Brief Summary

Constitutional Law — Constitutional validity — Section 38 of the Prevention of Organised Crime Act — High Court declared section unconstitutional for requiring ex parte applications without a rule nisi — National Director of Public Prosecutions sought preservation of property order under section 38 — Respondents, trustees of a family trust, challenged the constitutionality of the section — High Court found that the section limited the right to a fair hearing under section 34 of the Constitution and was not justifiable under section 36 — Constitutional Court confirmed the High Court's declaration of invalidity, holding that the procedure established by section 38 unjustifiably limited the fair hearing right.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned constitutional litigation arising from asset preservation proceedings under Chapter 6 of the Prevention of Organised Crime Act 121 of 1998 (“POCA”). The immediate subject was the constitutional validity of section 38 of POCA, which authorises the National Director of Public Prosecutions to apply to a High Court for a preservation of property order (including seizure and ancillary relief), on an ex parte basis.

The appellants were the National Director of Public Prosecutions (first appellant) and the Minister of Justice and Constitutional Development (second appellant). The respondents were trustees of the Zunaid Family Trust (the first to third respondents) together with a further respondent claiming an interest in the trust property; collectively, they were treated as “the respondents” because they were the applicants in a counter-application in the High Court.

The procedural history was central. A preservation order was granted by the Johannesburg High Court on 4 October 2000 on an ex parte application by the National Director. Forfeiture proceedings were later initiated, and the respondents brought a counter-application challenging the constitutionality of Chapter 6 (including section 38). In an earlier round, the High Court declared section 38 invalid in part, and that declaration came before the Constitutional Court for confirmation; the Constitutional Court set it aside in National Director of Public Prosecutions and Another v Mohamed NO and Others [2002] ZACC 9; 2002 (9) BCLR 970 (CC); 2002 (4) SA 843 (CC) (“Mohamed (1)”) and remitted the matter to the High Court.

On remission, the High Court again declared section 38 unconstitutional—this time issuing severance and reading-in relief—primarily on the basis that the section allegedly required preservation applications to be determined ex parte and made no provision for a rule nisi procedure that would give affected parties an opportunity to be heard promptly after interim relief. The High Court referred its declaration for confirmation to the Constitutional Court under the constitutional confirmation procedure. The present judgment addressed whether that declaration should be confirmed and whether the High Court’s costs orders should stand.

2. Material Facts

The undisputed factual chronology, as relied upon by the Constitutional Court, began with the National Director obtaining a preservation of property order from the High Court on 4 October 2000 by way of an ex parte application in terms of section 38. The order related to immovable property owned by the Zunaid Family Trust, and it was published in the Government Gazette on 13 October 2000 and served on, amongst others, the first to third respondents.

Within the Chapter 6 procedural scheme, the National Director later launched forfeiture proceedings. On 11 January 2001, the National Director applied under section 48 for forfeiture under section 50 of the immovable property which had been preserved. In response, the respondents brought a counter-application seeking broad constitutional relief (including an attack on Chapter 6 as a whole), reconsideration of the preservation order under rule 6(12)(c), and condonation relating to their participation in the forfeiture proceedings.

The Constitutional Court treated as material the statutory setting that a preservation order under section 38 can be made where there are reasonable grounds to believe that the property is either an instrumentality of a Schedule 1 offence or the proceeds of unlawful activities, and that forfeiture proceedings must then be instituted within a prescribed period, at which stage affected parties are entitled to a full hearing on forfeiture. The Court also treated as important that POCA makes provision for affected parties to seek rescission or variation of preservation orders (notably through section 47), and that section 44 contemplates the making of provision for reasonable living and legal expenses in a preservation order.

No evidential disputes about the underlying alleged criminality were determinative in this judgment. The Constitutional Court confined itself to the constitutionality of the procedure established (or permitted) by section 38, and it proceeded on the basis that the substantive forfeiture regime in Chapter 6 was not in issue in the appeal because the respondents did not pursue appeals against the dismissal of their other constitutional challenges.

