National Director of Public Prosecutions v Elran (CCT 56/12) [2013] ZACC 2; 2013 (1) SACR 429 (CC); 2013 (4) BCLR 379 (CC) (19 February 2013)

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[2013] ZACC 2
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National Director of Public Prosecutions v Elran (CCT 56/12) [2013] ZACC 2; 2013 (1) SACR 429 (CC); 2013 (4) BCLR 379 (CC) (19 February 2013)

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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 56/12
[2013] ZACC 2
In the matter between:
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
.................................
Applicant
and
MEIR ELRAN
...................................................................................................
Respondent
Heard on : 15 November 2012
Decided on : 19 February 2013
JUDGMENT
JAFTA J (Moseneke DCJ, Nkabinde J and Yacoob J concurring):
Introduction
[1] The interpretation and application of section 44 of the
Prevention of Organised Crime Act
1
(POCA) is at the heart of this application for leave to appeal. The
National Director of Public Prosecutions (NDPP) seeks leave
to appeal
against the judgment of the Full Court of the South Gauteng High
Court, Johannesburg (Full Court) which dismissed the
NDPP’s
appeal with costs. The NDPP had appealed against an order that
directed her to pay legal costs incurred by Mr Meir
Elran
(respondent) from property held in terms of a preservation of
property order.
[2] POCA authorises a High Court to grant a preservation order in
respect of property believed on reasonable grounds to be proceeds
or
instrumentalities of criminal offences.
2
An order of this kind preserves property to which it applies until a
forfeiture order is granted, a request for forfeiture is refused
or
the preservation order lapses.
3
The effect of a preservation order is that no one may deal in any
manner with property forming the subject matter of the order
unless
authorised by the High Court which has issued the order.
[3] In terms of section 44 of POCA, a High Court may permit payment
of reasonable living and legal expenses from the property that
is
subject to a preservation order.
Facts and litigation history
[4] On 6 March 2006 the NDPP obtained an order that preserved
property of the respondent. The order was, however, not confined
to
the property described in it but covered “any other property
held by [the respondent], whether in his own name or not,
including
funds transferred from South Africa to any overseas account.”
This order required the respondent to surrender his
entire estate to
a curator bonis. The order authorised any person affected by it to
approach the Court that granted it for its
reconsideration, provided
the NDPP and other parties mentioned in the order are given notice of
no less than 72 hours. The preservation
order afforded any party
intending to oppose forfeiture of property to the State, 14 calendar
days within which to deliver a notice
of opposition to the NDPP.
[5] The respondent delivered to the NDPP and lodged at the High Court
the notice to oppose forfeiture. He then asked the curator
bonis to
provide him with reasonable living and legal expenses. In response
the curator demanded to be furnished with certain information.
The
respondent submitted the information but the curator was not
satisfied by it. The curator pointed out that payment for expenses
in
question would be considered once further information was submitted.
This information related to a sale agreement in respect
of the
respondent’s shares in the Mackenna Game Farm and the paperwork
on Body Rush LLC in which the respondent held half
of the
shareholding.
[6] Meanwhile the NDPP launched forfeiture proceedings in July 2006.
The respondent is yet to file opposing papers in those proceedings.

Apparently the delay has been caused by the curator’s failure
to pay for legal expenses.
[7] The respondent instituted an application in the High Court
seeking payment of his monthly living expenses and a sum of R250 000

for legal fees. The NDPP opposed it. In a judgment delivered in March
2007, the application was dismissed on technical grounds.
An appeal
was not pursued because the respondent could not pay legal fees.
[8] The respondent engaged new attorneys and instituted a fresh
application for the same relief, except that he excluded the claim

for living expenses. The second application was launched in June
2009. In support of the claim for legal expenses, the respondent

relied on the affidavits which were used in the earlier, unsuccessful
application. These affidavits set out in detail his financial

