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[2006] ZASCA 12
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National Director of Public Prosecutions v Mohunram and Others (173/05) [2006] ZASCA 12; 2006 (1) SACR 554 (SCA) ; [2007] 4 All SA 704 (SCA) (17 March 2006)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case
No 173/05
REPORTABLE
In
the matter between
THE
NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS
APPELLANT
and
KUMARNATH
MOHUNRAM FIRST RESPONDENT
SHELGATE
INVESTMENTS CC SECOND RESPONDENT
BOE
BANK LIMITED THIRD
RESPONDENT
Coram:
Harms, Mthiyane, Conradie, Jafta JJA and Maya AJA
Heard: 7
March 2006
Delivered: 17
March 2006
Summary:
Prevention of Organised
Crime Act 121 of 1998
â forfeiture â gambling premises â
instrumentality of an offence â proportionality.
Neutral
citation:
National Director of Public Prosecutions v Mohunram
[2006] SCA 11 (RSA)
JUDGMENT
_____________________________________________________
HARMS JA
:
[1] The Prevention
of Organised Crime Act 121 of 1998 (to which I intend to refer as
âPOCAâ) provides, inter alia, for forfeiture
of property which,
in civil proceedings, is found on a balance of probabilities to have
been âan instrumentality of an offence
referred to in Schedule 1â
(s 50(1)(a)). An âinstrumentality of an offenceâ is defined to
mean any property which âis concerned
in the commissionâ of an
offence (s 1). Listed in the schedule is âany offence under any
legislation dealing with gambling, gaming
or lotteriesâ. Casinos
and gambling fall within the legislative competence of both national
and provincial legislatures (Schedule
4 of the Constitution). In
KwaZulu-Natal these matters are regulated by the KwaZulu-Natal
Gambling Act 10 of 1996. Since it is common
cause that the
respondents have contravened the Gambling Act, the appellant, the
National Director of Public Prosecutions, sought
to have immovable
property (a sectional title unit in the town Vryheid together with an
undivided share in the common property in
accordance with the
applicable participation quota) belonging to the second respondent,
Shelgate Investments CC, declared forfeited.
(The first respondent,
Mr Mohunram, is the only member of Shelgate.) C N Patel J, in the
Natal Provincial Division, dismissed the
application with costs on
the basis that the property had not been an âinstrumentalityâ of
any offence under the Gambling Act.
He refused leave to appeal but
this Court subsequently granted the necessary leave.
[2] POCA has been
the subject of a number of leading judgments and the forfeiture
provisions, more particularly, have been considered
by this Court in
recent times. This judgment does not raise any novel issues of
interpretation and is more concerned with the application
of the Act
to the particular facts of the case. There are usually three main
issues in a case such as this to decide and they are
(a) whether the
property concerned was an instrumentality; (b) whether any interests
should be excluded from the forfeiture order;
and (c) whether the
forfeiture sought would be disproportionate. In the present
circumstances issue (b) will be referred to at the
end of the
judgment because it is not an issue between the parties to the
appeal.
[3] It is common
cause that Mohunram used part of the property as a casino: he
operated 57 gambling machines on the property in contravention
of s
44 of the Gambling Act, which states that no person may operate a
casino unless validly licensed. (The word âcasinoâ is
defined in
s 1 as âany premises upon which . . . gaming machines may be
played.â) In terms of s 3(3)(a) of this Act, the owner
of a
building may not allow any other person to conduct any gambling
activity therein or thereon unless that person has been duly
licensed. Shelgate as owner did just that, having permitted Mohunram
to conduct the casino.
[4] It will
immediately be apparent that in both instances use of premises is of
the essence of the crimes as defined. Without use
of premises there
are no crimes. The complications that arose in cases such as
Cook
,
1
Parker
2
or
Prophet
3
do not arise in the present instance. It follows in my view
ineluctably that the particular premises were an instrumentality of
the
crimes; they were intimately concerned in their commission. The
High Court, on the other hand, held that the premises were, in this
case, merely a venue for the commission of these crimes. It held that
the gambling machines were the means or instruments of the
crime and
not the premises. This finding, in my judgment, does not take into
account the definitions of the crimes involved. If the
Gambling Act
had only provided for the criminalisation of the possession or use of
gambling machines, the finding might have had
some merit but even
then it would have been necessary to conduct, in the light of all the
facts, an inquiry along the lines suggested
in
Prophet
(at
para 27). Another consideration relied on by the High Court was the
fact that part of the property only had been used for a casino.
The
High Court found that the provision does not apply if part of a
property is used in the commission of a crime and not the whole.
There is no justification for this interpretation. âPropertyâ is
defined in POCA to include any âimmovableâ thing and immovable
property is identified with reference to its cadastral description,
ie, it is the property as described in the deeds office.
4
It is highly unlikely that the whole of an immovable property can
ever be used in the commission of a crime and the restriction would
make the provision meaningless. The fact that part of a property was
used in the commission of a crime generally does not determine
whether or not the property was an âinstrumentalityâ, although it
may be relevant in considering proportionality.
[5] Proceeding then
to the proportionality issue, ie, whether forfeiture was
constitutionally justified in the light of especially
the property
clause and the protection against double jeopardy, it has been held
that forfeiture may not be ordered if the forfeiture
would be
significantly disproportionate to the crime concerned. Although the
respondents did not raise this issue pertinently, as
was their duty,
and although the High Court did not pronounce thereon in the light of
its conclusion on âinstrumentalityâ, the
matter was properly
argued and requires consideration.
