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[2008] ZAWCHC 20
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National Director of Public Prosecutions v Starplex 47 CC and Others; National Director of Public Prosecutions v Mamadou and Another (12099 / 2007) [2008] ZAWCHC 20; 2009 (1) SACR 68 (C) ; [2008] 4 All SA 275 (C) (20 March 2008)
REPORTABLE
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE
NO: 12099 / 2007
In
the matter between:
THE
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
Applicant
and
STARPLEX
47 CC
(Registration
No. 2003/086303/23)
First
Intervening Respondent
WILLIAM
NGIMBI VUNDA
Second
Intervening Respondent
ANTONION
MARCOS
Third
Intervening Respondent
JOAO
JORGE KANJNJA GONCALVES
Fourth
Intervening Respondent
CLAY
NKUMINPOYI
Fifth
Intervening Respondent
In
re:
The
ex
parte
application
of:
THE
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
Applicant
and
DOUMBIA
MAMADOU
(A.K.A.
MOHAMMED MOLAMU)
First
Respondent
FATOU
FOFANA
Second
Respondent
JUDGMENT
: 20 MARCH 2008
BOZALEK,
J:
[1
] This is an application for a final order in terms of s 38(1) of
Chapter 6 of the Prevention of Organised Crime Act, 121 of
1998 ("the
Act") preserving certain cash amounts seized at premises at the
Cape Town railway storage facility on 13 December
2006.
[2]
On 5 September 2007, pursuant to an
ex
parte
application,
applicant was granted a
rule
nisi
for
the preservation of R191 145, 00, â¬21 825,00 , US $63 817 and
£130,00. At that stage only first and second respondents
were
cited by applicant. After service of the
rule
nisi,
first
to fifth intervening respondents filed notices of opposition
declaring an interest in the property and indicating their intention
to oppose any application for the confirmation of the preservation of
property order. The intervening respondents filed opposing
affidavits
which were answered by replying affidavits from applicant.
[3]
First intervening respondent opposes the granting of a preservation
order in respect of R148 145,00, second intervening respondent
the
granting of a preservation of property order in respect â¬20 250,00
and third intervening respondent the granting of a preservation
of
property order in respect of US $16 517,00. Fourth intervening
respondent opposes the granting of a preservation of property
order
in respect of US $10 000,00 whilst fifth intervening respondent
opposes the granting of a final order in respect of US $30
000,00.
[4]
A curator
bonis
was
appointed in terms of the rule
nisi.
According
to his report, filed on 21 September 2007, when the money seized was
counted it amounted to R190 635, US $66 634 and â¬21
880. There are
thus relatively minor discrepancies between the amounts cited in the
provisional preservation order and what the
curator
bonis
presently
holds. There is opposition only in respect of R148 145,00, US $56 517
and â¬20 250. There is no opposition in respect
of the balance of
the monies seized and held i.e. R42 490.00 US $10 117,00 and â¬1
650,00. These latter amounts coincide approximately,
save in the case
of the US dollars where there is a discrepancy of some $3 000,00,
with the currency apparently seized from second
respondent who does
not oppose the finalisation of a preservation order.
[5]
Ms. Smit, who appears on behalf of applicant, contends that a
preservation order should be granted in respect of these latter
monies as the case made out by applicant is to that extent,
uncontroverted. She also seeks an order in respect of the balance of
the monies contending that the claims of the intervening respondents
do not carry sufficient weight to justify the discharge of
the
preservation order. Mr. JC Tredoux, who appears on behalf of all the
intervening respondents, seeks the discharge of the rule
nisi
to
the extent of the claims made on the property by the various
intervening respondents. In doing so he challenges many aspects
of
applicant's case including the proprietry of the applicant obtaining
the rule
nisi
on
an
ex
parte
basis
and the legality of the search and seizure in terms of which the
monies were initially found and seized.
STATUTORY
BACKGROUND
[6]
Section 38(2) of the Act provides as follows:
1. The
National Director may by way of an ex parte application apply to a
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.
2. The
High Court shall make an order referred to in subsection 1 if there
are reasonable grounds to believe that that the property
concern:
a) is
an instrumentality of an offence referred to in schedule 1; or
b) is
the proceeds of unlawful activity
"Instrumentality
of an offence" is defined as meaning any property
"which
is concerned in the commission or suspected commission of an offence
at any time before or after the commencement of
the Act, whether
committed within the Republic or elsewhere".
"Proceeds
of unlawful activities" is defined as meaning
"any
property or any service, advantage, benefit or reward which is
derived, received or retained, directly or indirectly,
in the
Republic or elsewhere, at any time before or after the commencement
of the 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".
"Property"
is defined as including money. Item 26 in schedule 1 relates to "any
offence relating to exchange control".
