzzi
declared
the ‘purpose of such an order is to prevent the convicted
person from profiting…’
[43]
Following on
Shaik,
Gardiner
at para 23 clarified:
‘
The
main purpose of a confiscation order is to deprive offenders from
deriving any benefit from their ill-gotten gains.’
[25]
At
first blush it would seem that calculating the amount of a benefit
would be a straightforward factual enquiry followed by an
accounting
exercise leaving little scope for the exercise of any discretion. The
difficulties arise when the benefit is say, partially
legitimate or
the evidence of the amount of the benefit is imprecise or
unavailable. When a court exercises its discretion in such
circumstances its determination of the amount of the benefit must be
grounded in fact or law. Unsubstantiated estimates driven
by an
inclination to punish or even empathise with the defendant would be
injudicious. Equally so it would be to apply proportionality
to
arrive at estimates without a solid factual or legal substratum.
The onus to establish the factual matrix, the accounting
and the
basis for the exercise of any discretion rests on the applicant for
confiscation.
[44]
[26]
‘
Benefit’
must be associated with the defendant’s gain or profit. In
Rebuzzi,
Shaik
and
Gardiner
the facts were such that all the proceeds direct from the unlawful
activities and indirectly as returns on the proceeds as investments
amount to gains for the defendants. In
Rebuzzi
[45]
the defendant stole the proceeds of cash sales from his employer. In
Shaik
the defendant bribed a government official to acquire shares in a
company. In
Gardiner
the defendants deliberately withheld disclosure of their interest in
a company, the shares of which they acquired for their international
company, to the board of their local company. The payments the two
directors received in two offshore trusts were confiscated.
[46]
Additionally, in
Shaik
[47]
and
Gardiner
the returns on the ill-gotten shares and payments were also
confiscated. In
Shaik
the CC declared both the shares and their dividends to be benefits
received as a result of a bribe. Both were direct proceeds of
unlawful activities, predictably unmitigated by the expense the
defendant incurred in paying the bribe. In
Gardiner
the
SCA ordered the directors to pay the updated values of the payments
they received, with interest from the date of the confiscation
order.
As will emerge from the facts below, the proceeds the respondent
received were not exclusively a profit or gain.
[27]
On the facts of this case the respondent
was charged with twenty-one counts of fraud under the Criminal
Procedure Act 51 of 1977
(CPA) read with
section 51
of the
Criminal
Law Amendment Act 105 of 1997
and one count of corruption in terms of
the
Prevention and Combating of Corrupt Activities Act 12 of 2004
for
giving a benefit. The defendant created false documents that he
submitted to the Construction Industry Development Board (CIDB)
to
support an application for a 6GB Grade by the CIBD. The defendant was
not entitled to such grading. Thus he fraudulently misrepresented
the
status of his business AC Industrials Sales and Service that he
registered with the CIBD. This resulted in him and his business
being
awarded tenders based on fraudulent documentation and information
submitted to CIDB.
[28]
In
respect of the fraud counts the defendant pleaded guilty and was
sentenced to a fine of R500 000 or ten years imprisonment
and a
further five years imprisonment being wholly suspended for five years
on condition that he was not convicted of fraud committed
during the
period of suspension. In respect of the corruption count, he was
sentenced to five years imprisonment without the option
of a fine
wholly suspended for five years on condition that he was not
convicted of corruption committed during the period of
suspension.
[48]
[29]
In the confiscation application the learned
magistrate found that the respondent had benefited from the crimes.
As for the amount,
the appellant pitched an all or nothing battle for
the full amount of the contract price. The magistrate rejected the
claim reasoning
that the benefit was the profit. Exercising her
discretion she searched unsuccessfully for the amount of the profit.
Although it
became common cause that the profit was less than 10% of
the contract price, the appellant had failed to establish where in
the
spectrum of 0 to 10% rested the amount of the benefit. The
auditor who deposed to the affidavit for the appellant was aware that
better evidence regarding the profit was required. Counsel for
the appellant in the magistrates’ court conceded that
the
appellant had not shown exactly what the profits were. The
appellant had the full force of the law to obtain audited
financial
records, the magistrate noted. Consequently she found that the
appellant had failed to discharge the onus.
[30]
The
facts in
Mtungwa
were
similar.
Mr
Mtungwa successfully applied for employment with the Department of
Transport as a Provincial Inspector at the Road Traffic Inspectorate,
Ixopo. He misrepresented that he had a matriculation certificate. All
he had was a standard 8 certificate that was the prerequisite
for his
appointment. From 1992 to about February 2005 he rendered exemplary
services and was steadily promoted. In February 2005
he faced a
disciplinary enquiry for submitting a false matriculation
certificate. He was demoted to senior provincial inspector.