3. Legal Issues

The central legal question was whether section 38 of POCA unjustifiably limited the section 34 constitutional right to have disputes resolved by the application of law decided in a fair public hearing. The dispute therefore primarily concerned a question of law, specifically statutory interpretation in the light of constitutional procedural fairness norms, and the application of constitutional interpretive principles to determine whether section 38 necessarily excluded the audi alteram partem principle at the preservation stage.

A closely related issue of law was whether section 38, properly construed, precluded a High Court from issuing a rule nisi coupled with an interim preservation and seizure order pending the return day, or whether such a procedural device remained available through ordinary High Court process and inherent jurisdiction. This interpretive question was dispositive: if section 38 could reasonably be read to permit a rule nisi procedure (and interim relief), then the principal foundation of the High Court’s invalidity finding would fall away.

Contingent issues arose only if invalidity were established, namely whether the High Court’s remedial order (severance and reading-in, with retrospective effect subject to a qualification) was correct, and whether the costs orders were correct.

Although the High Court had also found infringements of privacy (section 14) and property (section 25(1)), those grounds were not substantively advanced in argument before the Constitutional Court in support of invalidity; their sustainability depended on the premise that section 38’s procedure was constitutionally defective.

4. Court’s Reasoning

The Constitutional Court’s reasoning proceeded from the accepted importance of the audi alteram partem principle as part of the section 34 fair-hearing right. The Court emphasised that procedural fairness in court proceedings is a core incident of the rule of law, and that courts are obliged to ensure fairness. In interpreting legislation, and particularly in assessing potential exclusions of audi, the Court endorsed the approach that the audi principle should be enforced unless the legislature has expressly or by necessary implication excluded it, or unless exceptional circumstances justify not giving effect to it.

The Court located section 38 within a broader, established tradition of South African procedure concerning ex parte applications, rules nisi, and interim relief. It reviewed longstanding practice recognising that, where notice would defeat the object of urgent or protective relief, courts may grant interim relief without notice but simultaneously issue a rule nisi to afford the affected party an early opportunity to be heard, including the possibility of anticipating the return day on short notice. This practice was described as flexible and adaptable and was linked to the High Court’s inherent procedural powers, now expressly reflected in section 173 of the Constitution.

Against that background, the Constitutional Court rejected the High Court’s view that section 38 necessarily required final preservation orders to be determined ex parte, without the possibility of a rule nisi. The Court held that the statutory phrase permitting the National Director to apply “by way of an ex parte application” did not mean the court was compelled to determine the matter finally without audi; rather, it authorised that mode of approaching the court, in the sense that such an application could not be refused merely because it was brought without notice. The objectionable feature identified by the High Court—an absolute exclusion of the rule nisi procedure—was therefore not supported by the language as properly interpreted.

A major plank of the High Court’s construction had been a comparison with section 26(3)(a) of POCA (in Chapter 5), which expressly refers to a provisional order and a rule nisi. The High Court had reasoned that because section 38 contains no similar express reference, the power to issue a rule nisi in Chapter 6 preservation proceedings must be excluded. The Constitutional Court treated this as reliance (at least implicitly) on the maxim inclusio unius est exclusio alterius, and it cautioned that this maxim is not a rigid rule and must be applied carefully. The Court held that the presence of an express rule nisi mechanism in section 26(3)(a) did not justify an inference that a rule nisi was excluded in section 38, particularly given the established common-law procedural competence of superior courts to issue rules nisi where appropriate.

The Court further found affirmative indications within Chapter 6 that undermined the High Court’s exclusionary inference. In particular, section 44 permits a preservation order to provide for reasonable living and legal expenses, but it simultaneously requires sworn disclosure by affected persons. The Court reasoned that the only persons able to provide the requisite information are those affected by the order, and that section 44’s scheme is difficult to reconcile with a construction that forecloses an early opportunity for affected parties to place such information before the court. This supported a construction that contemplates a provisional order and a subsequent opportunity for interested parties to be heard before finalisation.

