THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 043/04
In the matter between:
THE NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS Appellant
and
ANDREW LIONEL PHILLIPS 1st Respondent
LADDIES LARK (PTY) LTD 2nd Respondent
JANVEST CLOSE CORPORATION 3rd Respondent
APVEST CLOSE CORPORATION 4th Respondent
MAYVEST CLOSE CORPORATION 5th Respondent
JUNVEST CLOSE CORPORATION 6th Respondent
AUGVEST CLOSE CORPORATION 7th Respondent
DECVEST CLOSE CORPORATION 8th Respondent
PORTION 1 OF 247 EDENBURG CC 9th Respondent
SUSHIMI INV CC 10th Respondent
SWINGING TRADING TWISTER CC 11th Respondent
FEBVEST CC 12th Respondent
D MORNINGSIDE INVESTMENTS
(PTY) LTD 13th Respondent
STEPHEN WERNER CC 14th Respondent
MOONLITE IMPORT & EXPORT CC 15th Respondent
DOC PROPERTY INVESTMENTS CC 16th Respondent
_____________________________________________________
Coram : MPATI AP, SCOTT, NUGENT, FARLAM
J JA et JAFTA AJA
Date of Hearing : 11 NOVEMBER 2004
Date of delivery : 30 NOVEMBER 2004
Summary: Restraint order in terms of s 2 6(1) of Act 121 of 19 98 – court
granting it has no inherent jurisdiction to rescind or vary the orde r – power to
do so limited to the grounds prescribed in the Act.
___________________________________________________
JUDGMENT
2
SCOTT JA:
[1] On 22 December 2000 the appella nt, to whom I shall refer as
the NDPP, sought and obtained a provi sional restraint order in the
form of a rule nisi in the Johannesburg High Court against the first
to the 15 th respondents in terms of s 26 of the Prevention of
Organised Crime Act 121 of 1998 (‘the Act’). The order was made
final, despite opposition, on 30 July 2001. The judgment of Heher J
is reported: National Director of Public Prosecutions v Phillips and
others 2002 (4) SA 60 (W). Broadly stated, a restraint order serves
to prohibit any person from dealing wi th the assets of a suspected
offender with the object of ensuring that in the event of the
suspected offender subsequently being convicted those assets will
be available to satisfy a confiscation order which a court is
empowered to make in terms of s 18 of the Act. An appeal to this
court was dismissed on 4 Sept ember 2003. The judgment is
reported as Phillips and others v National Director of Public
Prosecutions 2003 (6) SA 447 (SCA). On 19 June 2003, and prior
to the hearing of the appeal, the 15 respondents plus another, the
16th respondent in this appeal, commenced proceedings in the
Johannesburg High Court for the resciss ion of the restraint order.
The NDPP and the curator bonis who had been appointed in terms
3
of s 28(1)(a) of the Act, were ci ted as the respondents. Only the
NDPP opposed. The application was heard by Louw AJ, who on
12 December 2003 granted an order rescinding the restraint order.
The present appeal against that order is with the leave of the court
a quo.
[2] In order better to understand t he issues and the context in
which they arise it is convenient to set out briefly the events
preceding the rescission application. As I shall show, these include
what may fairly be described as a spate of applications directed
mainly at the curator bonis. Some resulted in orders, others were
simply left unresolved.
[3] Until 8 January 2001 the fi rst respondent (‘Phillips’) owned
and openly operated a business know n as the Ranch. It involved
providing a venue and facilities for paying male customers to have
sexual relations with female prostitutes who were not employees.
The business was conducted on premises at 54 Autumn Street,
Rivonia, (‘the Autumn Street property’) owned by the 16
th
respondent. Another business, know n as the Titty Twister, was
conducted by the 13 th respondent on the same premises. The
business involved the production of strip tease shows and was
said to operate in tandem with t he business of the Ranch. Phillips
4
is either the sole shareholder or sole member of the second to the
16th respondents.