The
appellant prosecuted him. It applied in terms of
s 18
of POCA to have
assets confiscated to the value of R1.8 million being the equivalent
of eleven years earnings. The court found
no evidence to establish
the value of R1.8 million. On the facts of that case the learned
Judge described the confiscation order
as ‘nothing short of
ludicrous’ and ‘reckless’.
[49]
[31]
On the material facts I agree
Mtungwa
is foursquare with the facts in this case. The difference that Mr
Mtungwa met the qualification requirements for the job when he
was
first employed does not detract from the fact that he misrepresented
his qualifications. Proving that he benefitted unlawfully
in those
circumstances was more difficult. It would have depended on whether
his fraudulent misrepresentation influenced his initial
appointment.
Benefits from his subsequent elevation that rested on his fraudulent
misrepresentation would be from his unlawful
activity. Confiscating
the whole amount of his salary when the state benefited from his
services would have been disproportional
and a failure to balance
effectiveness with fairness as required in
s 18(1).
[32]
In view of my analysis of the application
of POCA to all offences I respectfully disagree with the remark of
the learned judge in
Mtungwa
that the POCA applied to large-scale larceny. Neither party contested
the application of POCA to the circumstances in this case.
Counsel
for the appellant also did not dispute the distinction drawn in
Mtungwa
between ‘large-scale larceny’ and less serious crimes.
This observation emerged in the course of writing the judgment.
[33]
Since
Shaik,
Gardener
and
Rebuzzi
the
law on the confiscation of the benefits of crime has been
substantially settled. What a benefit is and how to calculate what
has to be confiscated were explained in these appellate decisions.
Surprisingly therefore the appellant persisted with an interpretation
manifestly at odds with these authorities. The appellant sought to
persuade the trial court as it does this court that ‘benefit’
means the same as ‘proceeds of unlawful activities’,
which in this case was the entire proceeds of the contract. Reasoning
in reverse, the contract was the consequence of the crime; depriving
the defendant of the proceeds of the contract would eliminate
the
benefit. With respect, the reasoning is flawed, the approach
mechanical for all the reasons advanced above and more. On a purely
factual and common sense approach the entire amount received as the
proceeds of unlawful activities cannot be a benefit if it is
not
exclusively a gain or profit. The cost of construction component of
the proceeds received cannot rationally be equal to a gain
or
benefit. To treat it as such and order its confiscation would
result in the state unjustly enriching itself at the expense
of the
respondent. It would be disproportionate and an imbalance between
effectiveness and fairness. Furthermore, it would amount
to the
respondent paying more than the amount by which he benefited which is
prohibited under
s 18(2)(a).
Similarly to
Mtungwa
the appellant failed to prove the value of the benefit the respondent
received in this case.
[34]
The appeal is dismissed with costs
including the costs of two counsel.
I
agree.
________________
P
Bezuidenhout AJ
It
is so ordered.
______________
D
Pillay J
APPEARANCES
Counsel
for the appellant: M. Govindasamy SC, R Naidoo, Naidoo
Instructed
by: The State Attorney Durban
Tel:
031 365 2500
Fax:
031 306 2448
Ref:
119/000441/13R/P22
(H
Smal)
Cajee
Setsubi Chetty Inc
Tel:
(033) 345 6719
Fax:
(033) 345 5778
Ref:
MR A Essa
Counsel
for the respondents: V.I Gajoo SC, JE Howse
Instructed
by: Garlicke & Bousfield Inc
Tel:
(031) 570 5300
Fax:
(031) 570 5301
Ref:
Mr P Magwaza 4075/13
Ngcobo
Poyo and Diedericks Inc.
Tel:
033 341 9240
Fax:
033 394 3961
Ref:
Thoba Poyo/ Noxolo
[1]
S
v Shaik
and
Others
[2008] ZACC 7
;
2008 (2) SACR 165
(CC) para 50.
[2]
S
v Shaik
and
Others
[2008] ZACC 7
;
2008 (2) SACR 165
(CC) paras 22- 29; 50-57;
Kockjeu
v
National
Director
of
Public
Prosecutions
2013 (1) SACR 170
(ECG) paras 19-28.
[3]
Shaik
para
60.
[4]
Shaik
para 70: ‘
One
of the purposes of the broad definition of “proceeds of
unlawful activities” is to ensure that wily criminals
do not
evade the purposes of the Act by a clever restructuring of their
affairs.’
[5]
See
item 12 in Schedule 1 of POCA.
[6]
Kockjeu
v
National
Director
of
Public Prosecutions
2013(1) SACR 170 (ECG) para 23
[7]
Mohunram
and
Another v National Director of Public Prosecutions and Another (Law
Review Project as Amicus Curiae)
2007
(2) SACR 145 (CC).
[8]
National
Director of Public Prosecutions
v
Mtungwa
2006 (1) SACR 122
(N) at 130B.