[7]
In
National
Director of Public Prosecutions v Van Staden and Others
2007
(1) SACR 338
(SCA) at para 3, Nugent JA highlighted the principal
components of chapter 6 of the Act as follows:
"It
authorises the NDPP to apply to a High Court, without notice, for an
order that has the effect of temporarily depriving
a person of
property, so as to preserve the property in anticipation of an order
being sought for its forfeiture. A court is required
to make such an
order 'if there are reasonable grounds to believe that the property
concerned... is an instrumentality of an offence
referred to in
schedule 1' of the Act. Once such an order has been made the NDPP is
required to give notice of the order to interested
parties that are
known to him and they are entitled to intervene in the subsequent
proceedings. Within 90 days of a preservation
order being made the
NDPP may apply to a High Court for an order declaring all or any of
the properties forfeited to the State.
A court is required to make
such an order if it finds, as a matter of probability, that the
property is an 'instrumentality' of
such an offence, subject to its
power to exclude from the operation of the order certain interests
that are shown to have been
acquired in specified circumstances."
[8]
As regards the standard of proof required in order to obtain a
preservation order, in
National
Director of Public Prosecutions v Kyriacou
2004
(1) SA 379
(SCA), Mlambo AJA, on behalf of the majority of the Court,
rejected the notion that disputed evidence in such applications must
be dealt with in accordance with the principles set out in
Stellenbosch
Farmers Winery Ltd v Stellenvale Winery (Pty) Ltd
1957
(4) SA 234
(C) and
Plascon
Evans Paint Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A). He stated as follows (at page 384 [I] to 385 [B]):
"Section
25(1)(a) confers a discretion upon a court to make a restraint order
if, inter alia, 'there are reasonable grounds
for believing that a
confiscation order may be made...'. While a mere assertion to that
effect by the appellant will not suffice...,
on the other hand the
appellant is not required to prove as a fact that a confiscation
order will be made, and in those circumstances
there is no room for
determining the existence of reasonable grounds for the application
of the principles and onus that apply
in ordinary motion proceedings.
What is required is no more than evidence that satisfies a court that
there are reasonable grounds
for believing that the court that
convicts the person concerned may make such an order."
[9]
Although the
Kyriacou
case
dealt with restraint orders under chapter 5 of the Act rather than
preservation orders under chapter 6, the two procedures
are analogous
inasmuch as they are temporary orders pending the institution and
determination of a forfeiture action. In
National
Director of Public Prosecutions v Phillips and Others
2002
(4) SA 60
(WLD) in dealing with the question of what degree of proof
is required of the applicant in s 26 i.e. restraint proceedings in
terms
of chapter 5 of the Act, Heher J, as he then was, stated as
follows at para 12:
"In
my view an application for a restraint order is analogous (although
not identical) to an application for an interim interdict
and
attachment
pendente
lite.
Insofar
as such relief contains elements of finality, the Legislature could
never have intended that it should be defeated by reason
of conflicts
of fact
per
se.
Nor
would a reference to evidence be appropriate: that might well
anticipate the enquiry at the criminal trial and impinge on the
right
of silence. The
prima
facie
case
is proof of a reasonable prospect of obtaining both a conviction in
respect of the charges levelled against the respondent
and a
subsequent confiscation order under s 18(1). It is appropriate in
determining whether the onus has been discharged to apply
the long
accepted test of taking the facts set out by the applicant together
with any facts set out by the respondent which the
applicant cannot
dispute and to consider whether, having regard to the innate
probabilities, the applicant should on those facts
obtain final
relief at a trial (for this purpose, the confiscation hearing). The
facts set up in contradiction by the respondent
should then be
considered and, if serious doubt is thrown upon the applicant's case,
he cannot succeed."
This
approach was endorsed by this Court in the case of
National
Director of Public Prosecutions v Van Heerden
2004
(2) SACR 26
(C) (page 33 - 34), where Meer J stated as follows:
"A
preservation order under section 38 of POCA is akin to an interim
interdict. Its aim is to preserve property for up to 90
days pending
proceedings for a forfeiture order under section 48 of POCA... . The
appropriate standard of proof at the preservation
order stage must
therefor be the well established one of
prima
facie
proof
applicable to interim interdicts. In
Webster
v Mitchell
1948 (1) SA 1186
(W) at 1189 as qualified in
Gool
v Minister of Justice
1955 (2) SA 682
(C) at 688 C - D the degree of proof required was
formulated as follows: 'In an application for a temporary interdict
the applicant's
right need not be shown on a balance of
probabilities; it is sufficient if such right is
prima
facie
established,
though open to some doubt. The proper manner of approach is to take
the facts set out by the applicant together with
any facts set out by
the respondent which applicant cannot dispute and to consider
whether, having regard to the inherent probabilities,
the applicant
should (not could) on those facts obtain final relief at a trial. The
facts set up in contradiction by the respondent
should then be
considered, and if serious doubt is thrown upon the applicant's case,
he could not succeed.'
