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[2001] ZASCA 111
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National Director of Public Prosecutions v Basson (131/2000) [2001] ZASCA 111; [2002] 2 All SA 255 (A); 2002 (1) SA 419 (SCA); 2001 (2) SACR 712 (SCA) (28 September 2001)
IN THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
Reportable
Case No: 131/2000
In the matter
between:
THE NATIONAL DIRECTOR OF
Appellant
PUBLIC PROSECUTIONS
and
WOUTER
BASSON
Respondent
Coram
:
Hefer, ACJ,
Scott, Streicher, Mpati, JJA and Nugent, AJA
Heard
:
17
September 2001
Delivered
:
28 September 2001
Summary:
Section 18(1)
of the
Prevention of Organised Crime Act 121 of 1998
– whether retrospective in
effect.
J U D G M E N T
NUGENT, AJA
:
[1] A statute is said to
operate retrospectively if it creates legal consequences for conduct only after
that conduct has occurred.
The decisive question in the present appeal is
whether s 18(1) of the Prevention of Organised Crime Act 121 of 1998 (prior to
the
amendment of the Act by Act 38 of 1999) operates with that effect. If it
does, further questions would arise relating to its constitutional
validity, but
for the reasons that follow those questions need not concern us in this
appeal.
[2] Before turning to the circumstances which gave rise to the appeal
it is convenient to summarise some of the salient features of
the Act. Section
18(1) is the foundation for Chapter 5 of the Act, which is designed to enable a
court to deprive a convicted person
of the proceeds of crime. The section
permits a court which has convicted a person of an offence to make what is
referred to as
a “confiscation order” which has the effect of a
civil judgment. The section reads as follows:
“Whenever a [criminal] defendant is convicted of an offence the court
convicting the defendant may, on the application of the
public prosecutor,
enquire into any benefit which the defendant may have derived from
–
(a) that offence;
(b) any other offence of which the defendant has been convicted at the
same trial;
and
(c) any criminal activity which the court finds to be sufficiently related to
those offences,
and, if the court finds that the defendant has so benefited, the court may, in
addition to any punishment which it may impose in
respect of the offence, make
an order against the defendant for the payment to the State of any amount it
considers appropriate and
the court may make any further orders as it may deem
fit to ensure the effectiveness and fairness of that
order.”
[3] In terms of s 12(3) a person has “benefited from unlawful
activities” (which presumably means that he has derived
a benefit as
contemplated by s 18(1)) if:
“... he or she has at any time, whether before or after the commencement
of this Act, received or retained any proceeds of
unlawful activities.”
[4] The amount for which a confiscation order may be made may not exceed the
lesser of (a) “the value of the defendant’s
proceeds of the offences
or related criminal activities referred to in [subsection 18(1)]” or (b)
the net value of the sum
of the defendant’s property and certain defined
gifts made by the defendant (s 18(2)). Section 19(1) defines the “value
of a defendant’s proceeds of unlawful activities” to be:
“...the sum of the values of the property, services, advantages, benefits
or rewards received, retained or derived by him or
her at any time, whether
before or after the commencement of this Act, in connection with the unlawful
activity carried on by him
or her or any other person.”
[5] Part 3 of Chapter 5 deals with “restraint orders”, which are
designed to ensure that property is preserved so that
it can be realised in
satisfaction of a confiscation order. Section 26(1) authorises the National
Director of Public Prosecutions
to apply to a High Court,
ex parte,
for
an order “prohibiting any person ... from dealing in any manner with any
property to which the order relates.” The
remaining provisions of part 3
of Chapter 5 confer wide powers upon the court as to the terms of any such
restraint order. In particular,
it may appoint a curator bonis to take charge
of the property that has been placed under restraint, order any person to
surrender
the property to the curator bonis, authorize the police to seize the
property, and place restrictions upon encumbering or transferring
immovable
property. It may also make a provisional restraint order having immediate
effect and simultaneously grant a rule
nisi
calling upon the defendant
to show cause why the order should not be made final.