[9]
See
for example
Laugh
it off Promotions CC v SAB International (Finance) BV t/a Sabmark
International (Freedom of Expression Institute as Amicus
Curiae)
[2005] ZACC 7
;
2006 (1) SA 144
(CC) paras 49 and 50 and
South
African Police Service v Solidarity OBO
Barnard
2014 (6) SA 123
(CC) para 98.
[10]
Makwanyane
paras
104 and 105;
First
National Bank v CIR; First National Bank v Minister of
Finance
[2002] ZACC 5
;
2002 (4) SA 768
(CC) para 65;
Law
Society of South Africa v Minister of Transport
2011
2 BCLR 150
(CC) para 37 and
Barnard
para
165..
[11]
S
v Mhlungu and Others
[1995] ZACC 4
;
1995
(3) SA 867
(CC) para 36.
[12]
Investigating
Directorate: Serious Economic Offences and Others v Hyundai Motor
Distributors (Pty) Ltd and Others: In Re Hyundai
Motor Distributors
(Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2001
(1) SA 545
(CC) para 43.
[13]
Rautenbach
‘Constitution and Contract: the application of the Bill of
Rights to contractual clauses and their enforcement’
2011
THRHR
510-520
at 519; See also contrasting minority opinions of Cameron J et al in
Barnard
para
98 and Van der Westhuizen J para 158.
[14]
Law
Society of South Africa and Others v Minister for Transport and
Another
2011
(1) SA 400
(CC)
para
37.
[15]
Preamble; s 18(1);
Kockjeu
para 44.
[16]
Preamble; s 18 (1); s 12 (3).
[17]
Definition of ‘proceeds’ and
'proceeds
of unlawful activities'.
[18]
Concise
Oxford English Dictionary 12
th
ed (2011) (my underlining).
[19]
http://www.thesaurus.com.
[20]
See
for example
S
v Zuma
1995 4 BCLR 401
(CC) para 15 and
S
v Makwanyane and Another
1995 (3) SA 395
(CC) paras 9 and 10.
[21]
Barkhuizen
v Napier
[2007] ZACC 5
;
2007
(5) SA 323
(CC) para 30.
[22]
At
129C-D.
[23]
Mohunram
para 25;
National
Director of Public Prosecutions v R O Cook Properties (Pty) Ltd;
National Director of Public Prosecutions v 37 Gillespie
Street
Durban (Pty) Ltd and Another; National Director of Public
Prosecutions v Seevnarayan
2004
(2) SACR 208
(SCA)
(2004 (8) BCLR 844
;
[2004] 2 All SA 491)
para 65;
Prophet
para 33.
[24]
Mohunram
para 74.
[25]
National
Director of Public Prosecutions v RO Cook Properties (Pty) Ltd;
National Director of Public Prosecutions v 37 Gillespie
Street
Durban (Pty) Ltd; National Director of Public Prosecutions v
Seevnarayan
2004
(2) SACR 208
(SCA)
para
65.
[26]
Gardener
paras 17-18.
[27]
e.g.
Shaik
para 48.
[28]
e.g.
Shaik
para 44.
[29]
Distinguished below from confiscation under ch 5.
[30]
Gardener
para 19.
[31]
First
National Bank
para
98; See also
Mohunram
para 62.
[32]
Mohunram
para 10.
[33]
Para
56 (footnotes omitted).
[34]
Para
146.
[35]
See
for example
Jooste
v Score Supermarket Trading (Pty) Ltd (Minister of Labour
Intervening)
1999 (2) SA 1
(CC);
Van
der Walt v Metcash Trading Ltd
[2002] ZACC 4
;
2002 (4) SA 317
(CC) and Dlamini ‘Equality or Justice? Section
9 of the Constitution revisited – Part II’
Journal
for Juridical Science
(2002) vol 27(2) 15-32.
[36]
Prinsloo
v Van der Linde and Another
1997 (3) SA 1012
(CC) paras 23-41;
National
Coalition for Gay and Lesbian Equality v Minister of Justice
1999 (1) SA 6
(CC) paras 15-19 and Krüger ‘Equality and
Unfair Discrimination: Refining the
Harksen
Test’
SALJ
(2011) vol 128(3) 479-512.
[37]
Shaik
paras
51and 57.
[38]
Para
19.
[39]
Section
13 of POCA.
[40]
Gardener
para 23.
[41]
Section
31(1) of POCA;
Rebuzzi
para 17.
[42]
Shaik
para 79.
[43]
Para
19.
[44]
See
for example
National
Director of Public Prosecutions v Rautenbach and Others
2005
(4) SA 603
(SCA) para 66.
[45]
Rebuzzi
para 9-10.
[46]
Gardiner
para
5-9.
[47]
Shaik
para 62.
[48]
Supplementary
Volume 1 Page 727.
[49]
At
130I.