Van der Merwe and Another v Nel NO and Others (A481/05) [2006] ZAWCHC 6; [2006] 4 All SA 96 (C); 2006 (2) SACR 487 (C) (24 February 2006)

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[2006] ZAWCHC 6
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Van der Merwe and Another v Nel NO and Others (A481/05) [2006] ZAWCHC 6; [2006] 4 All SA 96 (C); 2006 (2) SACR 487 (C) (24 February 2006)

Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
Case
No.:
A 481/05
In
the matter between:
GARY
WALTER VAN DER MERWE
First
Appellant
ZONNEKUS
MANSION (PTY) LIMITED
Second
Appellant
and
INSPECTOR
NEL
First
Respondent
THE
MINISTER OF SAFETY AND SECURITY
Second
Respondent
THE
DIRECTOR OF PUBLIC PROSECUTIONS
Third
Respondent
COMMISSIONER
OF SOUTH AFRICAN REVENUE
SERVICES
Fourth Respondent
________________________________________________________________
JUDGMENT
: 24
TH
FEBRUARY 2006
________________________________________________________________
WAGLAY,
J.
1. The first Appellant was arrested at
Cape Town International Airport whilst he was about to depart for Las
Palmas via London, to
join his family and friends for an extended
holiday in Europe. The member of the South African Police Services
also confiscated
the foreign currency in his possession at the time
of his arrest.
2. On 13 July 2004, after passing the
security checkpoint but before passing the Passport Control, first
Appellant was requested by
Custom Officials to complete a “customs
declaration form”. After completing the form, his hand luggage was
searched with his
consent. First Appellant’s hand luggage
contained 130 000 euros and 21 249 US dollars, the combined value of
which amounted to
approximately R1 million.
3. The Customs Officials called the
South African Police Services (SAPS) and advised them that first
Appellant was about to leave
the country with the foreign currency
referred to above and handed the matter over to them. The first
Appellant explained to the
members of the SAPS who were then seized
with the matter that the foreign currency in his possession
represented foreign currency
belonging to an entire group which
including him, consisted of 8 adults and 4 children. He also
explained that the other members
of the group had departed for Las
Palmas two days earlier.
4. Although the members of the SAPS
believed that it was unlawful to leave the country with the amount of
foreign currency possessed
by the first Appellant, having heard
Appellant’s explanation they were uncertain, as to what regulation
was being contravened.
Because of this uncertainty they allowed the
first Appellant to board his flight to London, while other members of
the SAPS were
attempting to establish what Act or Regulation, if any,
was being contravened. Before the plane could depart, the SAPS
believing
that the first Appellant was contravening
Regulation
3(1)(a)
of the
Exchange Control Regulations, 1961
promulgated under s
9 of the Currency and Exchange Act of 1933 (Regulations or Reg.) had
first appellant off-loaded from the flight.
5. First Appellant was then arrested
and informed that his arrest was pursuant to the provisions of
Reg.3(1)(a). First Appellant
was also informed, “that the foreign
currency will be confiscated”.
6. The matter was thereafter referred
to the Commercial branch of the SAPS. The member of the Commercial
branch of the SAPS took
the first Appellant to the Bellville police
station where he was held overnight. The foreign currency was seized,
placed in a bag
and recorded in the “SAP 13” register at the
Bellville police station. On the next day, 14 July 2004, the first
Appellant was
released on bail. According to his counsel the criminal
case against him is still pending.
7. On the same day as first
Appellant’s release the South African Revenue Services (SARS)
issued a notice in terms of s 99 of the
Income Tax Act 58 of 1962
appointing the member of the SAPS who had seized the foreign currency
from the first Appellant and recorded
it in the SAP 13 register at
the Bellville police station, as an agent of the first Appellant. The
aforesaid notice referred to the
first Appellant as “Gary Walter
Van der Merwe/Wellness International Network (Pty) Ltd”. In terms
of this appointment the said
member of the SAPS was required to pay
over the foreign currency seized from the first Appellant to the
SARS. On 19 July 2004 the
foreign currency was paid over to the
SARS.
