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1985
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[1985] ZASCA 28
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S v Van Niekerk (48/85) [1985] ZASCA 28 (23 May 1985)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
CHARLES PETER VAN NIEKERK
APPELLANT
and,
THE STATE
.. RESPONDENT
CORAM
: VILJOEN, HOEXTER, GROSSKOPF, JJA
HEARD
: 7 MAY 1985
DELIVERED
: 23 MAY 1985
JUDGMENT
VILJOEN
, JA
The appellant was indicted and stood trial
in the
Court
a quo
on 14 counts of fraud and 3 alternative counts. On each of
counts 1 to 11 he was
convicted/
2. convicted of fraud. On the main count 12 (fraud)
he was found not guilty and discharged but he was convicted on the
alternative charge of theft. On counts 13 and 14 he was found not
guilty and
discharged on both the main charges of fraud and the alternative charges brought
under the Insolvency Act. On count 1
to 11, taken together, the accused was
sentenced to 9 years imprisonment and on the alternative count 12 the accused
was sentenced
to an additional 3 years imprisonment. It was ordered, further,
that two years of the sentence on counts 1 to 11 would run concurrently
with the
sentence of two years imprisonment passed and suspended in Pretoria on a prior
date, should that sentence be
brought/
3.
brought into operation. An application by the
appellant for leave to appeal against his convictions and sentences was
refused by the trial Court but this Court granted the appellant
leave to appeal
against his conviction and sentence on count 12.
In respect of all the counts
the period covered by the indictment ran from the beginning of December 1979 to
the end of March 1980.
Throughout that period the appellant was a director of a
concern carrying on business in Krugersdorp under the name of Torqueflo
(Proprietary) Limited. He was also, at all material times, the sole shareholder
of Torqueflo. Torqueflo had entered into a factoring
agreement with Anglo
African Factors. Count 1 to 11 arose from the
factoring/
4.
factoring by Torqueflo of false invoices with
Anglo African. They were
false in that they showed debts owing to Torqueflo by its debtors which did not
exist. Many of the debtors
shown did not themselves exist; they were fictitious.
Other invoices bore the name of real concerns, but they were not debtors of
Torqueflo and the transactions so shown were fictitious. The trial Court held
that the appellant was personally responsible for all
these fraudulent factoring
transactions.
Count 12 related to a batch of invoices factored by Torqueflo
to Anglo African at the end of March 1980. In contrast with the transactions
relating to counts l - 11 these, subject to one
qualification,/...
5.
qualification, were all genuine invoices. The
debtors and the debts concerned all existed. The debts
were owed, however, not to Torqueflo, but to a
company in Natal called A W I Engineering (Pro-
prietary) Limited
(hereinafter referred to as
A W I). The qualification was that the
invoices
wrongly showed Torqueflo, not A W I, as the creditor.
In finding the appellant guilty of the
theft of R110
000 the Court a
quo
reasoned as follows:
"Anglo African paid Torqueflo R110 000,00 as the proceeds of the factoring. It
was clearly proved that the accused knew all about
this, indeed gave
instructions for the batch of invoices in question to be factored by Torqueflo
and for Torqueflo to be paid the
proceeds. Indeed that was not seriously
disputed.
The factual background to all this is the following. During March 1980, the
accused entered into a contract with the sole shareholder
of A W I, a
man
called/
6.
called Fisher, in terms of which the accused purchased all the shares in A W
I. The price for them was payable in instalments, and
there was the usual
provision for cancellation in the event of a default in any payment. The accused
defaulted and the contract was
cancelled. It lasted not even 6 weeks. In the
meantime A W I's claims against its debtors, its genuine claims against its
debtors,
had been factored to Anglo African By Torqueflo. Fisher, or someone
acting on his behalf and authorised to do so, had supplied the
accused with a
list of these debtors and particulars of the claims against them. This had been
done with knowledge that the accused
intended to factor the claims, and in order
that he might do so. The permission to do so was granted, however, subject to an
express
and very important condition. It was that the proceeds were all to go to
A W I. That was hardly surprising. The deal might have fallen
through. Indeed,
as we now know, it did. In that event it was a matter of the greatest importance
to Fisher that the proceeds of
the factoring should be paid to A w I.