[6] The circumstances in which a restraint order may be made are provided for in
s 25(1) as follows:
“A High Court may exercise the powers conferred on it by section 26(1)
[i.e. the powers to make restraint orders] –
(a) when –
(i) a prosecution for an offence has been instituted against the defendant
concerned;
(ii) either a confiscation order has been made against that defendant or it
appears to the court that there are reasonable grounds
for believing that a
confiscation order may be made against that defendant; and
(iii) the proceedings against that defendant have not been concluded; or
(b) when –
(i) that court is satisfied that a person is to be charged with an offence;
and
(ii) it appears to the court that there are reasonable grounds for believing
that a confiscation order may be made against such
person.”
[7] The present appeal concerns a provisional restraint order that was made by
the High Court at Pretoria on 3 August 1999. At that
time the respondent had
been indicted on numerous charges of fraud and theft. The appellant applied,
ex parte,
for a restraint order to be made in relation to property under
the respondent’s control. The application was supported by affidavits
deposed to by Mr Fouche, formerly employed as a Deputy Attorney-General in the
Office for Serious Economic Offences, who had been
instrumental in investigating
the allegations made against the respondent, and Mr Ackerman, a Deputy Director
of Public Prosecutions,
who had been deputed to undertake the prosecution of the
respondent. (The appellant and a Mr Swanepoel also deposed to affidavits
but
they take the matter no further). What appeared from the affidavits was little
more than a summary of the allegations made
against the respondent in the
indictment and the summary of substantial facts. Those allegations, briefly
stated, were that the respondent,
while he was a member of a top secret military
project of the former South African Defence Force, misappropriated for his own
benefit
some R45 million of the moneys that had been made available for the
project by the State by channeling the moneys to a web of private
companies and
accounts that were under his control. Mr Fouche and Mr Ackerman both said that
they had considered the evidence against
the respondent and believed that there
was a reasonable prospect that he would be convicted and that a confiscation
order would be
made.
[8] The application came before Cassim AJ who granted a provisional restraint
order operating with immediate effect. The order is
lengthy, and its detailed
provisions are not material to the present appeal. It is sufficient to say
that the order incorporated
the following principal features. It prohibited
all persons from dealing with certain specified property, which included the
respondent’s
house in Pretoria, immovable property in Paarl and in
England, rights in various companies situated in this country and abroad, and
moneys held in bank accounts in this country and abroad. A curator bonis was
appointed to assume control of the property, which
was required to be
surrendered to the curator, failing which he was authorized to instruct the
police to seize it. The respondent,
and a certain Mr Viljoen were also directed
to make various disclosures on oath relating to other property interests.
[9] On the return day of the provisional order the respondent opposed its
confirmation. The matter came before Roux J who set aside
the provisional order
with costs on the attorney and client scale. The appellant now appeals against
that order with leave granted
by this Court.
[10] The offences upon which the respondent was indicted (which served as the
basis upon which the restraint order was sought) were
all alleged to have been
committed before the Act came into operation. The court
a quo
held that
any court that might convict the respondent would not be entitled in those
circumstances to make a confiscation order because
s 18(1) does not have
retrospective effect. It followed that a restraint order was also not
permitted, and on those grounds the
provisional order was set aside. The court
a quo
went on to find that a proper case had in any event not been made
out for the grant of a restraint order, and furthermore that the
provisional
order was liable to be set aside for the failure to disclose certain facts to
the court which granted it. In view of
the conclusion I have reached on the
main issue the latter findings are relevant only to the question of costs.
[11] There is a natural resistance to creating legal consequences for conduct
only after the conduct has occurred. As stated by
Justice Scalia, concurring
with the majority in
Kaiser Aluminium and Chemical Corporation et al v
Bonjorno et al
[1990] USSC 50
;
494 US 827
at 855:
“The principle that the legal effect of conduct should ordinarily be
assessed under the law that existed when the conduct took
place has timeless and
universal human appeal. It was recognized by the Greeks ... by the Romans ...
by English common law ... and
by the Code Napoleon. It has long been a solid
foundation of American Law...”