8. On or about 15 or 16 July 2004 the
first Appellant together with Zonnekus Mansions (Pty) Ltd (Zonnekus),
the second Appellant,
instituted the present proceedings. Zonnekus
is owned solely by the Eagles Family Trust (Trust). First Appellant
is the sole director
of Zonnekus and one of the trustees of the
Trust. The beneficiaries of the Trust are the first Appellant’s
issue.
9. The two Appellants sought the
return of the foreign currency seized by the SAPS to first Appellant
and an order granting first
Appellant permission to travel out of the
Republic of South Africa (Republic) with the said currency. The
application was premised
on the basis that the amount of foreign
currency seized by the SAPS from the first Appellant was below the
amount he was legally
entitled to take out of the country, and that
first Appellant’s arrest and detention was wrongful, unlawful and
malicious.
10. The Respondents denied that the
first Appellant’s arrest or the seizure of the foreign currency was
wrongful and/or unlawful.
Respondents averred that it was unlawful
in terms of the Regulations for the first Appellant to have in his
possession or attempt
to take out of the Republic the amount of
foreign currency found on the Appellant. Furthermore Respondents
stated that the first
Appellant was contravening the Regulations as
he had already exhausted his legally permitted travel allowance for
the 2004 calendar
year, adding that the first Appellant’s own
version that he was carrying the foreign currency for other persons
rendered him liable
to criminal prosecution in terms of Reg.3 (1)(a).
11. Six months after the application
was launched the matter came before Allie, J. At that hearing
Appellants no longer sought the
return of the foreign currency to the
first Appellant and permission for him to travel abroad with that
currency, but the return
of the 13 000 euros to the first Appellant
on the bases of the
rei-vindicatio
. Appellants did not seek
the return of the US$ 21 249 as that money, according to them, was
the property of one Allison and the
first Appellant was merely
carrying the money on Allison’s behalf. Second Appellant also did
not seek any relief.
12. Allie, J. dismissed the
application with costs and the matter now comes before this Court on
appeal.
13. The Appellants argument is that
the 130 000 euros was and remains the property of the first Appellant
and as such he is entitled
to its return. Bearing in mind that the
return of the foreign currency to first Appellant would give rise to
a contravention of
the Regulations, first Appellant properly seeks
for the foreign currency to be deposited into his banking account
where it could
be converted into local currency and made available to
him.
14. Respondents oppose the relief
sought on the basis that once the foreign currency was seized it
became forfeited to the National
Revenue Fund; the first Appellant
cannot therefore claim ownership thereof. If first Appellant is not
the owner of the 130 000 euros
he cannot seek its return on the basis
of the
rei-vindicatio
. The
rei-vindicatio
is only open
to an owner for the recovery of his/her property. According to the
Respondents when the first Appellant was arrested
and informed that
he was arrested pursuant to the provisions of Reg.3(1)(a) and that
all the foreign currency he had in his possession
at the time was
being seized, he was being informed that the foreign currency was
being seized in terms of the Regulations. The
provision under which
the foreign currency was seized therefore had to be Reg.3(3) which
provides:
“
(3) Every person who is about to
leave the Republic and every person in any port or other place
recognized as a place of departure
from the Republic, who is
requested to do so by the appropriate officer shall –
declare whether or not he has with
him any bank notes, gold, securities or foreign currency; and
­
produce any bank
notes, gold, securities or foreign currency which he has with him;
and the appropriate officer and any
person acting under his directions may search such person and examine
or search any article which
such person has with him, for the purpose
of ascertaining whether he has with him any bank notes, gold,
securities or foreign currency,
and may seize any bank notes, gold,
securities or foreign currency produced or found upon such
examination or search unless either
–
the appropriate officer is
satisfied that such person is, in respect of any bank notes, gold,
securities or foreign currency which
he has with him, exempt from
the prohibition imposed by sub-regulation (1); or
such person produces to the
appropriate officer a certificate granted by the Treasury which
shows that the exportation by such
person of any bank notes, gold,
securities or foreign currency which he has with him does not
involve a contravention of that
sub-regulation.
