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[2011] ZAFSHC 126
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National Director of Public Prosecutions v M and Others (1280/2011) [2011] ZAFSHC 126 (25 August 2011)
SAFLII
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FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF
SOUTH AFRICA
Case
No. : 1280/2011
In
the application of:-
THE
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
Applicant
and
T.
M. E.
M.
1
st
Defendant
L.
M.
2
nd
Defendant
(In
his personal capacity and in his capacity as
Beneficiary
of Lumeyr Boerdery CC)
LUMEYER
BOERDERY
CC
1
st
Respondent
L.
M.
2
nd
Respondent
L.
M.
3
rd
Respondent
STANDARD
BANK VAN SUID-AFRIKA
4
th
Respondent
MICHAEL
STEPHEN
COUTTS
5
th
Respondent
HEARD
ON:
18
AUGUST 2011
JUDGMENT
BY:
HANCKE,
J
DELIVERED
ON:
25
AUGUST 2011
[1]
This is the return day of an
ex
parte
application in which a rule
nisi
was issued in terms of section 26(3)(a) of the Prevention of
Organised Crime Act, No. 121 of 1998 (“POCA”). The
first defendant, second, third, fourth and fifth respondents are not
opposing the confirmation of the rule
nisi
.
The second defendant and first respondent are opposing the
confirmation of the rule
nisi
against them.
[2]
The first defendant is an adult female residing at [...] G. farm,
J. R., district Jacobsdal. The second defendant,
an adult male
from the same address, is married to the first defendant out of
community of property. I hereinafter refer
to him as “L.”.
The first respondent is Lumeyer Boerdery CC, a close corporation with
registered address at [...]
G. farm, J. R., district Jacobsdal,
hereinafter referred to as “the close corporation”.
The second respondent
is L. M., a minor male child and the third
respondent is L. M., a minor female child, both of them being
children of the first
and second defendants.
[3]
The purpose of a restraint order, dealt with in sections 25 and 26 of
POCA, is to secure property to ensure that a confiscation
order,
under section 18, which may later follow a conviction in terms of
section 18 of POCA, can be executed. A restraint
order may be
sought and granted prior to, or after, the institution of a
prosecution against a defendant.
[1]
[4]
A court has a discretion to grant a restraint order if certain
jurisdictional requirements are established,
viz
:
(a)
that the defendant has been charged or is to be charged with an
offence;
(b)
that a confiscation order has been made or that there are reasonable
grounds to believe that such an
order may be made against them; and
(c)
that the proceedings against the defendant have not been
concluded.
[2]
[5]
As far as (a) is concerned, it is clear from the founding affidavit
of Mohlala and the confirmatory affidavit by De Bruyn that
the
defendants, amongst others, will be charged within a period of six
months after the state’s investigation in the criminal
case has
been concluded.
[6]
As far as the second jurisdictional requirement is concerned, the
onus is on the applicant to establish that there are reasonable
grounds to believe that
(a)
the defendants may be convicted of any offence, in respect of which
they have or will be charged; and
(b)
the court convicting the defendants may find that they benefitted
from such offence or from other criminal
activity that the court
finds to be sufficiently related to those offences and accordingly
may make a confiscation order against
them. A high court may
exercise its powers to grant a restraint order where
“
there
are reasonable grounds for believing that a confiscation order may be
made”.
[3]
[7]
It is important to note that a court is not required to be satisfied
of the guilt of a defendant before a restraint order can
be granted.
What is required is,
inter
alia
,
reasonable grounds for believing that the defendant may be
convicted.
[4]
[8]
In an application for a restraint order, such as the present, if the
court is faced with a dispute on the papers, a reference
to oral
evidence is undesirable. In this regard the following is stated
in
Organised Crime and Proceeds of Crime Law in South Africa
by Albert Kruger on p. 158:
“
The
court must not be blinkered or gullible; it must look at the case as
a whole. From such perspective, the respondent’s
version
might well lend itself to rejection out of hand as clearly false.
Where there are several equally possible inferences,
however, the
NDPP will not be able to ask the court to exclude innocent
explanations.”
[5]
[9]
It is also important to note that the question is not whether a
defendant is likely to be convicted and if so, whether it is
likely
that he or she will be found to have derived a benefit from the
offence or any other related offence. The question
is whether
there are reasonable grounds for believing that those findings might
be made. The court should therefore take
all the evidence into
account and ask itself whether the defendants might be convicted and
that a confiscation order might be made.
A court is entitled to
come to the requisite conclusion that the evidence discloses such
reasonable grounds for belief notwithstanding
the existence of
evidence to the contrary and notwithstanding the court’s
inability to determine who is speaking the truth.
[10]
Mr. Cilliers, on behalf of L. and the close corporation, submitted
that the applicant did not make out a case in respect of
L. or the
close corporation in view of the wording in the founding affidavit
where it refers to “defendant” singular
on several
occasions. Although this is a sloppy and careless way of
citation, on a reading of the founding affidavit as a
whole, it is
clear that the relief is claimed in respect of all the defendants and
respondents.
[11]
Mr. Cilliers also submitted that there is no reference to the first
respondent being the close corporation in the founding
affidavit.
In
reply, Mr. Ontong, on behalf of the applicant, referred to the
following two passages in the founding affidavit of Mr. Mohlala:
“
26.8
The Defendant also used the money that was paid into her account for
her own personal use and benefit, transferred
money into the accounts
of her family members and into an account of Lumeyr Boerdery CC of
which she was a sole beneficiary off.”
and
“
8.10
The Defendant also used the money that was paid into her account for
her own personal use and benefit, transferred
money into the accounts
of her family members and into an account of Lumeyr Boerdery CC of
which she was a sole beneficiary off.”