[12] That principle is also recognized by the law of this country in which there
is a strong presumption against the retrospective
operation of a statute:
generally a statute will be construed as operating prospectively only unless the
legislature has clearly
expressed a contrary intention (
Genrec MEI (Pty) Ltd
v Industrial Council for the Iron, Steel, Engineering, Metallurgical Industry
& Others
[1994] ZASCA 143
;
1995 (1) SA 563
(A) at 572E-F). Moreover, a statute that
purports to create an offence (which was not at least an offence in
international law)
or to prescribe a punishment, with retrospective effect, will
conflict with sections 35(3)(l) and (n) respectively of the Constitution
and
might be invalid unless it can be justified in terms of s 36(1).
[13] If the imposition of a confiscation order upon a convicted person
constitutes a punishment as envisaged by s 35(3)(n) of the
Constitution (cf
Welch v United Kingdom
[1995] ECHR 4
;
20 EHRR 247)
we might for that reason alone be
enjoined by s 39(2) to construe s 18(1) of the Act so as to operate only
prospectively, in order
to promote the spirit, purport and objects of the Bill
of Rights. Because the matter can be disposed of on ordinary principles of
construction, however, we are not called upon to decide that question in this
appeal.
[14] In support of the submission that s 18(1) operates with retrospective
effect the appellant relied upon certain remarks that
were made by this Court in
National Director of Public Prosecutions v Carolus &
Others
2000 (1)
SA 1127
(SCA), which concerned the provisions of Chapter 6 of the Act. In
dealing with the question whether those provisions operated retrospectively
Farlam AJA said the following at par 20:
“It is clear from s 12(3) and s 19(1) of the Act, which are both contained
in chap 5, that the provisions of chap 5...are retrospective
in the sense
that, in determining the value of the proceeds of an accused person’s
unlawful activities, the Court is not confined
to those activities which took
place after the coming into operation of the Act
...” [emphasis
added].
[15] Those remarks do not meet the point that arises in the present case. The
fact that events preceding the coming into operation
of the Act are to be taken
into account in determining whether the defendant has “benefited from
unlawful activities”
(s 12(3)), and in valuing the “proceeds of
unlawful activities” (s 19(1)), is not decisive of whether s 18(1)
operates
with the same effect. Those sections allow for benefits received
before the commission of the particular offence to be taken into
account, both
in determining whether a confiscation order should be made, and in determining
the scope of such an order, and are
equally consistent with the section
operating only prospectively as they are with it operating retrospectively. To
the extent that
they are of assistance at all, in my view they indicate a
contrary intention to that which the appellant contends for: the express
reference in those sections (and in the definitions of ‘pattern of
criminal gang activity’ and ‘pattern of racketeering
activity’) to events that preceded the Act coming into operation indicates
that the legislature was alive to the question of
retrospectivity, and the
absence of similar words in 18(1) suggests that the omission was
deliberate.
[16] The only other provision of the Act upon which the appellant relied in
support of a retrospective construction of s 18(1) was
the definition in s
12(1)(iii) of a “defendant”, which means “a person against
whom a prosecution for an offence
has been instituted ...” It was
submitted that the definition includes a person against whom a prosecution had
been instituted
at the time the Act came into operation, from which it follows
that s 18(1) extends to offences that had already been committed.
That
submission begs the question whether the definition does indeed include such a
person. It assumes that s 18(1) operates retrospectively,
for if it does not,
then the definition of a “defendant”
ipso facto
excludes a
person against whom a prosecution was pending at the time the Act came into
effect. To place reliance upon that definition
in an attempt to resolve the
present problem seems to me to commit one to a process of circular reasoning.
What is more important,
in my view, is to ask whether the legislature would have
resorted to such an oblique method to give retrospective effect to s 18(1)
when
express words (as in s 12(3) and s 19(1)) would have sufficed. In my view it
clearly would not have done so.