Having concluded that there was “only one proper construction” of section 38—namely that the audi rule had not been excluded and that High Courts retained the ability to issue a rule nisi with an interim preservation order pending the return day—the Constitutional Court held that the statutory scheme could be applied in a manner consistent with section 34. The Court assumed (without deciding) that the temporary deprivation inherent in an interim order pending a return day could constitute a limitation of section 34, but held that any such limitation would in any event be justified under section 36, given the important purpose of preventing dissipation of suspected proceeds or instrumentalities of organised crime, and because the limitation would be narrowly tailored and under judicial control. The respondents did not attempt to argue otherwise on justification once the constitutionally compatible construction was adopted.

On the High Court’s additional findings regarding sections 14 and 25(1), the Constitutional Court noted that no argument had been advanced to sustain those grounds, and that they depended materially on the High Court’s procedural invalidity premise. Once the procedural premise was rejected, the foundation for those additional constitutional infringements fell away and could not be sustained.

The Court also addressed the respondents’ submission that, if section 38 were constitutionally valid on a proper construction, the High Court should nonetheless have made a declaratory order stating the constitutionally compatible meaning. The Court considered such relief inapposite and redundant in the context of a constitutional validity enquiry under section 172(1)(a) of the Constitution. It held that where a court finds inconsistency it must declare invalidity (leaving no room for ordinary declaratory relief), and where a court finds no inconsistency, the court’s reasons and the objective nature of constitutional validity determinations provide the required authoritative guidance through precedent, without the need for a separate declaratory order.

On costs, the Court explained that its conclusion affected only the orders relating to the counter-application. It preserved the High Court’s costs order concerning the costs occasioned by the respondents’ amendment and supplementation of their counter-application, while altering the remainder of the counter-application costs disposition in line with the dismissal of the counter-application and the approach taken by the National Director to costs.

5. Outcome and Relief

The Constitutional Court upheld the appeal and declined to confirm the High Court’s declaration of constitutional invalidity in respect of section 38 of POCA.

The Court amended the High Court’s order on the counter-application so that the counter-application was dismissed, and it retained the costs order requiring the applicants in the counter-application (the National Director and the Minister) to pay the respondents’ costs occasioned by the amendment and supplementation of the counter-application (including the costs of two counsel). No broader costs order in favour of the appellants on the counter-application was sought in the Constitutional Court, and the judgment recorded that no such costs relief was pursued.

Cases Cited

Mohamed NO and Others v National Director of Public Prosecutions and Another 2002 (4) SA 366 (W).

National Director of Public Prosecutions and Another v Mohamed NO and Others [2002] ZACC 9; 2002 (9) BCLR 970 (CC); 2002 (4) SA 843 (CC).

De Beer NO v North-Central Local Council and South-Central Local Council and Others (Umhlatuzana Civic Association Intervening) [2001] ZACC 9; 2001 (11) BCLR 1109 (CC); 2002 (1) SA 429 (CC).

Safcor Forwarding (Johannesburg) (Pty) Ltd v National Transport Commission 1982 (3) SA 654 (A).

Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam, and Another; Maphanga v Officer Commanding, South African Police Murder and Robbery Unit, Pietermaritzburg, and Others 1995 (4) SA 1 (A).

Universal City Studios Inc v Network Video [1986] ZASCA 3; 1986 (2) SA 734 (A).

Network Video (Pty) Ltd v Universal City Studios Inc and Others 1984 (4) SA 379 (C).

Simross Vintners (Pty) Ltd v Vermeulen 1978 (1) SA 779 (T).

R v Ngwevela 1954 (1) SA 123 (A).

Du Preez and Another v Truth and Reconciliation Commission [1997] ZASCA 2; 1997 (4) BCLR 531 (A); 1997 (3) SA 204 (A).

Cooper NO v First National Bank of South Africa Ltd 2001 (3) SA 705 (SCA).

Transvaal Agricultural Union v Minister of Land Affairs and Another [1996] ZACC 22; 1996 (12) BCLR 1573 (CC); 1997 (2) SA 621 (CC).

Director of Public Prosecutions: Cape of Good Hope v Bathgate 2000 (2) SA 535 (C).

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12; 2000 (10) BCLR 1079 (CC); 2001 (1) SA 545 (CC).

De Lange v Smuts NO and Others [1998] ZACC 6; 1998 (7) BCLR 779 (CC); 1998 (3) SA 785 (CC).