[4] On 4 February 2000, following a raid two days earlier, the
NDPP applied for and was granted a preservation order in terms of
s 38 of the Act prohibiting any person from dealing with the
Autumn Street property. A preserva tion order is a prelude to a
forfeiture order. The latter is an order which a High Court is
empowered to make in terms of s 48 of the Act. The forfeiture of
property under these provisions, unlike a confiscation order in
terms of s 18, is not dependent upo n a successful prosecution, but
ultimately upon it being established by the NDPP on a balance of
probabilities that the property in quest ion ‘is an instrumentality of
an offence referred to in Schedule 1’ to the Act or ‘is the proceeds
of unlawful activities’. (For an anal ysis of the provisions dealing
with preservation and forfeiture orders see NDPP v R O Cook
Properties (Pty) Ltd ; NDPP v 37 Gillespie Stre et Durban (Pty) Ltd
and another and NDPP v Seevnarayan 2004 (2) SACR 208
(SCA).) Proceedings for a forfeitu re order were subsequently
commenced but have not been fina lised. Following the granting of
the preservation order on 4 February 2000, Phillips and the 13
th
respondent continued to conduct their respective businesses on
5
the Autumn Street property to the knowledge of the curator bonis
who had been appointed in terms of s 42 of the Act.
[5] Charges were subsequently la id against Phillips both under
the Sexual Offences Act 23 of 1957 for keeping a brothel and
under the Aliens Control Act 96 of 1991 for unlawfully employing
foreign women. The trial has commenced but has since been
postponed.
[6] The restraint order grant ed on 22 December 2000 extended
not only to the property specified in a schedule of assets attached
to the order, but, subject to certain exceptions such as clothing etc,
to ‘all other property held by [Phillips], whether in his name or not’.
The first to the 15th respondents were furthermore directed in terms
of s 28(1)(b) to surrender to the curator bonis any of the property
subject to the order which may have been in their possession or
under their control. The curator bonis, in turn, was authorised and
required to take possession or control of the property, to take care
of it and to administer it. Acti ng in terms of the order, he took
control inter alia of the businesses which were being conducted on
the Autumn Street property and on 8 January 2001, not
unexpectedly, caused them to ce ase operating. The consequence,
of course, was that the property ceased to generate an income.
6
[7] I mention in passing that the curator bonis previously
appointed in terms of s 42 appears to have played no further role
in relation to the Autumn Street property. The curator bonis
appointed in terms of s 28(1) simply took this property into his
possession and administered it toge ther with the other property to
which his appointment related. No thing turns on this and further
reference in this judgment to the curator bonis is to be understood
as a reference to the curator appointed in terms of s 28(1).
[8] In the absence of available funds, the curator bonis in the
months that followed failed to pay various charges accruing on the
immovable properties owned by the ninth, 13 th, 14 th and 16 th
respondents. These included municipal rates as well as other
charges such as those for electricity, water, sewerage removal and
the like. At the instance of these respondents and Phillips, an order
was granted by Grobler AJ on 23 August 2002 declaring the
curator bonis to be responsible for the payment of all such arrear
and future charges. The latter sough t to comply with the order by
using the funds standing to the c redit of Phillips and the second
respondent at various banks. Ph illips and the second respondent
responded by launching an application for an order directing him to
restore the credit balances in the accounts in question.
7
[9] In the meantime, the Autu mn Street property, owned by the
16th respondent, and immovable p roperty situated at 26 Gary
Avenue, Morningside, owned by the 13 th respondent, had been
damaged by vandals. This prompt ed two further and separate
applications to compel the curator bonis to restore the properties to
the condition in which they had been on 22 December 2000. An
order in these terms was granted by Masipa J on 21 November
2002.
[10] In response, no doubt, to t he situation in which he found
himself, the curator bonis took steps to let the immovable
properties owned by the respo ndents in order to generate an
income and so comply with the orders against him. This resulted in
an urgent application interdicting him from doing so pending yet
another application to have him removed as curator bonis. The
interdict was granted by De Jager AJ on 6 March 2003 on the
ground that the curator was not authorised to let the properties.
The application to have him removed as curator bonis appears
never to have been finalised.
[11] In the event, the curator bonis failed to comply with the order
granted on 23 August 2002 declaring him to be responsible for
payment of arrear and future charges on the properties. Contempt
proceedings followed but these were dismissed on 19 March 2003
8
by De Jager AJ on th e grounds that the curator bonis had no
authority to generate funds and th at he could not be guilty of
contempt ‘for not doing what is not possible to be done’. Contempt
proceedings were also instituted ari sing from the c urator’s failure
to comply with the ‘restoration’ order granted by Masipa J on 21
November 2002. Answering affidavi ts were delivered on 1 April
2003 but the application appears not to have been pursued,
presumably because of the fa te of the earlier contempt
proceedings.