The main charge against the accused under the heading of Count 12 is one of
fraud against
Anglo/
7.
Anglo African. The fraud is said to have been committed in the same way as
the frauds covered by Counts 1 to 11. In our view, however,
this was no fraud on
Anglo African. We say this because, apart from all else, we cannot infer at all,
let alone beyond reasonable
doubt, that on this occasion there was any intention
to defraud Anglo African. There was clearly a false representation to Anglo
African that the debts in question were owed to Torqueflo, when in fact they
were owed to A W I. The reason was, however, that A
W I had no factoring
agreement with Anglo African. It seems likely and at least possible that, had
the accused asked Anglo African
to factor A W I's debts, it would have agreed,
subject to the conclusion of the standard factoring agreement and, what is more,
that
the standard factoring agreement would then have been concluded between A w
I and Anglo African. Anglo African, after all, had such
agreements already, not
only with Torqueflo, but with a number of other companies with which the accused
was associated. Instead,
a shortcut was taken by Torqueflo. These debts were
factored as if they were owed to Torqueflo. At the same time however, and this
is important, the accused wrote to the debtors of A W I telling them that
Torqueflo had taken A W I over. It had
not,/.....
8.
not, of course. He had, but that does not matter for present purposes. He
also told them their debts had been factored to Anglo African,
and that they
must pay Anglo African. They would, however, have indeed been obliged to pay
Anglo African. A W I, temporarily represented
by the purchaser, had factored
these debts, and that had been done in pursuance of an authority to factor the
debts given by A W
I, represented by the seller. There was, it seems, an
effective cession of the claims to Anglo African and, once that is so, it is
impossible to say that the accused had any fraudulent intent, v
is-a-vis
Anglo African.
Vis-a-vis
A w I, the accused's behaviour is, however, another matter.
the alternative charge focusses on this. It is a charge of theft from
A W I, the
theft of the R110 000,00 that ought to have been paid to A W I and never was,
the theft in short of the proceeds of the
factoring of A w I's claims. That this
offence was committed by the accused is as plain as a pikestaff. The case is a
straightforward
one of theft by conversion. The claims belonged to A W I. The
proceeds ought to have gone to A w I. That was the case, quite apart
from the
condition subject to which permission to factor was given. But the
condition/
9.
condition underlined what the position was in any event. Instead of
accounting to A w I for the proceeds, the accused converted them
to his own use
by causing them to be paid to Torqueflo, from the augmented funds of which,
incidentally, he then drew cash for the
deposit payable by him for the purchase
of the very shares in A w I. The accused gave no explanation whatsoever for his
and Torque-flo's
failure to account to A W I for the proceeds of the factoring.
The best he could do in his evidence was to say he did not know why
this had
never been done. There was no suggestion that he had ever given instructions or
arranged for it to be done, that he had
ever intended that it should be done,
that he had ever contemplated that it would be done. That he did not is the only
inference
to be drawn."
In view of the argument addressed to this
Court on
appeal it is necessary to have regard to
the trial
Court's
reasons for acquitting the appellant
on the main
counts 13 and 14 - the counts alleging
fraud. These reasons are:
"Count/
10.
"Count 13 relates to the accused's purchase of the shares in A W I, and Count
14 to his purchase of the shares in the company owning
Atlas Engineering. The
main count under each charge is one of fraud. The accused is said to have
misrepresented to the seller in
each case that he had the means to purchase the
shares, that he had the intention to pay the full price, and that he was able to
pay the full price, when, so it is alleged, he knew that he could not afford to
buy and he had no intention of performing."
"There is no real reason to believe, and it was certainly not proved, that
when he contracted the accused did not intend to implement
both contracts, and
that he did not truly believe that he would be able to find the necessary cash.