…”
15. According to Respondents the
effect of a seizure of foreign currency under Reg.3(3) is that it
immediately becomes forfeited to
the National Revenue Fund and can
only be refunded or returned to the person from whom it was seized by
the Treasury. This is provided
for in Reg.3(5) which reads:
“
(5)
All bank notes
,
gold, securities and
foreign currency seized under
sub-regulation (3) or (4) shall be forfeited for the benefit of the
National Revenue Fund: Provided
that the Treasury may, in its
discretion, direct that
any bank notes, gold, securities
or
foreign currency so seized, be refunded or returned, in
whole or in part
, to the person from whom they were taken,
or who was entitled to have the custody or possession of them at the
time when they were
seized.”
(my emphasis).
16. Dealing firstly then with the
issue of forfeiture. The Respondents reliance on Reg.(3)5 to hold
that the foreign currency on seizure
was immediately forfeited to the
National Revenue Fund is based upon the decision of
Action
Engineering and Fencing (Pty) Ltd v Moyses NO and Others
2004 (5)
SA 399
(T). In that matter, Muleya, an employee of
Action
Engineering,
was given over ZAR700 000 in Zimbabwe to bring to
South Africa and to deposit that money into a South African banking
account. He
was arrested at the bank before he could make the
deposit and the money in his possession was seized. While Muleya was
arrested
pursuant to Regulation 3(1)(b)
bis
the money was
seized in terms of the provisions of the Criminal Procedure Act 51 of
1977 (CPA). After Muleya pleaded guilty before
the magistrate and
was duly convicted, the State applied for the money seized from
Muleya to be forfeited to it in terms of s35(1)(a)
of the CPA. The
Court granted such application.
Action Engineering
the owner
of the monies then brought an application to review and set aside the
decision of the magistrate to grant the order in
terms of s35(1)(a).
17. In considering the review
application, the Court looked at Reg3(6); 3(7) and 3(8). These 3
paragraphs are similar in all respects
to Regulations 3(3); 3(4) and
3(5) save that while sub-regulation 3(3), 3(4) and 3(5) deal with
persons who are about to leave the
Republic with “bank notes, gold,
securities and/or foreign currency, sub-regulations 3(6), 3(7) and
3(8) deal with persons entering
the Republic with South African
currency.
18. After quoting sub-regulations
3(6), 3(7) and 3(8) the Court in
Action Engineering
goes on to
say at page 407 C – D:
“
On a general reading of these
provisions, I am of the view that the actions of Savious, [Muleya] in
respect of which he pleaded guilty
and was convicted, fall squarely
inside the ambit of these sub-regulations.
Moreover, it
appears to be provided in peremptory language that the money must be
forfeited for the benefit of the National Revenue
Fund, whereupon,
the Treasury (third respondent as per the definition quoted), in its
discretion, may direct that the money seized,
or any portion thereof,
may be refunded either to Savious [Muleya] or to whoever was entitled
to have custody or possession – in
this case, the applicant by all
account
s.”
(emphasis added).
19. Later in the judgment the Court
stated that because the actions of Muleya in bringing South African
currency into the Republic
without the necessary permission “fell
squarely inside the ambit of the mechanism provided for in regulation
3, the provisions
of s35 of the CPA do not apply”. This view of
the Court was based on its interpretation of s35(1)(a) of the CPA
which it held
did not apply in circumstances that obtained in that
matter. s35 of the CPA provides for the court that convicts an
accused to declare
the instrument used to commit the offence or by
means of which an offence was committed to be declared forfeited to
the State. The
Court in
Action Engineering
held that the money
that was seized by reason of contravention of Reg.3 could not
constitute an “instrument” used to commit an
offence or an
“instrument” by means of which an offence was committed and could
therefore not be forfeited to the State in terms
of s35(1)(a).