position as it was in 2006. The respondent averred that he had
acquired no assets since the date of the preservation order.
[9] In opposing this application, the NDPP disputed the need for the
relief claimed and raised a number of defences. First, the
NDPP
contended that the respondent has property that is not subject to the
preservation order and from which he could meet the
legal expenses.
In support of this leg of the defence, the NDPP relied on inferential
reasoning. The NDPP pointed out that the
respondent had been able to
support himself and his family for a period of three years since the
preservation order was granted.
With reference to the respondent’s
monthly living expenses, which were estimated at R100 000, it
was claimed that he
could not afford these expenses without a
substantial source of income, which he has failed to disclose.
[10] Second, the NDPP asserted that the respondent had failed to make
a full disclosure of his interest in property. Specific reference
was
made to the following:
“
R5.4
million received by the [respondent] as part payment of the full
purchase price of R12.5 million for the sale of his shares
in
Mackenna Game Farm. Approximately R1.7 million deposited into the
account of SA Homestead during the period June 2005 and January
2006,
with the [respondent] being the only signatory on the account.
Foreign transfers amounting to $22 000, transferred by the

[respondent] to various bank accounts in Israel, one of which is in
the name of ‘Ben Hamo’, the original name of the

[respondent] prior to his name change. Approximately R1.1 million
transferred into the bank account of Daria Bachta’s, the

[respondent’s] wife.”
[11] Third, the NDPP contended that the respondent failed to provide
a sworn and full statement of his assets and liabilities.
She pointed
out that the respondent had attached to his founding affidavit a list
of liabilities only, which excluded assets and
that list, it was
contended, did not constitute a sworn statement as required by the
relevant provision of POCA.
[12] Fourth, the NDPP submitted that the application should be
dismissed on the ground that the respondent failed to comply with
the
preservation order which required him to continue making monthly
payments under the mortgage bond he held at the time the order
was
made. It was also stated that in non-compliance with clauses 10 and
14 of the preservation order, the respondent failed to
repatriate
these properties: 1 000 shares in Ciena valued at approximately
R18 000; 300 shares in Oracle valued at approximately
R25 000;
half of the shares in Body Rush LLC, the value of which was about
R1.6 million; and an amount of approximately
$8 000
transferred to the account of one Ben Hamo.
[13] Regarding the assertion that he had property not covered by the
preservation order, the respondent replied as follows:
“
I
reiterate that since the granting of the preservation order in March
2006 I have not been in a position to pay my living and legal

expenses and have been forced to live on loans and charity from
friends and family. All my bank accounts have been frozen and all
my
worldly assets have been placed under preservation. The preservation
order is all-encompassing and includes all and any property
held by
me. . . . I am not in a position to meet my living and legal expenses
and since March 2006 I have lived off loans and charity
from my
friends and family. . . . The living expenses detailed in my founding
affidavit relate to the living expenses which were
incurred by me
prior to the granting of the preservation order. As a result of the
preservation order I have been unable to pay
my monthly living
expenses and have had to drastically reduce same. I cannot afford to
make payments of the amounts due in respect
of my home loan and have
fallen into arrears in respect of water and electricity, rates and
taxes, maintenance obligations and
other monthly expenses. I am in
dire financial straits as a result of the preservation order.”
[14] Dealing with the allegation of incomplete disclosure of interest
in the property referred to above, the respondent stated:
“
[The
NDPP] has frozen all bank accounts held by me and by the entities
referred to in the preservation order. I do not possess any
funds
other than those standing to my credit in my personal bank accounts
which were attached by [the NDPP]. My name is not and
never was Hamo.
I reiterate that I am not possessed of any funds. I have, in any
event, provided [the curator bonis] with details
of receipt of R5.4
million as well as details as to what I have done with the money.”
The
allegation about the R5.4 million is elaborated on in an affidavit
deposed to by the respondent in June 2006.
[15] Regarding the accusation that he failed to submit a sworn
statement of his assets and liabilities, the respondent drew
attention
to two affidavits deposed to by him. One was dated 3 May
2006 and the other 15 June 2009. Both were annexed to his founding
affidavit.
These affidavits set out in detail the respondent’s
assets and liabilities.
[16] With regard to the failure to comply with the preservation
order, the respondent admitted that he had not made the monthly