"At
the preservation stage therefore the applicant is required to
establish under section 38(2) no more than a prima facie
case that
there are reasonable grounds to believe that the property concerned
is (a) an instrumentality of an offence referred
to in schedule 1;
and (sic) (b) is the proceeds of unlawful activities. It is only at
forfeiture stage under section 48 that proof
on a balance of
probabilities is specified by the legislature. Had the intention been
for the higher standard to have applied also
at the preservation
stage, the legislature would also have specified. It provided instead
for reasonable grounds to believe."
I
am in agreement with the approach to standard of proof as set out in
Phillips's
and
Van
Heerden's
case.
FACTUAL
BACKGROUND
[10]
On 13 December 2006 members of the immigration inspectorate of the
Department of Home Affairs and members of the SAPS attached
to both
the Railways police and the commercial crime unit executed a warrant
to enter and search certain premises at the Cape Town
railway
station. The warrant was an entry and search warrant in terms of
s
33(5)(a)
and (b) of the
Immigration Act, 13 of 2002
. In the office
occupied by first respondent certain files, documents and a large sum
of cash made up in bundles of South African
rand and foreign currency
was found. Further, large sums of cash, mainly South African rand
were found in the drawers of the table.
A safe allegedly concealed
behind a door was opened and searched where further monies were
found. The police officers also searched
a room that appeared to be
used as a kitchen where they found three women cooking. At second
respondent's feet one of the police
officers found a large paper bag
filled with the foreign and South African currency corresponding
approximately with those amounts
in respect of which there is no
opposition in this matter as referred to in paragraph 4 above. Second
respondent was identified
as a citizen of Mali residing illegally in
South Africa. She explained that the money in question was the
proceeds of her business
of selling foreign food.
[11]
According to the police official, when asked to explain the balance
of the money found on his premises, first respondent replied
that it
was the proceeds of his money exchange business. He added that he
kept money in his safe as it was difficult for foreigners
to operate
bank accounts in South Africa. When asked to show proof that he was
authorised to operate a money exchange business
or any document
justifying his possession of the foreign currency found in his
office, first respondent replied that he could not
find the documents
and asked for permission to call his wife. This was refused.
[12]
The cash, documentation and various other articles which were
regarded as evidencing a money exchange business were seized
and
confiscated. In due course first respondent produced a South African
identity document and was charged in the magistrates'
court with
contravening the exchange control regulations of 1961 as amended by
Government Notice R885 published in Government Gazette
Number 20299
of 23 July 1999.
Regulation 2(1)
of those regulations provides:
"Except
with the permission granted by the Treasury, and in accordance with
such conditions as the Treasury may impose no person
other than a
authorised dealer shall buy or borrow any foreign currency or gold
from, or sell or lend any foreign currency or gold
to any person not
being an authorised dealer."
Regulation
22
provides for a fine not exceeding R250 000,00 or imprisonment for
a period not exceeding 5 (five) years or both for a contravention
of
the regulations. First respondent appeared in the magistrates' court
on the charge but the matter was struck from the roll some
months
later when the docket went missing. The State now proposes to
reinstate the prosecution.
ONUS
[13]
As regards the question of
onus
I
understood Mr. Tredoux's argument to be that the test of establishing
a
prima
facie
case
in the present context must be understood and determined as involving
the discharge of an
onus
on
a balance of probabilities. In this regard he relied on the case
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A). However, to approach the question of
onus
on
the basis that the applicant must make out his case on a balance of
probabilities is to disregard not only the cases cited earlier
but
the explicit wording of
s 38(2)
which requires that applicant must do
no more than establish that there are
"reasonable
grounds to believe that the property concerned is an instrumentality
of and offence or the proceeds of unlawful
activities".
This
clearly fall short of overall proof of such a case on a balance of
probabilities. Such a level of proof is clearly not what
the
legislature envisaged since in s 38(2) of the Act, which makes
provision for a forfeiture order following upon a preservation
order,
the test for the granting of such an order is explicitly stated to be
proof that the property concerned is an instrumentality
of an offence
or the proceeds of unlawful activity "on a balance of
probabilities".
[14]
In my respectful view, the formulation of the test for a preservation
order is well set out by Heher J in the
Phillips's
case
as endorsed in
Van
Heerden's
case,
both of which make provision for weighing up of the probabilities but
in the context of the applicant having to make out a
prima
facie
case.
PRELIMINARY
POINTS
[15]
The intervening respondents sought in the first place a discharge of
the
rule
nisi
on
the grounds that it was improperly sought on an
ex
parte
basis.
Reliance was placed on
National
Director of Public Prosecutions v Braun and Another
2007
(1) SA 189
(CPD) where it was held that since an applicant invoking
38 of the Act on an
ex
parte
basis
was obliged to adhere to the requirements of the
uberrimae
fides
rule,
if such an applicant withheld material facts which might influence
the Court in coming to a decision, it would be entitled
to reconsider
and rescind the order irrespective of whether non-disclosure was
wilful or
mala
fide.