20. Even if the Court is correct that
the money seized from Muleya was not capable of being forfeited in
terms of s35(1)(a) of the
CPA I do not believe that that, in itself,
would trigger the applicability of the provisions in Reg.3 which
provide for forfeiture
of seized goods. In any event, I am not
satisfied that Reg.3(8) provides for automatic forfeiture. Reg.3(8)
mirrors Reg.3(5).
Both these sub-regulations provide that money
seized in terms of sub-regulation (6) or (7) or (3) or (4) “shall
be forfeited to
the National Revenue Fund”, however this forfeiture
is subject to (“Provided that”) the Treasury, in its discretion,
directing
that any of the “foreign currency” or “any notes”
“
so seized
” in terms Reg.3(5) or in terms of Reg.3(8) are
refunded or returned. This
proviso
that the Treasury may
return or refund “foreign currency” or “notes” “
so
seized
” suggest that the Treasury must exercise a discretion
before forfeiture has taken place. Had forfeiture been automatic as
suggested
by the Respondents and by
Action Engineering
then
instead of the words “
so seized
”,I believe the legislature
would have used the word “
so forfeited
”.
21. The fact that the Treasury is
given a discretion to deal with seized “foreign currency”
indicates that the legislature intended
that once foreign currency is
seized pursuant to Regulation 3(3) or 3(4),the Treasury be informed
(Reg.5). Once the Treasury is
informed it must then exercise a
discretion as to whether or not any or all of the items
seized
be refunded or returned and
a priori
, where there is no refund
or return or only partial refund or return, the items then held are
deemed to be forfeited. Whether representation
may be entertained
before the Treasury exercises its discretion is not indicated, but I
see no reason why a party who may be affected
should not at this
stage make representations as to why the Treasury should exercise its
discretion in favour of returning or refunding
the items seized.
22. Insofar as Respondents may contend
that the use of the word “refund” envisages automatic forfeiture
rather than to simply
hold, this argument is, in my view, contrived.
Refund can only apply to money. It means to pay back and when money
is seized and
mixed with other money in a manner where it can no
longer be distinguished from the other money, it cannot be capable of
being returned
and can accordingly only be refunded. The use of the
term refund does not therefore imply that forfeiture in terms of
Reg.3(5) is
automatic.
23. Furthermore, I do not believe that
it could ever have been intended that an act of seizure could
constitute a permanent deprivation
without any intervention from a
body other than party seizing the items.
24. The Respondents’ averment that
the first Appellant cannot claim ownership of the 130 000 euros
because this was forfeited to
the National Revenue Fund cannot
therefore be upheld.
25. I now turn to consider the
applicable regulation in terms of which the foreign currency was
seized by the SAPS. As I understand
Respondents’ argument, where a
person is arrested in terms of Reg.3(1) any seizure persuant to such
arrest has to be a seizure
in terms of Reg.3(3). This view, I
suspect, is also based on the judgment of
Action Engineering
for reasons indicated earlier. I do not agree with this view. Where
a person is arrested in terms of Reg.3(1)(a) and items pursuant
to
such arrest are seized, such items do not
have
to be seized in
terms of Reg.3(3) they can be seized in terms of s20(a) of the CPA.
Section 20 of the CPA entitles the State to
seize anything which is
concerned or “believed to be concerned in the commission or
suspected commission of an offence…”.
Foreign currency seized
must be seen to be “concerned with” or “believed to be
concerned” with the suspected contravention
of Reg.3(1)(a) if it is
found upon a person who is charged with contravening that Regulation,
which deals with taking foreign currency
out of the Republic without
authorization.
26. The provisions of s20(a) of the
CPA are thus wide enough to include seizure of foreign currency from
persons in the position that
the first Appellant was at the time of
his arrest. In so far as it may be necessary to determine whether or
not the foreign currency
seized from the first Appellant was seized
in terms of Reg.3(3) or s20(a) of the CPA, I believe, having regard
to the fact that
the monies were paid over to SARS after a notice in
terms of s99 of the Income Tax act was issued points more to the
foreign currency
being seized in term of s20 of the CPA rather then
regulation 3(3). I do not accept Appellant’s argument that because
the foreign
currency was entered into the SAP13 register this also
points to a seizure in terms of s20 of the CPA. Recordal of seized
items
in the SAP13 register is not proof of the seizure being
pursuant to s20 of the CPA. This register simply provides proof of
the seizure
and holding of goods and does not constitute a recordal
of whether or not the items were seized in terms of s20 of the CPA.