[6] The
respondentsâ main complaint is that Mohunram had paid admission of
guilt fines amounting to R88 500,00 in respect of the
illegal casino
operation; under the provisions of the Gambling Act he forfeited R2
102,10, being monies that were found on the premises
during a police
raid; and his gaming machines (which he valued at R285 000) were,
also in terms of the Gambling Act, seized. See
s 94(4). This, they
say, was enough punishment (as if punishment were the object of
forfeiture). They again raise the fact that part
only of the property
had been used for gambling and not the whole property. And they argue
that the loss of the value of the property
would be disproportionate.
[7] As far as the
first point is concerned, it should be borne in mind that the
property of Shelgate is the subject of the forfeiture
application and
not the property of Mohunram. And these are business premises, not
residential. Shelgate, to date, has lost nothing
due to its own
illegal actions. Admittedly, Mohunram is the ultimate beneficiary of
Shelgate but that should not conceal the fact
that one has to respect
the separate corporate personality of Shelgate. Mohunram and Shelgate
have had the advantages of their separate
legal personalities and
they have to bear the consequences thereof. In addition, the argument
loses sight of Mohunramâs illicit
income from the operation which,
on the available evidence, amounted to about R360 000 during the one
year when he ran the operation
after an amendment to the Gambling Act
that made it clearly illegal. It also does not take into account the
seriousness of the crime
as reflected in the penalties and
forfeitures provided for by the Gambling Act (s 94). As first
offenders Mohunram risked imprisonment
of ten years and Shelgate a
fine of R2m.
[8] The other two
points can be dealt with as one. The area of the sectional title
property is 542 sq metres. Although Mohunram did
conduct a legitimate
business on part of the property, we have not been informed as to the
respective sizes of the two areas. Taking
into account that he had 57
gaming machines and a gambling booth, the area occupied by his casino
operation could not have been insignificant.
One can get some
indication of the size of the gambling area if one considers that
after the casino was closed down he subdivided
the casino area and
let the two portions. Turning then to the value of the property, at
least one thing is clear and that is (bearing
in mind the bond of the
third respondent (BOE Bank Ltd)) that the equity of Shelgate, is far
less than the value of the property.
The figures are in dispute, the
appellant believing that there is value for the state in a forfeiture
order while the respondents
think not. However, since the appellant
utilised motion proceedings, he is generally bound by the version of
the respondents. According
to Mohunram, the property market in
Vryheid at the relevant time was âseverely depressedâ and he
thought that it was unlikely
that the outstanding bond would be
realised should the property be sold. (We are not concerned with the
present value or the present
state of the market, matters about which
we in any event do not have any knowledge.) Accepting this evidence,
as we must, there does
not appear to be any merit in the argument
that forfeiture would have been disproportionate to the crimes
involved.
[9] The appeal has,
consequently, to succeed. The order that is about to issue reflects
the interests of the bondholder and that prior
to the proceedings
before Patel J a
curator bonis
had been appointed as part of a
preservation order in terms of s 38 of POCA.
ORDER:
1. The appeal is upheld with costs
including costs consequent upon the employment of two counsel.
2. The order of the court
a quo
is to be replaced with the following: -
(a) An order is granted under
s 50(1)
of the
Prevention of Organised Crime Act, No 121 of 1998
declaring
forfeit to the state the property described as:
(i)
Section 2
as shown and more fully
described on sectional plan no
SS 577/96
in the scheme known as the
Malapin Centre in respect of the land and building or building
situate at 244 Utrecht Street, VRYHEID,
in the Transitional Local
Council Area, Vryheid; and
(ii) an undivided share in the common
property in the scheme apportioned to the said section in accordance
with the participation
quota as endorsed on the said sectional plan;
(b) the
curator bonis
appointed
in terms of the preservation order made on 19 October 2001 will
continue to act in such capacity;
(c) the interest of the third
respondent is hereby excluded from the operation of this order;
(d) the
curator bonis
, as of
the date on which the forfeiture order takes effect, shall be
empowered to perform the following:
subject to consultation with the
third respondent, to dispose of the property by sale or other
means;
deduct the fees and expenditure
associated with his function as a
curator bonis
;
settle the outstanding balance on
the home loan bond account number 8350103059 held by the second
respondent at a branch of the
third respondent;
deposit the balance of the proceeds
into the Criminal Asset Recovery Account;
(e) the Registrar of the High Court,
Natal Provincial Division, is directed to publish a notice of this
order in the Government Gazette
as soon as possible; and
(f) the first and second respondents
are directed to pay the applicantâs costs jointly and severally.
____________
LTC HARMS
JUDGE OF APPEAL
CONCUR:
MTHIYANE JA
CONRADIE JA
JAFTA JA
MAYA AJA
1
National Director of Public Prosecutions v R O
Cook Properties (Pty) Ltd
2004 (2) SACR 208
(SCA).
2
National Director of Public Prosecutions v
Parker
SCA judgment of 1 December 2005 case 624/04.
3
Prophet v National Director of Public
Prosecutions
2005 (2) SACR 670
(SCA).
4
Cf
Dlamini v Joosten
unreported SCA
judgment 30/05 of 30 November 2005.