[16]
It was further contended that first and second respondents should
have been given notice of the initial application for a preservation
order and there was no good reason why the matter was brought
ex
parte
inasmuch
as the monies were at all material times held by the police pursuant
to the provisions of the Criminal Procedure Act, 51
of 1977 ("the
Code") pending the outcome of the prosecution against first
respondent.
[17]
It is common cause that when the prosecution was withdrawn first
respondents' legal representative contacted the police with
a view to
recovering the monies on behalf of his client pursuant to the
provisions of s 31 of the Code. When advised that the asset
forfeiture unit intended to bring an application for the preservation
of the funds in terms of the Act, first respondent's legal
representative contacted the applicant's office seeking an assurance
that any such application would be brought on notice to first
respondent. Acting on behalf of applicant, the State Attorney
declined to give any such undertaking explaining his client's
position
as follows:
"As
you are aware your client is at liberty to demand the return of his
property from the SAPS at any time, given that the
criminal case
against him has been struck from the roll. Without a court order in
place to secure the property, the monies seized
may be dissipated.
Your client, on the other hand, will not suffer any prejudice as a
result of the decision to obtain the order
ex parte, given that he is
currently not in possession of the property and will be able to
exercise his rights to oppose confirmation
of the interim
preservation order at any stage. In any event, this correspondence
will be brought to the attention of the Judge
hearing the
preservation application who will no doubt apply his/her mind to the
matter."
The
correspondence in question was placed in front of the judge who
granted the provisional order and there is thus no question
of any
material fact not having been drawn to the attention of the Court.
Furthermore, I am persuaded by the reasoning behind applicant's
approach. Whilst casting no aspirations on the
bona
fides
of
first respondent's legal representative, it appears to me that it was
always open to first respondent, after withdrawal of the
charges, to
unilaterally approach the SAPS and demand the release to him of the
monies seized. In my view, applicant was justified
in adopting a
prudent approach in bringing an application to secure the monies
without notice to the respondents.
THE
LAWFULNESS OF THE SEARCH AND SEIZURE
[18]
On behalf of the respondents Mr. Tredoux contended that the seizure
of the property was illegal and irregular much as it was
not
authorised by the only warrant in existence and nor by the provisions
of the Code. Again I disagree with these submissions.
The Department
of Home Affairs officials who comprised part of the group which
conducted the search and seizure operation obtained
a warrant from
the magistrate, Cape Town for the entry onto and search of premises
in terms of s 33(5)(a) of the
Immigration Act on
the basis of
information that a group of foreign nationals were issuing fraudulent
documents and permits. The immigration officers
were assisted by the
South African Police Services. During the search operation it became
apparent to SAPS members that further
offences were being committed
on the premises, namely, contraventions of the exchange control
regulations. The SAPS members, in
searching the premises and seizing
the property which is the subject of this application, purported to
act in terms of
s 22
of the Code. It provides that a police official:
"may
without a search warrant search any person or container or premises
for the purposes of seizing any article referred to
in
s 20
-
a) if
the person concerned consents to the search for and the seizure of
the article in question. or
b) if
he on reasonable grounds believes:
i
that
a search warrant will be issued to him under paragraph (a) of
s 21(1)
if he applies for such warrant; and
ii
that
the delay in obtaining such warrant would defeat the object of
the
search".
[19]
Had the police authorities, upon finding the currency in question,
left the premises in order to apply to a magistrate for
a search
warrant, there is every chance that some or all of the currency would
have disappeared by the time that they returned.
In my view, further,
it is impractical to suggest, as respondents' counsel did, that any
such possibility would have been obviated
by posting a guard at the
premises. Money is inherently capable of quick flight and can be
difficult to trace. I am satisfied therefore
that the search and
seizure operation was lawfully conducted and that the provisional
preservation order granted cannot be discharged
on the grounds of an
illegal search or seizure.
RESPONDENTS'
CASE
[20]
First respondent does not dispute that the currency was seized from
premises occupied by him, as described by the police. He
denies,
however ever telling the police that it emanated from a money
exchange business which he operated. He lays no claim to
any of the
preserved property in his personal capacity stating that all the
South African currency belongs to first intervening
respondent, a
close corporation of which he is the sole member. He states that R148
145,00 was the proceeds of first intervening
respondent's business
operations, namely, the operation of parking facilities at the Cape
Town railway station, which involved
a lease, and the wholesale
selling of clothing and apparel from the premises where the currency
was found.
[21]
First respondent claims, furthermore, that he was born in South
Africa in 1974 of a South African father and an Ivorian Coast
mother
but returned to that country with her shortly after his birth. In
1995 he returned to South Africa seeking his father and,
after
succeeding in doing so and obtaining refugee status some years later,
was eventually issued with identity document and a
South African
passport. He testified that of the foreign currency seized, â¬20
250,00 is the property of the second intervening
respondent. Of the
US $56 517,00 seized, US $16 517,00 belongs to the third intervening
respondent, US $10 000,00 belongs to the
fourth intervening
respondent and US $30 000,00 to the fifth intervening respondent. As
for the balance of the dollars and euros
seized, he states that this
must have been seized from second respondent or someone else.
