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[2019] ZASCA 120
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Malherbe v S (829/18) [2019] ZASCA 120 (25 September 2019)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable/ Not Reportable
Case
No: 829/18
In
the matter between:
DAWID
JOHANNES
MALHERBE APPELLANT
and
THE
STATE RESPONDENT
Neutral
citation:
Malherbe v The State
(829/18) ZASCA 120 (25 September 2019)
Coram:
Tshiqi, Mbha, Van Der Merwe and Mocumie
JJA and Weiner AJA
Heard:
16 August 2019
Delivered:
25 September 2019
Summary:
Criminal Procedure – appeal against refusal by the high
court to grant leave to it to appeal on petition – issue is
whether the appellant has reasonable prospects of success on appeal
and not the merits of the appeal – reasonable prospects
of
success present if a sound, rational, basis exists for the conclusion
that the appellant has prospects of success on appeal.
ORDER
On
appeal from:
Western Cape Division, Cape Town (Ndita J and Kose
AJ sitting as court of appeal):
1 The appeal is upheld.
2 The order of the high court
refusing the appellant’s petition for leave to appeal against
his convictions and sentence,
in terms of
s 309C
of the
Criminal
Procedure Act 51 of 1977
, is set aside and replaced with the
following:
‘
The
applicant is granted leave to appeal against his convictions and
sentence to the Western Cape Division, Cape Town.’
JUDGMENT
Mocumie
JA (Tshiqi, Mbha, Van der Merwe JJA and Weiner AJA concurring):
[1]
This is an appeal against the refusal by the Western Cape Division,
Cape Town, of the appellant’s application for leave
to appeal
to that court against the convictions of fraud and money laundering,
as well as the sentence imposed in the Bellville
Regional court,
sitting as a Specialised Commercial Crime Court (the regional court).
The appellant was charged in the regional
court with several counts
of fraud, contravention of the Public Finance Management Act 1 of
1997 and money laundering in contravention
of s 4 read with ss 1 and
8 of the Prevention of Organised Crimes Act 21 of 1998. He was
convicted of only one count of fraud on
the basis that he made
misrepresentations with the intent to defraud, which
misrepresentation resulted in Eskom’s prejudice
in the amount
of over R10 million, in loss of profits. He was also convicted of
money laundering in respect of the proceeds of
the fraud. In imposing
sentence, the regional court found that compelling and substantial
circumstances existed which justified
the imposition of a lesser
sentence under the Criminal Law Amendment Act 105 of 1997 (Minimum
Sentences Act). He was sentenced
to 10 years’ imprisonment on
each count. Five years’ imprisonment in respect of count 2 was
ordered to run concurrently
with the sentence imposed in respect of
count 1. The appellant was therefore sentenced to an effective
fifteen years’ imprisonment.
[2]
The appellant’s application, to the regional court, for leave
to appeal to the high court against both convictions and
sentence in
terms of s 309B of the Criminal Procedure Act 51 of 1977 (the CPA)
was refused. Consequently, the appellant petitioned
the Judge
President of the Western Cape Division in terms of s 309C of the
CPA, which application suffered the same fate.
Thereafter the
appellant sought special leave to appeal to this court in terms of s
16(1)
(b)
of the
Superior Courts Act 10 of 2013
against the
refusal of leave to appeal. Special leave was granted on 26 June 2018
by two judges of this court.
[3]
In
S v Khoasasa
,
[1]
almost sixteen years ago, this court, held that a refusal of leave to
appeal on petition, in terms of
s 309C
of the CPA, by two judges of a
high court, is ‘a judgment or order’ or a ‘ruling’
as contemplated in
s 20(1)
and s 21(1) of the Supreme Court Act 59 of
1959. A petition for leave to appeal to the high court is in essence
an appeal against
the refusal of leave to appeal by the court of
first instance, the magistrate court. The refusal of leave to appeal
by the high
court is only appealable to this court with the necessary
special leave having been granted. A number of judgments from this
court
have subsequently confirmed, applied and endorsed the reasoning
in
Khoasasa
.
[2]
[4]
In a matter such as this, this court has to consider whether leave to
appeal to the high court against the convictions and sentence
imposed
by the regional court should have been granted. The test is
straightforward namely, whether there are reasonable prospects
of
success in the envisaged appeal against the conviction and sentence,
rather than whether or not the appeal ought to succeed.
[3]
When this court grants leave to appeal, it should be careful not to
influence the outcome of the appeal, and for this reason, it
is
curtailed in dealing with the merits to the limited
extent necessary to explain its reasoning for granting
leave to
appeal.
[4]
[5]
Briefly stated, the background of the matter is as follows. During
2002, the appellant was a managing director (MD) at Eskom
which
seconded him to serve as the MD of PN Energy Services (Pty) Ltd
(PNES). At the time, PNES was a joint venture company in
which Eskom
held shares. PNES provided electricity services to the Khayelitsha
area in Cape Town.