payments in terms of the housing loan agreement but pointed out that
he was unable to do so because all his assets were subject
to the
preservation order. He also conceded that the shares in the United
States of America had not been repatriated. The reason
given for this
was that he could not bring those shares to South Africa without
travelling to the United States of America. Apparently
he was unable
to travel due to restrictions imposed as a result of criminal charges
brought against him. But he gave the curator
permission to bring the
shares in question to South Africa and take necessary steps to
recover his shares in Body Rush LLC.
[17] In the Court of first instance, this application was heard by
Rosenberg AJ. The learned Judge rejected the defences raised
by the
NDPP, following her interpretation of section 44 of POCA through the
prism of the Constitution. She was satisfied that the
respondent had
met the requirements of the section. She ordered the curator to pay
taxed legal fees to the respondent’s attorneys.
[18] Dissatisfied with the outcome, the NDPP appealed to the Full
Court. The NDPP contended that the Court of first instance ought
not
to have been satisfied that the respondent had disclosed his
interests in the relevant property and that he had submitted to
the
Court a full sworn statement of his assets and liabilities. The Full
Court examined the affidavits on record and concluded
that there was
sufficient evidence to support the finding that the respondent had
met the requirements of section 44. It dismissed
the appeal but
amended the order that was granted by the Court of first instance to
authorise payment of legal expenses in respect
of the forfeiture
proceedings only.
Leave to appeal
[19] Counsel for the respondent argued that the matter does not raise
a constitutional issue. He submitted that it concerns a determination

of facts with a view to establishing whether the respondent has made
out a case for the relief sought. This argument cannot be
upheld.
Clearly the matter raises a constitutional issue. It involves the
application and the interpretation of section 44 of POCA.
In the
context of this case, the section implicates the exercise of the
right to legal representation, one of the important basic
rights
entrenched in the Bill of Rights. Moreover, the interpretation of the
section must comply with section 39(2) of the Constitution.
4
[20] As the matter raises an issue of importance which is likely to
arise frequently in the future, it is in the interests of justice

that this Court determine the correct construction of section 44.
Until now the section has not been considered by this Court or
the
Supreme Court of Appeal. A decision of this Court will provide
guidance to those who implement POCA and the courts applying
it.
Accordingly, leave must be granted.
Issues
[21] The main issue is whether the Full Court was right in refusing
to interfere with the order granted by the Court of first instance,

following the exercise of a discretion conferred on it by section 44
of POCA. The determination of this issue involves establishing:
(a)
the nature of the discretion that was exercised; (b) circumstances
under which the exercise of that discretion may be overturned
on
appeal; and (c) whether those circumstances exist here. At the heart
of these issues lies the interpretation of section 44 of
POCA. It is
convenient to begin with the construction of that section.
Approach to interpreting section 44
[22] At the outset we must remind ourselves of the nature of the
legislation we are concerned with. POCA was enacted in pursuit
of
legitimate and important government purposes of combating serious
organised crime and preventing criminals from benefiting from
the
proceeds of their crimes. Among the arsenal of tools employed to
achieve these objectives is the authorisation of seizure of
property
and restraint orders. These orders authorise state officials to seize
property suspected to be the proceeds of crime or
an instrumentality
of an offence.
[23] Any person whose property is subject to a restraint or
preservation order is precluded from dealing with the property in any

manner other than the one permitted by the Court.
5
An application for a preservation order like the one we are concerned
with here is made to the High Court without any notice to
the person
whose property is to be seized and preserved. Notice is given only
when the order is served upon the property owner.
By then the owner
might, as is the position in the present case, be divested of his
entire estate, without any allowance for his
immediate financial
needs and those of his family. Clearly this is a draconian intrusion
into the rights of those people who are
affected by POCA orders.
[24] There can be no doubt that POCA is meant to serve as an
effective tool in the fight against crime. But at the same time it

authorises a serious erosion of the rights contained in the Bill of
Rights, the cornerstone of our democracy. This is done merely
on the
basis of a reasonable belief that the property targeted was involved
in the commission of crime or was its proceeds. It
was in this
context that in
Fraser v Absa Bank Ltd (National Director Of
Public Prosecutions as
Amicus Curiae)
6
this Court observed:
“
[POCA]
could however also have potentially far-reaching and abusive effects,
if not interpreted and applied in accordance with the
rights and
values protected in the Constitution.”
7
[25] In an attempt to soften the blunt effect it has on fundamental
rights, POCA makes allowance for payment of living and legal
expenses
from the seized assets during the currency of the preservation order.
However, these expenses which must be reasonable
are not given merely
upon request. The applicant must meet certain requirements. I will
return to these requirements when interpreting
section 44 below.
[26] What is important at this stage is to point out that the failure
to meet these requirements would result in the request being
refused.
The refusal may have far-reaching consequences for those whose
property is subjected to a preservation order. The risk
is increased
by orders like the present, which covered the entire estate of the
respondent. It will be recalled that ultimately
the State would be
entitled to a forfeiture order only to the extent the respondent in
this case has benefited from criminal activities
and no further.
8
[27] Since the purpose of section 44 is to ameliorate the adverse
effect of a preservation order by, among others, promoting the