[22]
First respondent admits that the police found and seized a single
file titled "Galileo" in his office but denies
any
knowledge of the further documents which were allegedly seized by the
police and upon which they rely as proof of currency
transactions. To
the extent that such documents include certain diaries first
respondent states that he does not recognise them
and that none of
the entries therein are in his handwriting. He goes further, stating
that the entries make no sense to him and
that he is not even in a
position to guess at their meaning. He adds that a certain Mr. Traore
who occupied the offices alongside
his and whose premises were also
searched, told him that the diaries belonged to him. Regarding the
question of what he told the
police, first respondent states that he
chose not to answer them telling them that he first wanted to speak
to his lawyer. His
reasons for doing so were that he did not want to
be distracted from observing the search and, secondly, that his
experience of
police officers is that they misconstrue or
misrepresent what one tells them.
[23]
In a bid to substantiate his claims in regard to the businesses
allegedly run from the premises, first respondent attached
copies of
first intervening respondent's financial statements for the financial
years 2006/2007 as well as extracts from its banking
account records,
a sample parking ticket, two invoices relating to payments in respect
of the parking area lease and certain documentation
issued by the
Registrar of Companies and Close Corporations.
[24]
All these documents revealed less than they promised, however. The
financial statements point to a modest but ill-defined business
whose
principal asset is a property worth approximately R500 000,00, the
details of which are not disclosed. The only salary apparently
paid
is one to first respondent himself in the amount of R10 000,00 per
month. First intervening respondent's revenue for the 2006
year was
R650 000,00 and for 2007 R360 000,00 odd and the profits for those
years respectively R35 000,00 and R18 000,00 odd. It
is not possible
to determine from these financial statements what businesses made
sales or generated profits.
[25]
A scrutiny of the bank account extracts indicate that the main
regular debits were payments in respect of a home loan whilst
the
main source of income were regular deposits in the amount of several
thousand rand every few days ascribed to "Africa
Parking".
The invoices appear to reveal payments of rental in the amount of
approximately R16 000,00 monthly in respect of
a parking area at the
Cape Town Good Hope concourse.
[26]
No details are given by first intervening respondent of the levels of
income generated weekly or monthly by either the clothing
business or
the parking business or of the size of the parking business which
appears to be the main income generator. The sample
ticket states
that one parking bay would earn R6,00 per hour for a maximum of
R48,00 in a day.
[27]
In an effort to explain the substantial cash amount found on his
premises, first respondent explained that the parking business
generates mainly cash, the bays operating seven days a week.
Similarly, the clothing business was also conducted largely on a cash
basis. According to first respondent first intervening respondent
made some of its purchases in cash and also pays some of its
expenses
in cash. He did not explain how much cash the respective businesses
generate on a daily, monthly or weekly basis. This
lack of detail,
coupled with the limited amount of information revealed by the
documentation attached by first intervening respondent
and first
respondent, is perplexing. For example no detail is provided as to
what salaries are paid on a regular basis in cash
relating to the
parking business, nor what purchases are made by either business, let
alone any proof thereof.
[28]
I turn to consider the explanations tendered by the various
intervening respondents in respect of the foreign currency found
on
the premises. Second intervening respondent is, a citizen of the
Democratic Republic of the Congo, holding refugee status in
this
country. He states that he is a business entrepreneur living in Cape
Town conducting business as an entrepreneur principally
in buying and
selling motor vehicles to foreign traders outside of South Africa and
in particular from Angola. He states that he
sources the motor
vehicles from motor dealers in Durban, these purchases being made in
US dollars or euros.
[29]
Second intervening respondent states that he has no bank account
since no bank is willing to open one for him given his refugee
status. He therefor operates only with cash. In December 2007 he
received â¬20 250,00 from two Angolans. These two persons were
existing customers and gave him the money in order to purchase two
used 4 x 4 motor vehicles which he was to source from a motor
dealership in Durban. On the same day he approached first respondent,
whom he has known for several years, and asked him if he
could place
the currency in his safe for safekeeping for a few days until he
travelled to Durban to source and purchase the vehicles.
This was in
keeping with similar arrangements he had made in the past. He stated
also that he had introduced third and fourth intervening
respondents
to first respondent a day or two before 10 December when first
respondent allowed them also to place their money in
his safe. First
intervening respondent insisted that the money which he deposited in
the safe was at all times his property.
[30]
Third intervening respondent states that he is a businessman and a
citizen of Angola where he is resident. His business is
to purchase
used Japanese motor vehicles imported by specialist motor dealers in
Durban for resale in Angola. In early December
2006 he arrived in
Cape Town on his way to Durban to purchase two Hi-Ace motor vehicles
from
Tokyo
Cars
in
Durban bringing with him US $16 517 for this purpose. In Cape Town he
met second intervening respondent whom he had known for
a couple of
years and arranged to deposit the money in question in first
respondent's safe which was duly done. Some three days
later second
intervening respondent informed him that his monies had been seized
by the police. He claims the return of the monies.