During 2007 PNES became wholly
owned by Eskom. The appellant also served on the board of directors
of PNES. The other directors
were Mr Machinjike, the chairperson, and
Mr Sebola. Mr Machinjike testified for the prosecution. Mr Sebola was
a co-accused of
the appellant, but was discharged after the close of
the state case and therefore did not testify. Both Mr Machinjike and
Mr Sebola
were also employees of Eskom.
[6]
During January 2009 Eskom decided to ‘decorporatise’
PNES. It was also decided that during the process of integrating
the
business of PNES into Eskom, the core services and non-core services
of PNES would in terms of two separate contracts be outsourced
to a
third party. On
10 December 2008, the board of
PNES held a meeting. The idea was mooted by the appellant that a
company, in which he had an interest,
would be able to perform the
core and non-core services required during the integration period.
On 14 January 2009, the board
of PNES held a further meeting and
considered amongst other items on the agenda whether the two
contracts should be awarded to
Energy Utility Services (Pty) Ltd
(EUS). The appellant declared that he was a significant shareholder
in EUS and recused himself
from the deliberations of this item on the
agenda. The board resolved to award both contracts to EUS and both
contracts were signed
on the same day. The execution of these
contracts, during the period from 1 February 2009 to 11 February
2010, resulted in a profit
of approximately R10,2 million to EUS.
[7]
The appellant acquired EUS on 3 December 2008. On
10 December 2008 and 14 January 2009, the appellant was the 100%
shareholder and
sole director of EUS. Save for the period from 21
October 2009 to 21 July 2010, when an employee share trust held 5 per
cent thereof,
the shares in EUS were at all relevant times held
either by the appellant or by a company of which he was the sole
shareholder.
[8]
The regional court found that all the elements of the offences in
question had been proven to justify the convictions. Whilst
the
application for leave to appeal is against all the findings of the
regional court, I will, for the purposes of this application,
only
refer to the main area of concern that occupied the attention of this
court during the hearing of the appeal. The debate centred
around
whether
the appellant misrepresented the BEE
status of EUS to the other members of the PNES board.
[9]
On this crucial issue the regional court and the high court found
that the misrepresentation had been established by the evidence
of Mr
Machinjike.
However, it is clear that during cross
examination, Mr Machinjike
contradicted his
evidence-in-chief in certain respects on this issue. It is therefore
necessary to consider whether these contradictions
are material and
whether they affected his credibility. A firm of attorneys
representing both PNES and Eskom, Cliffe Dekker Hofmeyr
Attorneys,
was requested to review the process leading to the appointment of EUS
in respect of the two contracts in issue. It was
common cause that Mr
Jeftha from Cliffe Dekker Hofmeyr Attorneys was given all the
information about EUS by the appellant. Prior
to the review process,
in a letter dated 5 January 2009 which was placed before the Board,
Mr Jeftha, who drafted the memorandum
attached to this letter stated
that EUS was already BEE compliant. When Mr Machinjike was cross
examined about this, he gave a
different version which may reasonably
be regarded as tantamount to a denial of this version. He conceded
that he was not misled
by the appellant, and that he was aware that
the BEE shareholding involved a lengthy process, which could not
proceed until the
contracts were concluded. In the result, I conclude
that another court may find that the state did not prove the guilt of
the appellant
beyond a reasonable doubt on both counts, in particular
on the question whether the appellant made the alleged
misrepresentation
with the necessary intention to commit fraud.
[10]
With regards to sentence, although the regional court found that
there were substantial and compelling circumstances that justified
a
deviation from the prescribed minimum sentence, it imposed a sentence
that in effect does not reflect such a deviation. For this
reason, I
find that there are
reasonable prospects of
success on appeal against sentence as well.
[11]
In the result, the following order is granted:
1 The appeal is upheld.
2 The order of the high court
refusing the appellant’s petition for leave to appeal against
his convictions and sentence,
in terms of
s 309C
of the
Criminal
Procedure Act 51 of 1977
, is set aside and replaced with the
following:
‘
The
applicant is granted leave to appeal against his convictions and
sentence to the Western Cape Division, Cape Town.’
_______________
B C Mocumie
Judge
of Appeal
APPEARANCES:
For
Appellant: C Webster SC (with him R Liddel)
Instructed
by: Keith Gess Attorneys, Cape Town
Symington
& De Kok, Bloemfontein
For
Respondent: M Govender
Instructed
by: The Director of Public Prosecutions, Cape Town
The
Director of Public Prosecutions, Bloemfontein
[1]
S v
Khoasasa
2003
(1) SACR 123
(SCA) paras 14 and 19-22.
[2]
Matshona
v S
[2008] 4 All SA 69
(SCA) para 3-4;
Smith
v S
[2011] ZASCA 15
;
2012 (1) SACR 567
(SCA) para 2;
Tonkin
v The State
[2013] ZASCA 179
;
2014 (1) SACR 583
(SCA) para 2
.
[3]
Mdluli v
S
[2015] ZASCA 178
para 3.
[4]
S v Smith
[2011] ZASCA.