Whether the belief was reasonable
or not is neither here nor there. The accused,
one gathers, is a sort of Micawber character. What we have learnt of his
business
activities shows a high degree of optimism. Money is shuffled around
from one place to another and back again. That he may have been
careless,
negligent, in the conduct of his affairs, is one thing. Negligence cannot
suffice for fraud.
Nothing/
11.
Nothing less will suffice than proof, on the
allegations in this indictment; of an actual
subjective lack of intention to implement the
contracts, and a subjective lack of any honest
belief in his ability to do so. While there
may be circumstances in this case which suggest
the possibility that one or the other or both
these states of mind were present, while there
may be circumstances in this case which tend
to suggest that the accused may have entered
into agreements to buy A W I and Atlas for no
other purpose than to plunder these companies
and then to get out, there is nothing more in
that regard than suspicion. That such was in
truth the case was not proved. Far less was
it proved beyond a reasonable doubt."
On behalf of the appellant it was
submitted,
firstly, that the Court a
quo
misdirected itself in
finding beyond a reasonable doubt that the
appellant
had committed the crime of theft by conversion of the
amount of
R110 000 inasmuch as the Court a
quo
accepted, in acquitting the
appellant on counts 13 and
14 that/
12. 14 that the appellant might reasonably possibly
genuinely have intended to purchase and manage
A W I; secondly, that the
State had failed to
show what portion of the amount of R110 000 could
be directly attributed
to the A W I invoices which
were factored ; thirdly, that the payment of
the
proceeds of such factoring by the appellant was only
outstanding for a
period at most of one week from
the time of factoring namely 26 March to the
time
that other frauds on Anglo African were uncovered;
and consequently, in view of the fact that the
appellant had firmly
intended to manage A W I himself
and not to "get out" (as the learned trial
Judge
put it) after a while, that
mens rea
had not been
proved.
The/
13. The first submission cannot be sustained.
The intention of the appellant to purchase and manage
A w I affords no guarantee that he intended to do
so properly. What the learned trial Judge said in
the course of his judgment in the context of the
fraud charge is, in my view, not relevant at all to
the theft charge. As appears from the extract quoted
above the trial Court
came to the conclusion that the
State had failed to prove, on the allegations
in the
indictment relating to fraud, an actual subjective
lack of
intention on the part of the appellant to
implement the contracts, and a
subjective lack of any
honest belief in his ability to do so. There was
not
sufficient evidence to support a finding that the
appellant/
14. appellant entered into the agreement for no other
purpose than to plunder A W I and then to get out, the Court held. This
finding does not, in my view, assist the appellant. The appellant
did plunder A
W I by stealing from it but might have stayed on to manage it, however irregular
such management might have been.
The third contention must similarly be
rejected. As appears from the excerpt from the judgment above the Court pointed
out that the
appellant gave no explanation whatsoever for his and Torgueflo's
failure to account to A w I for the proceeds of the factoring, and
drew the
inference, correctly, in my view, that the appellant never intended to account
to A W I for such proceeds.
The/
15.
The second submission must be partially
upheld.. The evidence reveals that
payments made to Torqueflo by Anglo African did not always relate to a
particular or the most recent
offer of receivables because Torqueflo's requests
for payment were not always made with each offer submitted. Regard being had to
the evidence and the schedule containing particulars of invoices accepted,
customer payments and drawings, it is, however, possible
to calculate what
amount available to the supplier (in this instance Torqueflo) relates
specifically to the A w I invoices. The effect
of such calculation is that, but
for the A W I invoices, an amount of R71 992 was as at 26 March available to
Torqueflo. The amount
of R110 000
drawn/
16.
drawn by Torqueflo does not, therefore, relate to
A W I invoices alone. The amount has to be reduced
to R38 008 (R110 000 - R71 992). The appellant
should, therefore, have been found guilty of the
theft from A W I of R38 008 only and not R110 000.
To this extent the appeal against the conviction succeeds.
In considering the sentence to be imposed on the appellant the learned trial
Judge had regard to his personal circumstances and his
previous convictions.