Fourth intervening
respondent deposed to an affidavit stated that he was likewise a
businessman resident in and a citizen of Angola
whose business was
buying and selling pre-owned motor vehicles. This he did mainly by
sourcing them from motor dealers in Durban
who specialise in
importing such vehicles from Japan for resale to the African market.
He too had arrived in Cape Town in early
December 2006 bringing US
$10 000,00 in cash with the intention of purchasing two Hi-Ace motor
vehicles in Durban. Just as in third
intervening respondent's case,
he met second intervening respondent on his arrival in Cape Town and,
through him, arranged to deposit
his money for safekeeping in first
respondent's safe. A few days later he was advised that the money had
been seized by the police.
[31]
The fifth intervening respondent testified that he was a citizen of
the Democratic Republic of the Congo who has resided in
South Africa
for the past few years on the basis of his refugee status. The main
focus of his business was the buying and selling
of motor vehicles
for his cousin, one Mendes in Angola. He sources most of these
vehicle from various motor dealers in Durban and
resells them to his
cousin at a profit. If his cousin has "sourced" the vehicle
directly from the dealer, he, the deponent,
attends to the purchase
and delivery of the vehicles to his cousin for a fee.
[32]
In early December 2006 his cousin gave him US$30 000,00 with the
purpose of purchasing two Hi-Ace 18 seater motor vehicles
from Nismo
Cars in Durban. On 9 and 11 December 2006 he deposited these monies
in two instalments into first respondent's safe
for safekeeping as he
had done on previous occasions, pending his departure for Durban to
purchase the vehicles. A few days later
he had been advised that the
monies have been seized by the police and he now lays claim to these
monies.
EVALUATION
AND ANALYSIS
[33]
Faced with these versions as to the provenance and ownership of the
monies seized by the SAPS, it must now be determined whether
applicant has made out a case establishing that there are
"reasonable
grounds to believe that the property concerned is an instrumentality
of an offence or the proceeds of unlawful
activities".
[34]
Applicant's case is that both the South African and the foreign
currency was either the instrumentality of the offence of buying
and
selling foreign currency without being authorised to do so or the
proceeds of such activities. It seems clear that if the foreign
currency found on the first respondent's premises was indeed bought
by him or intended for sale to his clients then it was either
an
instrumentality of the said offence or the proceeds thereof.
Similarly, if the R148 145,00 represented first respondent's working
capital i.e. was to be used by him for purchasing of foreign currency
or if it represented the proceeds of foreign currency he
had sold
then it could satisfy the requirements of subsections 38(2)(a) or (b)
of the Act.
[35]
The only evidence that first respondent was engaged in buying and
selling foreign currency was his alleged admission thereof
to the
police, the presence of the foreign currency and the large amount of
South African rands on his premises and the various
documents seized
by the police allegedly evidencing such transactions. First
respondent denies making any such admission to the
police and it
seems somewhat unlikely that he would do so. On the other hand his
explanation, that he said nothing to the police
because he does not
trust them, is also unlikely. If all the currency found on his
premises was legitimately there and with a substantial
amount thereof
allegedly belonging to third parties, one would have expected first
respondent to have made this clear from the
outset. Furthermore, the
version given by the police officials, namely, that when asked for
proof of authority to conduct such
a business he stated that he
needed to contact his wife, adds some detail to the broad allegation.
[36]
The documentation seized by the police goes some way to bolstering
applicant's case. The loose pages found in the diaries annexed
to the
record (annexure "AWM" at pages 401 - 404) appear to be
handwritten notes of foreign currency transactions conducted
on
various dates in 2004 or are simply recorded in a 2004 diary. They
appear to indicate a busy trade, mainly in euros and dollars,
with
the headings "buy" and "sell". Figures for
certain amounts of euros and dollars are given together with
what
appears to be an exchange rate. First respondent disavowed all
knowledge of these notes and stated that he could not even
guess what
they meant, a comment which I regard as disingenuous. Annexure "AWM"
2 (1) (at pages 405 - 410 of the record)
are extracts from a 2004
diary seized from first respondent's premises which similarly appear
to record foreign currency transactions.
On some days it is recorded
that there was "no business" whilst on other days the
"total profit of the week"
and expenses are recorded. It is
not possible to say with any certainty what these various documents
record but the probabilities
are that they indeed record foreign
exchange buy and sell transactions which, coupled with first
respondent's alleged admission
to the police officers, calls for a
convincing response from him. Instead, first respondent, apart from
certain documentation contained
in the Galileo file simply denied any
knowledge of the documents allegedly seized by the police. He
suggests, on the basis of hearsay
evidence, that the documentation
was seized from Traore's premises but no affidavit from that person
is attached nor any explanation
as to why such an affidavit could not
be filed.