However,
no facts were mentioned by the said deponent to substantiate the
allegation that funds were transferred into the close
corporation’s
account.
[12]
Mr. Ontong submitted that there was a flow of funds in a fraudulent
manner from the first defendant to the close corporation
in view of a
forensic report, of which a certain Jaco Spies was the author.
Apart from the fact that the alleged unlawfulness
does not appear
from the said report, Spies at no stage made an affidavit confirming
the correctness of the report or explained
the effect of the
allegations made therein. In my view, the said report does not
take the applicant’s case any further.
[13]
It is important to note that a detailed explanation of the close
corporation’s financial position is provided in the
opposing
affidavit. It appears that the first defendant sold her
interest in the close corporation some time ago to L..
This
transaction had been financed with a loan that second defendant
obtained from Standard Bank against her registration of a
first
mortgage bond over the property of the close corporation, as
security. These facts are not disputed by the applicant
in its
replying affidavit. It appears that the close corporation,
owning the farm, was transferred from the first defendant
to L. for
the same amount of money which the first defendant bought it from a
third party, which was R3,8 million. About
ten months later L.
sold the close corporation, including the farm, for R7,6 million.
[14]
As far as the original funding of the purchase price is concerned,
the amount R3,4 million was paid by way of a deposit of
R750 000,00
and a loan was obtained from Absa Bank in the amount of R2 750
000,00.
[15]
When L. bought the interest in the close corporation from the first
defendant a bond of R4 million was registered on the property
in
favour of Standard Bank, which amount was appropriated to pay R2,7
million to Absa Bank, being the outstanding loan, as well
as R1,3
million on the purchase price of the first defendant’s trust
and loan account in the close corporation. The
respondent’s
allegation that the said interest in the close corporation was
legally transferred to L., is not disputed by
the applicant in its
replying affidavit.
[16]
The fact that the farm had been sold approximately 10 months later at
a significant profit is not in itself important.
The question
is whether money, unlawfully obtained by the first defendant, flowed
to the close corporation. Only if applicant
proves that money
unlawfully flowed from the first defendant to the close corporation,
would applicant be entitled to a restraint
order against the close
corporation. The aspect of profit is further explained by the
deponent in the opposing affidavit,
where he states that the farm had
been changed into a game farm, subsequent to the transaction where he
purchased first defendant’s
interest in the first respondent.
[17]
In the circumstances I am of the view that the applicant did not make
out a case against the close corporation, being the first
respondent,
for a restraint order, and therefore cannot succeed against it.
[18]
As far as L. is concerned, it appears that the first defendant
transferred an amount of R859 210,71 to the bank account of
L..
The transactions were made over a period of more than one year.
To explain the said deposits, it is L.’s
case that he received
a salary of R25 000,00 per month. It appears, however, from
L.’s bank accounts for the period
August 2008 to June 2010 that
he actually received a salary of R15 000,00 per month, which amounts
to R345 000,00. No documentary
proof to support L.’s
allegations, exists. There is no clear explanation as to the
balance of more than R500 000,00
which was paid to L.. It
follows therefore that the inference is irresistible
[6]
that he was not entitled to the money and that the first defendant
gave him an affected gift from the benefit of the proceeds of
unlawful activities.
[7]
L.
tries to create an impression that he was not at all involved in the
financial affairs. It is denied that he could
have reasonably
believed that the money that moved through his accounts had been
lawfully gained. It is evident that L. was
involved in the
criminal activities of the first defendant at least by allowing his
bank accounts to be used in the said way.
There is a duty on
any interest holder,
inter
alia
,
in an account to ensure that it is not being utilised for criminal
activity and L. neglected duty.
In
view of the aforegoing, the applicant has made out a case against L.
for a restraint order in the amount of R500 000,00.
Reserved
costs of 23 June 2011
[19]
On the said date the presiding judge informed the parties that he did
not have sufficient time to prepare for this application
in view of
the fact that the paginated papers were only provided to him during
the course of the afternoon of 21 June 2011.
It is clear that
the applicant did not comply with the rules of this court and that
the late filing of the paginated papers led
to the postponement.
The applicant should therefore be ordered to pay the wasted costs of
the hearing of 23 June 2011.
[20]
According the following orders are issued:
1.
The provisional restraint order is confirmed against the first
defendant, second and third respondents
with costs, excluding insofar
as it relates to the farm G. [...] , J. R., Jacobsdal district, Free
State Province.
2.
The provisional restraint order is confirmed against the second
defendant only in respect of an
amount of R500 000,00, with costs.
3.
The restraint order against the first respondent is uplifted and the
applicant is ordered to pay
the costs of the first respondent.
________________
S.P.B.
HANCKE, J
On
behalf of applicant:
Adv. E.B. Ontong
Instructed
by:
Director
of Public Prosecutions
BLOEMFONTEIN
On
behalf of second defendant
and
first respondent:
Adv. J.G. Cilliers SC
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
/sp
[1]
Section
25(1)(b) of POCA.
[2]
Section
25(1) read with section 17 of POCA.
[3]
Section
25(1)(a) of POCA.
[4]
NDPP
v REBUZZI
2002 (1) SACR 128
(SCA) at par [20];
NDPP
v RAUTENBACH AND OTHERS
2005 (1) SACR 530 (SCA).
[5]
NDPP
v ZHONG
[2005] ZAGPHC 47
;
2005 (2) SACR 544
(W) par [13].
[6]
Or
the most readily apparent and acceptable inference, as stated in
A
A ONDERLINGE ASSURANSIE-ASSOSIASIE BPK v DE BEER
1982 (2) SA 603
(A) at 614H.
[7]
Section
12 of POCA; see also
NDPP
v REBUZZI
,
supra
,
par [14].