exercise of the right to legal representation, it must be construed
in a manner that promotes the spirit, purport and objects of
the Bill
of Rights as obligated by section 39(2) of the Constitution.
Preference must be given to a construction of section 44
that
advances the exercise of the right to legal representation as opposed
to an interpretation that frustrates the exercise of
this right. In
this regard this Court said in
Fraser:
“
When
interpreting legislation, a Court must promote the spirit, purport
and objects of the Bill of Rights in terms of section 39(2)
of the
Constitution.
This
Court has made clear that section 39(2) fashions a mandatory
constitutional canon of statutory interpretation.” (Footnotes

omitted.)
9
Meaning of section 44
[28] Section 44 provides:
“
(1) A preservation of
property order may make provision as the High Court deems fit for—
(a) reasonable living expenses
of a person holding an interest in property subject to a preservation
of property order and his or
her family or household; and
(b) reasonable legal expenses of
such a person in connection with any proceeding instituted against
him or her in terms of this
Act or any other related criminal
proceedings.
(2) A High Court shall not make
provision for any expenses under subsection (1) unless it is
satisfied that—
(a) the person cannot meet the
expenses concerned out of his or her property which is not subject to
the preservation of property
order; and
(b) the person has disclosed
under oath all his or her interests in the property and has submitted
to that Court a sworn and full
statement of all his or her assets and
liabilities.”
[29] The plain reading of the section shows that
it does two things. First, it confers a discretion on the High Court
to direct
that funds for reasonable living and legal expenses be paid
from the seized property. The discretion given by section 44(1) is an

open one subject to the condition that the court deems the order for
living and legal expenses to be necessary. The nature of this

discretion is a matter to which I return below. But more importantly,
subsection (1) also identifies the class of applicants eligible
to
request the order. It stipulates that the applicant must be a person
“holding an interest in the property subject to a
preservation
order and his or her family or household”. Significantly, the
subsection does not say the applicant must be
a person from whom the
property in question was seized. The determinant qualification is the
interest in the property concerned.
[30] The request for payment of legal expenses can
be made only by the person with interest in the property subject to
the preservation
order. The legal expenses must relate to proceedings
instituted against the applicant in terms of POCA or “other
related
criminal proceedings.”
[31] The
second thing done by section 44 is that, having conferred an open
discretion under subsection (1), subsection (2) noticeably
narrows
down the discretion to limited circumstances. It lays down as a
minimum requirement proof of certain specified facts to
justify the
granting of the order. In terms of subsection (2) it must be proved
to the satisfaction of the court that the applicant
cannot meet the
expenses out of his or her property which is not subject to the
preservation order. The applicant must disclose
interest in the
property. A sworn statement setting out fully the assets and
liabilities of the applicant must also be submitted
to the court. A
careful examination of subsection (2) reveals that the required
proof relates to the inability to meet expenses
from the applicant’s
property falling outside the preservation order. The other
requirements are concerned with the nature
of information which must
be placed before the court during the enquiry. The purpose of the
full list of assets and liabilities
is readily apparent. It helps the
court to determine the inability to pay.
[32] Although section 44(2)(b) does not expressly say that the
interest to be disclosed must be in the property subject to a
preservation
order, counsel for the NDPP was correct when he
submitted that the subsection requires the applicant to disclose
interest in the
preserved property. The purpose for this is to inform
the court not only of the nature of interest held so as to show that
an applicant
has legal standing but also that she or he is entitled
to have expenses paid from the property in question.
Jurisdictional facts
[33] In this Court, counsel for the NDPP argued that section 44(2)
lays down jurisdictional facts, the existence of which is necessary