[17] The sections that were referred to by the appellant in support of the
construction that it contended for do not constitute the
clear expression of
legislative intent that is required before a court will give retrospective
effect to a statute. The section
must thus be construed as operating only
prospectively, with the result that a confiscation order may not be imposed in
consequence
of a conviction for an offence committed before the Act came into
effect. That being so, it could not be said in the present case
that there were
grounds for believing that a confiscation order might be made and a restraint
order ought to have been refused.
On those grounds alone the appeal must fail.
[18] Two matters remain that are relevant to the question of costs. The learned
judge granted a punitive order, both because he
considered the application to be
hopeless, and as an expression of disapproval at certain conduct relating to the
circumstances in
which the application was brought.
[19] Section 25(1) of the Act does not permit a court to grant a restraint order
upon nothing more than a summary of the allegations
made against the defendant
concerned, and an expression of opinion by members of the appellant’s
staff that a confiscation
order will be granted (which is all that was before
the court in the present case). The section requires that it should appear to
the court itself, not merely to the appellant or his staff, that there are
“reasonable grounds” for such a belief, which
requires at least that
the nature and tenor of the available evidence needs to be disclosed. Precisely
what evidence is required,
and the form that it should take, is not necessary,
to decide in the present case, because the punitive costs order was in any event
justified on other grounds.
[20] On the day before the application was brought the respondent’s legal
advisers, who had become aware that a restraint order
might be sought,
telephoned Mr Ackerman and told him that such an order was unnecessary because
the respondent laid no claim to any
of the property concerned (other than his
house, two motor vehicles, and personal belongings) which he was willing to
place under
the control of the State. As for the house, Mr Ackerman was told
that it was already under the control of the State as security
for the
respondent’s bail. Mr Ackerman’s response was that they should
speak to Mr d’Oliviera, the Deputy National
Director of Public
Prosecutions, who was dealing with the matter. The respondent’s legal
advisers attempted to telephone Mr
d’Oliviera on his cell phone the
following morning but the phone had been switched off the previous night and
remained off
for the next two days. On the morning of 3 August, before the
application was brought, Mr Ackerman spoke to Mr d’Oliviera,
and told him
that he had learnt the previous night that the respondent’s legal
representatives were aware of the pending application.
It seems that he did
not disclose the offer that had been made, because that was not disclosed to the
court when the application
was moved by Mr d’Oliveira, who said that he
was unaware of it. Sometime in the course of that morning Mr Ackerman also
deposed
to an affidavit in support of the application, in which he made no
mention of the offer that had been conveyed to him the previous
day, but
expressed the opinion that it was “necessary and in the interests of
justice” that a restraint order should
be made.
[21] Where an order is sought
ex parte
it is well established that the
utmost good faith must be observed. All material facts must be disclosed which
might influence a
court in coming to its decision, and the withholding or
suppression of material facts, by itself, entitles a court to set aside an
order, even if the non-disclosure or suppression was not wilful or
mala
fide
(
Schlesinger v Schlesinger
1979 (4) SA 342
(W) at 348E –
349B). The fact that the respondent had volunteered to place all the affected
property under the control of
the State was clearly material. Why it was not
disclosed to Mr d’Oliveira, and then suppressed in the affidavit deposed
to
filed by Mr Ackerman in support of the application, has not been explained.
It was submitted on behalf of the appellant that Mr
Ackerman might have
considered that the offer was made without prejudice. There is no suggestion of
that in the evidence. In my
view the affidavit deposed to by Mr Ackerman was
materially misleading. Although the appellant himself cannot be said to have
been
at fault, he must perforce bear the consequence of the conduct of the
officials who are entrusted to litigate on his
behalf.
[22] The question of costs was a matter for the discretion of the court a quo
and this Court will not lightly interfere in the exercise
of that discretion.
In my view there were ample grounds in the present case for the court
a
quo
to have exercised its discretion in the way in which it
did.
[23] The appeal is dismissed with costs which are to include the costs
occasioned by the employment of two counsel.
_____________
R W
NUGENT
Acting Judge of Appeal
Hefer, ACJ)
Scott, JA)
Streicher, JA)
Mpati, JA) concur