From the latter he drew certain inferences. He came to the conclusion that the
appellant was a persistent criminal
who did not learn from experience. He
described the appellant as "obviously one of these people who gambles on getting
away with
it." His
record/
17. record was regarded as a positively aggravating
factor, and a major one. The learned Judge said:
"His record shows him to be a crook who cares very little about the interests of
society, when those interests are in conflict with
his opportunity to make a
fast buck".
The learned Judge assumed in the appellant's
favour
that the suspended sentence passed in November 1977
would be
brought into operation. Two factors which,
in the view of the learned Judge,
affected the
sentence, were these:
"The first is that I obviously must and do take account of the cumulative effect
of the sentences to be passed on the different counts.
I should say that, for
reasons I shall give in a moment, I intend to take Counts 1 to 11 as one for the
purpose of sentence, and
to treat Count 12 separately. Had either of those
counts (or series of counts in the case
of Counts/
18.
of Counts 1 to 11) stood alone, I would have imposed a heavier sentence for
each category than the one I intend passing, in the light
especially of the
accused's record. But the sentence under each heading will be somewhat reduced,
and I believe appropriately reduced,
to take account of the cumulative
effect.
The second point is the one to which I referred a moment ago, the question of
taking Counts 1 to 11 together. Counts 1 to 11 all relate
not to one
transaction, true, but to a single series of transactions of precisely the same
kind. The fact that the accused was charged
with and convicted on 11 counts is
somewhat fortuitous. The State could have elected to make these 28 counts,
taking each separate
invoice as the basis for a single count. On the other hand,
it could have elected to charge all of these transactions as one count.
It chose
to make what might have been one count at the one extreme and 28 counts at the
other extreme, 11 by taking separate batches
of invoices as the criterion for a
particular count, a convenient thing to have done, but an entirely arbitrary
basis. So this is,
in my view, a classic case for doing what is often considered
unsuitable, but which is eminently
suitable/
19.
suitable in the special circumstances
of this case, that is to say treating a
number of counts, in this case Counts 1
to 11, as one for the purposes of
sentence."
The learned Judge described counts 1
to 11 as
massive frauds. He proceeded as follows:
"Over a period of some 4 months, the accused deliberately, systematically, with
ample opportunity for reflection, reconsideration
or a plain failure of nerve,
succeeded in fraudulently extracting from Anglo African Factors the very large
sum of R458 000,00. This
was done not as some Frauds are by exceeding the bounds
of reasonable optimism about what the true situation is, or what one's
expectations
in that regard are, but by a coldblooded system of falsification of
documents. I view counts 1 to 11 in the most serious
light."
Count 12 was treated differently, as
follows:
"Count 12 was more of a spur of the moment
affair/
20.
affair. It was a single incident on its own, but the sum involved was very
substantial, R110 000,00. The accused knew full well that
this money was not
his. He pocketed it and Mr Fisher, a man who I am sure could not have afforded
the loss, whould have suffered
it had Anglo African not been in a position to
and been willing to recede his company's claims against their
debtors."
In view of the conclusion of this Court
that the
Court a quo erred in finding the accused
guilty of R110 000, it is competent
for this Court
to interfere with the sentence imposed. That the
amount of
R110 000 influenced the learned Judge to
impose a sentence of three years appears from the
words:
" but the sum involved was very substantial."
Regard being had to this fact and to all
other/
21.
other considerations mentioned by the learned Judge a
quo
-
above all the cumulative effect of the sentence - a sentence of 1 year
imprisonment on count 12 would, in my view, be a proper
one.
In the result the appeal against the con
viction on count 12 succeeds to
the extent that the
appellant is found guilty of the theft of R38 008.
On
this count a sentence of one year imprisonment
is imposed. When this is added
to the sentence imposed
on counts 1 - 11, the total sentence is one of ten
years
imprisonment. Two years of this sentence will run
concurrently with
the sentence of two years imprison
ment/
22.
ment passed and suspended in Pretoria on
10 November 1977 should that sentence be brought
into operation.
JUDGE OF APPEAL
Hoexter, JA)
- agree
Grosskopf, JA)