National Union of Metalworkers of South Africa and Others v Bader Bop (Pty) Ltd and Another 2003 (2) BCLR 182 (CC).

Administrator, Transvaal and Others v Zenzile and Others 1991 (1) SA 21 (A).

Poynton v Cran 1910 AD 205.

Colquhoun v Brooks (1888) 21 QBD 52.

Rennie NO v Gordon NNO 1988 (1) SA 1 (A).

Palvie v Motale Bus Service (Pty) Ltd [1993] ZASCA 105; 1993 (4) SA 742 (A).

Bernstein and Others v Bester and Others NNO [1996] ZACC 2; 1996 (4) BCLR 449 (CC); 1996 (2) SA 751 (CC).

Veneta Mineraria SPA v Carolina Collieries (Pty) Ltd 1987 (4) SA 883 (A).

Ex Parte Ginsberg 1936 TPD 155.

Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (1) BCLR 1 (CC); 1996 (1) SA 984 (CC).

Legislation Cited

Constitution of the Republic of South Africa, 1996 (sections 14, 25(1), 34, 36, 167(5), 172(1)(a), 172(2), 172(2)(d), 173).

Prevention of Organised Crime Act 121 of 1998 (sections 1, 18(1), 26(3), 37–62, 38, 39, 40, 44, 47, 48, 49, 50, 51, 52, 54, 62).

Supreme Court Act 59 of 1959 (section 19(1)(a)(iii), section 43).

Constitutional Court Complementary Act 13 of 1995 (section 8).

Rules Board for Courts of Law Act 107 of 1985.

Magistrates’ Courts Act 32 of 1944.

Drugs and Drug Trafficking Act 140 of 1992.

Proceeds of Crime Act 76 of 1996.

Rules of Court Cited

Uniform Rules of Court (rule 6(12)(c), rule 6(8), rule 6(13)).

Constitutional Court Rules (rule 15, as referenced in connection with confirmation procedure).

Held

Section 38 of the Prevention of Organised Crime Act 121 of 1998 was held, on its proper construction, not to exclude the audi alteram partem principle, because High Courts retain the ability to issue a rule nisi coupled with an interim preservation and seizure order pending the return day, notwithstanding that the National Director is authorised to proceed by ex parte application.

Because section 38 was construed in a constitutionally compatible manner, the High Court’s declaration that section 38 was unconstitutional (and its associated severance and reading-in remedy) was not confirmed, and the appeal was upheld. The High Court’s further conclusions relating to privacy (section 14) and arbitrary deprivation of property (section 25(1)) could not be sustained once the procedural invalidity premise was rejected.

The counter-application in the High Court was dismissed as amended by the Constitutional Court’s order, with a limited costs order preserved in relation to the costs occasioned by the respondents’ amendment and supplementation of their counter-application.

LEGAL PRINCIPLES

The judgment applied the principle that where legislation is reasonably capable of more than one construction, and one construction would result in constitutional invalidity while another would not, the construction consistent with the Constitution must be preferred, provided it is reasonable and not strained. This was treated as an established canon of constitutional interpretation.

It reaffirmed that the audi alteram partem principle forms a significant component of the section 34 fair-hearing right, and that courts should not readily infer its exclusion. The audi principle must be enforced unless the legislature has excluded it expressly or by necessary implication, or unless exceptional circumstances justify its non-application.

The judgment confirmed that High Courts possess inherent power to regulate their own process (now expressly recognised in section 173 of the Constitution), including the procedural competence to issue a rule nisi and interim orders in appropriate circumstances, even where the governing statute authorises an ex parte initiating procedure and does not expressly spell out the rule nisi mechanism.

Finally, the judgment emphasised the objective character of constitutional validity determinations, drawing on the Constitutional Court’s established approach that the validity of a statute cannot turn on the subjective position of particular litigants; reasons given in constitutional adjudication provide authoritative guidance through precedent without the need for a separate conventional declaratory order when legislation is found to be constitutionally compliant.

National Director of Public Prosecutions v Mohamed NO and Others (CCT44/02) [2003] ZACC 4; 2003 (1) SACR 561; 2003 (5) BCLR 476 ; 2003 (4) SA 1 (CC) (3 April 2003)