[12] The next step appears to have been the application for the
rescission of the restraint order which, as I have said, was
launched on 19 June 2003. Before co nsidering the basis on which
the respondents (applicants in the court below) claimed the relief
they sought, it is necessary to refer briefly to a subsequent event.
After the hearing and shortly before judgment was due to be
delivered the NDPP sought and was granted leave to file a
supplementary affidavit. Attached to it was a report by the curator
bonis in which he explained that on 17 November 2003 he had
succeeded in concluding an agreement with a bank in terms of
which the latter had made available a credit facility of R10 m to
cover the costs of the former in the performance of his duties as
curator bonis. In an answering affidavit Phillips argued that the
9
amount of R10 m was inadequate and pointed to various other
difficulties which, he said, would confront the curator in the event
of the latter attempting to rectif y what had occurred in the past. In
view of the conclusion to which I have come it is unnecessary to
consider these issues. It is also unnecessary for the purpose of
this judgment to express a view as to the correctness or otherwise
of the various orders granted against the curator bonis referred to
in the preceding paragraphs and I deliberately refrain from doing
so.
[13] The respondents did not seek to have the restraint order
rescinded on one of the grounds provi ded for in the Act, but ‘in the
exercise of this court’s inherent jurisdiction to protect and regulate
its own process, and to develop the common law, taking into
account the interests of justice’ . It was contended that in the
exercise of that discretion the re scission order should be granted
because it had become impossible for the curator bonis to perform
his duties under the restraint order and that the effect of the
restraint order was directly cont rary to its clear purpose. The
question that arises and one which became the primary issue both
in this court and the court below , is whether a restraint order can
be rescinded by the court that granted it in the exercise of its
inherent jurisdiction and on some ground other than one provided
10
for in the Act. To resolve the issue it is necessary to refer in some
detail not only to the provisions in the Act relating to the rescission
of a restraint order but also to those concerning the granting of
restraint orders and the appointment of a curator bonis.
[14] The necessary jurisdictional facts for the exercise of the
discretionary power afforded to a High Court to grant a restraint
order are set out in s 25(1). The relevant part reads:
‘A High Court may exercise the powers conferred on it by section 26(1) –
(a) . . .
(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 or der may be made against such
person.’
Section 25(2), which is one of the provisions in the Act dealing
with the rescission of a restraint order, provides:
‘Where the High Court has made a restraint order under subsection (1)(b),
that court shall rescind the restraint order if the relevant person is not
charged within such period as the court may consider reasonable.’
Section 26 empowers a High Court to grant a restraint order.
Subsection (1) reads –
11
‘The National Director may by way of an ex parte application apply to a
competent High Court for an order prohi biting any person, subject to such
conditions and exceptions as may be specified in the order, from dealing in
any manner with any property to which the order relates.
Section 26(2), in turn, provides that a restraint order may be
made in respect of property of the kind specified therein.
Subsections (3) and (7) are not relevant for present purposes.
Section 26(8) deals with the execut ion of a restraint order. It
provides –
‘A High Court making a restraint order shall at the same time make an
order authorising the seizure of all movable property concerned by a police
official, and any other ancillary order s that the court considers appropriate
for the proper, fair and effective execution of the order.’
Section 26(9), in turn makes prov ision for the manner in which
seized movable property is to be dealt with. It reads:
‘Property seized under subsection (8 ) shall be dealt with in accordance
with the directions of the High Cour t which made the relevant restraint
order.’
Section 26(10)(a) prescribes the circumstances in which a High
Court which made the restraint order may vary or rescind that
order. In terms of s 26(10)(b) the court is obliged to rescind the
order when the proceedings against the defendant are
concluded. Section 26(10) reads:
12
‘(10) A High Court which made a restraint order –
(a) may on application by a person a ffected by that order vary or
rescind the restraint order or an or der authorising the seizure of
the property concerned or other ancillary order if it is satisfied –
(i) that the operation of t he order concerned will deprive the
applicant of the means to provide for his or her
reasonable living expenses and cause undue hardship for
the applicant; and
(ii) that the hardship that the applicant will suffer as a result
of the order outweighs the risk that the property
concerned may be destroy ed, lost, damaged, concealed
or transferred; and
(b) shall rescind the restraint order when the proceedings against
the defendant concer ned are concluded.’