[37]
This brings one to the third area of dispute, namely, the
explanations tendered for the presence of the foreign currency and
the South African currency in first respondent's premises. I am
prepared to accept that first intervening respondent, also referred
to as
"Starplex",
did
business from the premises in question. Although Starplex's business
is described in CIPRO documentation as "general wholesale",
it appears to have been an all-purpose vehicle used by first
respondent. I am prepared to accept, furthermore, that from time to
time Starplex may have sold clothes on a wholesale basis. Small
stocks of clothing were found in the office during the raid. There
is
however no evidence before the court of any systematic trading in
clothing when such evidence should have been easily obtainable.
From
the documentation made available by Starplex there are strong
indications that it conducted a parking business but again details
of
its turnover, income and sales are notably lacking.
[38]
Starplex conducted a bank account into which regular deposits,
apparently relating to the business of
Africa
Parking,
were
made as well as regular payments. In the circumstances first
respondent's explanation that he kept a large sum of cash on his
premises to pay unnamed expenses is, in my view, bald and
unconvincing. Furthermore, even accepting that Starplex conducted a
parking business and a wholesale clothing business from the premises,
this by no means excludes the possibility that first respondent
also
ran a business buying and selling foreign currency from the same
premises. Indeed, if he was engaged in such a business, it
would be
foolish of him not to have some sort of cover at the same time in the
form of one or more legitimate businesses. In my
view first
respondent and Starplex have not satisfactorily explained the
presence of such a substantial cash amount, namely R148
145,00 on the
premises.
[39]
This leads to the question of the foreign currency found in the safe.
The explanations furnished by the second to fifth intervening
respondents were remarkably similar in each case, namely, that the
currency was intended for purchasing vehicles in Durban from
specialist importers of such vehicles from Japan for on-sale to
African countries outside of South Africa. In each case the monies
had been deposited but a few days before they were seized by the
police and because the possessors or owners of the foreign currency
had no better place for safe-keeping of the currency in Cape Town.
Apart from the remarkable coincidences involved in the provenance
of
each of these four sums of money, other puzzling features were
pointed out by applicant's counsel. In none of the cases was
there
any record of proof of the deposit in the form of a receipt or book
entry. Secondly, third and fourth intervening respondents
deposited
these substantial sums of money with first respondent, although he
was virtually a stranger to them, shortly after being
introduced to
him by the second intervening respondent. In the case of the second
and fifth intervening respondents, notwithstanding
the fact that both
had lived in Cape Town for years, both claimed to have no safer place
to deposit monies than in first respondent's
safe. Coincidentally
each intervening respondent, save for the first intervening
respondent, deposited large sums of foreign currency
in second
respondent's safe but days before these were found and seized by the
police. In each case they were on their way to Durban
to purchase
imported vehicle for on sale to other parts of Africa. Another factor
not satisfactorily explained is that none of
these sums of money were
apparently separately held by first respondent, for example, in an
envelope. Instead, all the foreign
currency was bundled together.
[40]
Apart from copies of business cards relating to some of the Durban
motor dealers mentioned, none of the four intervening respondents
produces any documentation in support of their version that they were
travelling to Durban to purchase vehicles from such dealers.
Applicant contacted the various Durban motor dealers mentioned by
second to fifth intervening respondents to make specific enquiries
as
to whether they had reserved any vehicles for sale to the said
intervening respondents or had had any previous dealings with
them.
The only positive response received related to fifth intervening
respondent who had purported to annex documentation to his
affidavit
relating to a vehicle which he had allegedly purchased from Nismo
Cars on an earlier occasion for resale to his cousin,
Mendes. In
reply, an affidavit was filed from a member of Nismo Cars stating
that the vehicle in question had been sold directly
to Mendes and
that they had no record of any dealings with fifth intervening
respondent at any stage.
[41]
As was argued by applicant's counsel, it seems unlikely that second
to fifth intervening respondents would travel, in some
cases from
Angola, but at the least from Cape Town, to Durban with large sums of
foreign currency to purchase vehicles without
seemingly having made
any enquiry as to whether such vehicles were available let alone
without making prior arrangements for the
purchase thereof.
[42]
There is a further problem relating to the claims made by second and
fifth intervening respondents, both of whom allege that
the monies
they deposited with first respondent belonged to third parties and
were to be used by them to purchase vehicles on such
third party's
behalf. Although both these intervening respondents claim ownership
of the currency, I have serious doubt whether
this was so in fact or
law. It appears to me that, at best for the intervening respondents,
the true owners were the third parties
in question. Not only did
these third parties not lay claim to the monies in person but they
filed confirmatory affidavits despite
in each case the intervening
respondent having indicated that the person/s from whom he had
received the monies was aware of these
proceedings.
[43]
I have considerable doubt whether a court could ever discharge a
preservation order and direct that monies apparently belonging
to
third parties should be returned to persons who, at best, were acting
as their agents in holding the money. However, in the
view that I
take of this matter, it is not necessary for me to determine this
question nor the related question of whether, pursuant
to a mandate
allegedly given to these intervening respondents by the original
sources of the funds, they became owners of the funds.