In any
event, if foreign currency is seized under s20 of the CPA,
there is no reason why such seizure cannot later be converted to one
under
reg.3(3). If such seizure is converted, persons in the
position of the first Appellant, need to be advised thereof.
27. The argument as to whether the
foreign currency seized from the first Appellant was seized in terms
of Reg.3(3) or s20 of the
CPA is however only relevant in so far as
Respondents persisted with their claim that the foreign currency was
forfeited in terms
of Regulation 3(5). Since I find that there was
no forfeiture, it is of no significance if the foreign currency was
seized in terms
of s20 of the CPA as contended by the Appellants.
Whether it was seized in terms of Reg.3(3) or s20 of the CPA, the one
thing that
is certain is that the seizure was neither wrongful nor
unlawful.
28. Notwithstanding the lawful
seizure, Appellants persist with their claim for the return of the
foreign currency. In this respect,
it is claimed that first
Appellant as owner of the foreign currency is entitled to the
rei
vindicatio
.
29. In this matter the first Appellant
was arrested pursuant to the provisions of Reg.3(1)(a), which
prohibits the taking out of the
Republic foreign currency without
authorization. The foreign currency was then seized and Appellants
now seek the return of the
foreign currency even though first
Appellant has been criminally charged and the criminal trial is at
present still pending against
him.
30. In any event, before the first
Appellant can succeed with the
rei vindicatio
he needs to
satisfy the Court that he is in fact the owner of the foreign
currency seized. In this respect, in his founding affidavit
the
first Appellant (as the first Applicant and on behalf of the second
Applicant) makes the following allegation:
“
Applicants seek to recover
their foreign currency . . . “
paragraph 7.
“
The said foreign currency
which belongs to me and the second
Applicant…”
paragraph 7.
30.3 “. . . I was the only adult
male to accompany the group and who was responsible for the provision
of all the financial support
of the whole group, as well as the crew
of the ship, decided that it would be safe for me to take the foreign
currency with me as
it would be risky to place such a large amount in
their possession. It was therefore decided that I would take all the
foreign currency
except for 300 Euros on behalf of all the members of
our group when I depart on 13
th
July 2004.
The other member of the group as a result left without any currency
except for 300 Euros…”
paragraph 24.
30.4 “. . . I explained that, due
to my delay and the balance of my party having departed the Sunday
two days earlier, I was carrying
the entire group’s currency.”
paragraph 33.
31. This founding affidavit does not
support first Appellant’s contention that he is in fact the owner
of the 130 000 euros seized.
The first Appellant, under oath, states
that the foreign currency belongs to Zonnekus and himself (paragraph
31.2 above). He then
states that he was merely carrying the foreign
currency for others in the group (paragraph 31.4 above) and adds that
he was doing
so for reasons of safety (paragraph31.3 above).
32. Counsel for the Appellants was at
pains to explain that although the Appellants claim that the South
African monies utilized
to purchase the foreign currency did not only
belong to the first Appellant, the fact that those monies were
deposited into the first
Appellant’s banking account made him the
owner of the South African monies. This may be true but once the
first Appellant obtained
the foreign currency and did not regard this
as his own but recognized that it was owned by others as reflected in
his affidavit,
it cannot be said that he is the owner of it,
notwithstanding that he may have purchased the foreign currency from
his own funds.
33. For all the above reasons I am
satisfied that there is no reason to interfere with the decision
handed down by the Court
–a quo
.
In the
result the appeal is dismissed with costs.
_______________
WAGLAY, J.
I agree.
_______________
TRAVERSO, DJP.
I agree.
_______________
LOUW, J.