Finally it is necessary to quot e s 28 dealing with the appointment
of a curator bonis, which I do in its entirety.
‘(1) Where a High Cour t has made a restraint order, that court may at any
time –
(a) appoint a curator bonis to do, subject to th e directions of that
court, any one or more of the following on behalf of the person
against whom the restraint order has been made, namely –
(i) to perform any particular act in respect of any of or all the
property to which the restraint order relates;
(ii) to take care of the said property;
(iii) to administer the said property; and
13
(iv) where the said property is a business or undertaking, to
carry on, with due regar d to any law which may be
applicable, the business or undertaking;
(b) order the person against wh om the restraint order has been
made to surrender forthwith, or within such period as that court
may determine, any property in respect of which a curator bonis
has been appointed under paragraph (a), into the custody of that
curator bonis .
(2) Any person affected by an order contemplated in subsection (1)(b)
may at any time apply –
(a) for the variation or rescission of the order; or
(b) for the variation of the terms of the appointment of the curator
bonis concerned or for the discharge of that curator bonis.
(3) The High Court which made an order contemplated in subsection (1)(b)
–
(a) may at any time –
(i) vary or rescind the order; or
(ii) vary the terms of the appointment of the curator bonis
concerned or discharge that curator bonis;
(b) shall rescind the or der and discharge the curator bonis
concerned if the relevant restraint order is rescinded;
(c) may make such order relating to the fees and expenditure of the
curator bonis as it deems fit, including an order for the payment
of the fees of the curator bonis –
14
(i) from the confiscated proc eeds if a confiscation order is
made; or
(ii) by the State if no confiscation order is made.’
[15] It is appropriate at this stage to make certain general
observations regarding the provisions quoted above. As far as s 28
is concerned, it is apparent that once an order is made in terms of
s 28(1)(b) directing property to be surrendered to the curator bonis,
a High Court which made the order may in terms of s 28(3)(a) vary
or rescind that order or it may discharge the curator bonis or vary
the terms of his or her appointm ent. The circumstances in which
the power to vary or rescind may be exercised are not
circumscribed. Any good or suffici ent cause would suffice and a
court would be entitled to have regard to ‘a num ber of disparate
and incommensurable features’ wh en exercising the power so
afforded to it. (Knox D’Arcy Ltd and others v Jamieson and others
1996 (4) SA 348 (A) at 361H-J.) In this respect the provisions of s
28(3)(a) stand in stark contrast to those of s 26(10) dealing with
the court’s power to vary or rescind a restraint order. On the other
hand, in the absence of an order in terms of s 28(1)(b), the impact
of a restraint order, certainly in the case of immovable property,
would in most cases be minimal. There would seem to be no
reason in such circumstances why a defendant could not live on
15
the property, or continue to receive rent from it if let, or run a
business on the property. Such activi ties would not involve dealing
in the property within the meaning of s 26(1).
[16] As previously mentioned, the first to the 15 th respondents
were in terms of s 28(1)(b) di rected to surrender to the curator
bonis any property in their possession or control which was subject
to the restraint order. In the result the High Court granting the
order was empowered on good or sufficient cause shown to vary
or rescind at any stage the order in terms of s 28(1)(b) or to vary
or rescind any of the terms of the curator’s appointment. Good or
sufficient cause for varying the t erms of the curator’s appointment
would typically include the need to ameliorate or resolve some
administrative difficulty. If the curator bonis had no authority in
terms of his appointment to let any one or more of the properties,
as was held by De Jager AJ to be the case, the respondents or the
curator bonis would have been free to approach the court for a
variation of the terms of his appoin tment so as to authorise him to
do so.