[44]
In the light of the lack of any substantiation for the claims of the
second to fifth intervening respondents and the sheer
improbability
of their versions, as detailed above, I must conclude that applicant
has established its case in respect of the particular
amounts of
foreign currency claimed by these parties. A consequence of this
finding is its effect upon the credibility of first
respondent and
thus upon first intervening respondent's claims. In the absence of an
acceptable explanation for the presence of
the foreign currency in
the safe upon first respondent's or first intervening respondent's
premises, the inference that it was
an instrumentality or the
proceeds of the offence of unlawfully conducting a foreign exchange
business operation is considerably
strengthened. This in turn
strengthens the probability that the rand amount found in the
possession of first respondent was either
his working capital for
such business or the proceeds thereof. Although it is possible that
some of these monies claimed by first
intervening respondent may well
relate to either the parking business or even the wholesale clothing
business, it is equally possible
that they do not. Certainly no such
dividing line can be drawn on the sparse information furnished by
first intervening respondent.
In the circumstances, particularly
given that at this stage it is a preservation order which is being
sought, I do not consider
that the Court should attempt to draw an
arbitrary line between funds which may have been lawfully generated
by first intervening
respondent and other funds.
[45]
In the result, in respect of the monies to which the first to fifth
intervening respondents lay claim, I am satisfied that
by taking the
facts set out by applicant together with those facts set out by the
various respondents which applicant cannot dispute
and having regard
to the innate probabilities, applicant should on those facts obtain a
forfeiture order in due course. Taking
into account, furthermore, the
facts set up in contradiction by the various respondents I have come
to the conclusion that they
do not throw serious doubt upon
applicant's case. In the circumstances I am satisfied that applicant
has made out , in respect
of the property, a case that there are
reasonable grounds to believe that it represents the instrumentality
of an offence or the
proceeds of such an offence.
[46]
There is a dearth of evidence regarding the balance of the funds
seized by the police, namely, the amount in respect of which
there is
no opposition to the confirmation of the preservation order. It would
appear that these were either seized from second
respondent or
alternatively from first respondent but were not claimed by him or
any of the intervening respondents. Accordingly
applicant must be
taken to have made out its case in respect of those monies as well
and the preservation order must be confirmed
in respect of all the
monies presently held by the
curator
bonis.
COSTS
[47]
Mr. Tredoux argued that even in the event that the preservation order
being confirmed no costs should be awarded against the
respondents at
this stage pending the outcome of any forfeiture application.
However, the interim preservation order made provision
for a costs
order only in the event of confirmation of the interim order being
opposed.
[48]
Although applications for preservation and forfeiture order are
interlinked it appears to me, in the circumstances of this
matter at
least, that they are sufficiently distinct to justify a costs order
in favour of applicant where the interim preservation
order has been
confirmed in the face of opposition. In the circumstances I can see
no good reason to depart from the general rule
that costs follow the
event and not to award costs to applicant.
ORDER
[49]
The following order is made:
1.1. In
terms of section 38 of the Prevention of Organised Crime Act, 21 of
1998, (the Act), the cash amounts of R191 145,00 (one
hundred and
ninety one thousand one hundred and forty five rand), â¬21 825,00
(twenty one thousand eight hundred and twenty five
euros) and US $63
817,00 (sixty three thousand eight hundred and seventeen United
States dollars) ("the property") seized
at a Cape Town
railway station storage facility on 13 December 2007 is preserved.
1.2. Andre
Van Heerden of SAB&T is appointed as
curator
bonis
over
the property in terms of section 42 of the Act, with all such powers,
duties and authority as are reasonably incidental thereto.
1.3. The
property shall be brought under the control of the
curator
bonis
and
shall remain in his custody until the expiration of the period
prescribed in section 40 of the Act or until the conclusion of
the
forfeiture proceedings instituted by applicant in respect of the
property under section 48 of the Act.
1.4. The
fees and expenditure of the
curator
bonis
shall,
in terms of section 42(2) of the Act, be paid from the proceeds of
such property as may be forfeited to the State in terms
of section 50
or section 53 of the Act and, in the event of no such order being
granted, such fees and expenditure shall be paid
by the State.
1.5. Applicant
shall cause the preservation of property order to be published in the
Government Gazette as soon as is practicable
after the order has been
made final.
1.6. The
respondent and intervening respondents and any other person wishing
to oppose the making of a forfeiture order, are to
file notice of
their intention to do so in terms of section 39(3) and 39(5) of the
Act within 14 days after service upon them of
the notice of the
preservation order.
1.7. In
the case of any other person, notice of their intention to oppose the
forfeiture order should be filed within 14 days after
the date of
publication of the notice of the preservation order in the Government
Gazette.
2
First to fifth intervening respondents are ordered to pay the
applicant's costs of this application, jointly and severally, the
one
paying the others to be absolved.
LJ
BOZALEK, J