[17] The court a quo, in coming to the conclusion it did, found that
on a proper construction of s 26 of the Act it was free in the
exercise of its inherent jurisdicti on to rescind or vary a restraint
order on good cause shown. It reas oned that a restraint order,
16
unlike a confiscation order in terms of s 18, was interlocutory, that
it was akin to and essentially the same as the interim interdict at
common law sometimes referred to as an ‘anti-dissipation order’
which it regarded as susceptible to variation or rescission and that
the Act did not manifest a clear intention to exclude the common
law rule that such an order can be rescinded or varied on good
cause shown. It concluded that the object of s 26(10)(a) was no
more than to extend the right to apply for such a rescission or
variation to any person affected by the order in the manner
described in the section. In effect, therefore, so it held, s 26(10) is
a ‘locus standi providing provision’ and not a provision which limits
the court’s common law powers in respect of persons who have
locus standi at common law.
[18] The immediate difficulty one has with this conclusion is that it
is inconsistent with the construction placed on s 26 by this court
when dismissing the appeal against the granting of the restraint
order. (The reference is given in para [1] above.) In that appeal
(‘the restraint appeal’) the question arose whether a restraint order
was appealable. Howie P, who delivered the judgment of the court,
accepted that a restraint order wa s only of interim operation ‘and
that, like interim interdicts and a ttachment orders pe nding trial, it
17
has no definitive or dispositiv e effect as envisaged in [ Zweni v
Minister of Law and Order 1993 (1) SA 523 (A)]’ (para 20).
Recognising that interlocutory orders which are said to be ‘purely
interlocutory’ (see eg Bell v Bell 1908 TS 887 at 891), may be
varied or rescinded by the court that granted them and are
therefore unappealable, the learned president identified the ‘crucial
question’ to be ‘whether a restraint order has final effect because it
is unalterable by the court that grants it’ (para 20). In answering
the question so posed, the president contrasted a restraint order
with an order made in terms of s 28(1) of the Act. At para 21 he
said:
‘[21] Orders respectively appointing curators, requiring surrender of property
and burdening title deeds are all resci ndable at any time. Presumably the
unstated requirement is that suffici ent cause must be shown but otherwise,
unlike the case of s 26(10)(a), no limits are placed on their susceptibility to
rescission. And in the case of a common- law interim interdict or attachment
pendente lite there is no reason why, for sufficient cause, they would not,
generally, be open to variation, if not rescission.’
Thereafter, and having previous ly referred to the limited
circumstances in which a res traint order may be rescinded or
varied as prescribed by s 26 (10)(a), the lear ned president
concluded: (para 22)
18
‘Absent the requirements for variation or rescission laid down in s 26(10)(a)
(and leaving aside the present ly irrelevant case of an order obtained by fraud
or in error) a restraint order is not capable of being changed.’
He accordingly held that the order was final in the sense required
for appealability and that for this and other reasons which need not
be considered the restraint order was appealable.
[19] In his judgment, Louw AJ makes no more than a passing
reference to the judgment of this court in the restraint appeal and
appears not to have appreciated that the finding of the court that a
restraint order was unalte rable, save as provided for in the Act,
was part of the ratio decidendi and therefore binding upon him.
Nonetheless, I consider it desirable to comment on the
construction placed on s 26(10)(a) by the court a quo (which was
not advanced in the restraint appeal); namely that the section is no
more than ‘a locus standi providing provision’. As I understand the
learned judge’s reasoning, it is this: A defendant, ie a person
charged or to be charged, who wishes to have a restraint order
varied or rescinded need establis h no more than the existence of
good or sufficient cause, as the expression is understood at
common law, but anyone other than the defendant would be
confined to the grounds set forth in s 26(10)(a). I must immediately
confess to finding this construc tion contrived, to say the least.
19
However, its fallacy lies in the fact that it is premised on the
assumption that a court granting a restraint order has inherent
jurisdiction at common law to vary or rescind the order until
deprived of that jurisdiction, w hether expressly or by necessary
implication. A restraint order as contemplated in s 26 is not one
that may be granted at common law. A High Court is empowered
by the Act to grant the order just as it is empowered by the Act to
vary or rescind it. If no provision wa s made in the Act for the order
to be varied or rescinded at the instance of a defendant, as is
apparently suggested, the order would stand until set aside in
terms of s 25(2) or s 26(10)(b). In my judgment, s 26(10)(a) is not
capable of the construction the court a quo would place upon it;
the section prescribes the circum stances in which a High Court
may vary or rescind a restraint orde r, whether at the instance of
the defendant or any other ‘person affected’ by it.
[20] In this court counsel for the respondents submitted that even
if in terms of the Act the circumstances in which a court may
rescind a restraint order were limit ed to those prescribed in s
26(10)(a), a court, nonetheless, ough t to be able to rescind the
order in the circumstances which prevailed in the present case. He
argued that just as a court could always set aside an order on the
grounds of fraud or error as observed by Howie P in a passage
20
quoted in para [18] above, so would a court be able to set aside a
restraint order where its implementation had become impossible.
[21] It is a well-established principle that a court may always set
aside its own final judgment in certain limited circumstances.
These include situations where the judgment is founded upon
fraud, common mistake an d the doctrine of instrumentum noviter
repertum (the coming to light of as yet unknown documents). See
generally Herbstein & Van Winsen The Civil Practice of The
Supreme Court of SA 4ed by Van Winsen, Cilliers & Loots, edited
by Dendy, at 690-698. The principle, however, has no application
to the circumstances relied upon by counsel. As observed by
Trengove AJA in Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A)
at 939D-F:
‘. . . I do not consider it necessary to enter upon a disc ussion of the grounds
upon which the rescission of a judgm ent may be sought at common law
because, whatever the grounds may be, it is abundantly clear that at common
law any cause of action, which is relied on as a ground for setting aside a final
judgment, must have existed at the date of the final judgment.’
[22] The contention that the restraint order has become
impossible to implement is in any event based on a misconception.
As indicated above, there is a clear distinction between the
restraint order made in terms of s 26(1), on the one hand, and an
21
order in terms of s 28(1) on the other. The form er has the effect of
prohibiting any person, subject to certain conditions and
exceptions, from dealing in any manner with property made
subject to the order. Such a prohibition may, no doubt, in particular
circumstances result in undue hardship. Indeed, the provisions of
s 26(10)(a) are aimed at such a situation. But it is difficult to
conceive a situation in which a prohibition is impossible to
implement. Section 28(1), on the other hand makes provision for
an order appointing a curator bonis, directing the surrender of the
property in question to him or her and determining the latter’s
powers in relation to that property. As previously observed, once
an order is made in terms of s 28(1)(b) any order in terms of s
28(1) may be varied or rescinded on good or sufficient cause
shown.
[23] The facts of the present case reveal a woeful lack of co-
operation between the respondents and the curator bonis. The root
of all the problems highlighted by the respondents and giving rise
to the flood of court applications lay in the absence of funds
available to the curator bonis to care for and pay the imposts in
respect of the immovable properties in question. But these
difficulties arose, not from the restraint order, but from the absence
of a power afforded to the curator bonis in terms of the order made
22
under s 28(1)(a) to generat e the necessary funds from the use of
the properties, or possibly the la tter’s failure properly to exercise
the powers already granted. As I have said, the obvious solution
appears to have been to grant the curator bonis the power to let
one or more of the properties.
[24] It is true, of course, that in the absence of a restraint order
there could be no order in terms of s 28(1)(b). But it does not
follow that the implementation of the restraint order has been
rendered impossible by reason of the failure of the curator bonis to
exercise powers which he or she has, or the failure of the curator
bonis to be afforded power s necessary properly to administer the
property.
[25] To sum up, a High Court wh ich grants a restraint order in
terms of s 26(1) of the Act has no inherent jurisdiction to rescind
the order. Subject to one exc eption its power to do so is
circumscribed by the Act and is limit ed to the grounds set forth in s
25(2) and s 26(10). The exception is the existence of one or other
of the recognised common law grounds for rescission which must
have existed when the restraint order was granted.
[26] The respondents’ application for rescission of the restraint
order was founded on none of t hese grounds and the appeal must
accordingly succeed.
23
[27] The following order is made:
(a) The appeal is upheld with costs, including the costs of
two counsel.
(b) The order of the court a quo is set aside and the
following is substituted:
‘The application is dismissed with costs, including the
costs of two counsel’.
__________________
D G SCOTT
J U D G E O F A P P E A L
CONCUR:
Mpati AP
Nugent JA
Farlam JA
Jafta AJA