before a court may exercise the discretion conferred by section
44(1). He submitted that the following prerequisites must be
established
before the exercise of the power and the court must be
satisfied that each exist:
(a) the fact that the applicant cannot meet the expenses out of
property that is not subject to the preservation order;
(b) the applicant must make a full disclosure of interest in the
property subject to the preservation order; and
(c) the applicant must submit a sworn and full statement of all his
assets and liabilities.
[34] If this construction were to be assigned to section 44(2), it
would mean that courts cannot authorise payment for relevant
expenses
if one of those facts is not established, regardless of the
circumstances of a particular case. Although the text of the

subsection is capable of the construction contended for by the NDPP,
it is not the only meaning that may be given to it. Where
a provision
is capable of more than one meaning, preference must be given to the
construction that renders the statute constitutionally
compliant.
10
If a provision is capable of two reasonable interpretations which do
not render the statute inconsistent with the Constitution,
preference
must be given to the meaning that promotes the spirit, purport and
objects of the Bill of Rights.
11
[35] To construe section 44(2) in the manner contended for by the
NDPP would undermine the very purpose served by section 44. Without

it the relevant chapter of POCA would be unconstitutional. Dealing
with a similar provision of POCA in
Fraser
, this Court said:
“
Without
the recognition of the right to legal representation in section
26(6), the scheme of the restraint embodied in POCA might
well have
been unconstitutional.”
12
[36] The interpretation advanced by the NDPP will not only be
inconsistent with the promotion of the right to legal representation

and the purpose of section 44, it will also lead to absurd results.
In a case like the present a court would be disempowered. It
would be
precluded from authorising payment of expenses if the applicant has
failed to submit a list of assets, even if there are
no assets to
list. A court would be denied the power to intervene even where it is
satisfied that an applicant has no property
that is not subject to
the preservation order and from which legal expenses could be raised.
The failure to establish one of the
facts in question would have
fatal consequences to applications of this nature.
[37] To avoid all of this, section 44(2) must be interpreted to mean
that a court will authorise payment of expenses if satisfied
that the
applicant cannot meet these expenses from unpreserved property and
she or he is entitled to receive payment of expenses
from the
property subject to the preservation order. This interpretation
accords with the purpose of section 44 and advances the
right to
legal representation. It also allows the court to exercise its
discretion properly. When exercising the discretion, the
court is
required to engage in a balancing exercise. It must weigh the
applicant’s interests, including the right to legal

representation, against the objects of preserving the property
subject to a preservation order and preventing the applicant from

benefitting unduly from that property.
Fraser
lays down a
similar approach. In that case this Court said:
“
The
circumstances of each case have to be considered in order to reach a
determination which is fair and just in view of the objects
and
wording of POCA, together with an accused person’s
constitutionally protected fair trial rights, existing rules and
principles of the law of insolvency and other relevant areas of law.
The High Court should seek as best as possible to ensure that
a
defendant neither benefits unduly from the terms of a restraint
order, nor is prejudiced as far as reasonable legal and/or living

expenses are concerned.”
13
[38] It is at the stage of balancing the competing interests that a
court may take into account factors like whether the applicant
has
disclosed interests in the relevant property and, where it is
necessary, a list of assets and liabilities has been submitted.
It is
the court hearing the application for expenses which is better placed
to determine the impact of a failure to furnish information
necessary
to enable the court to exercise its discretion. But the threshold in
every case will always be that the court is satisfied
that the
applicant has no property that is not subject to a preservation order
and from which the requested expenses may be met.
This is essential
for the correct balance to be maintained.
Nature of the discretion
[39] Section 44 confers a discretion upon the High Court that granted
the preservation order. It is that particular High Court
alone which
may exercise it and make an order authorising payment of expenses
from the property subject to a preservation order.
This manifestly
illustrates that the discretion is a strict one. Indeed, in
Fraser
this Court said:
“
The
discretion of a High Court hearing an application of a creditor to
intervene in section 26(6) proceedings is one with which
a Court of
Appeal will only interfere in limited circumstances. . . . An
appellate Court will not question whether the decision
reached by the
Court of first instance was the correct one.”
14
[40] This is the right approach on appeal to the exercise of a strict
discretion. Interference with that discretion is permissible
only
where the discretion is not exercised judicially. The examples of
such instances are where:
(a) the exercise of the discretion has been influenced by wrong
principles of law;
(b) the
exercise of the discretion has been influenced by a misdirection or a
wrong appreciation of the facts; and
(c) the
court had reached a decision which could not reasonably have been
made by a court properly applying its mind to all relevant
facts and
principles.
15
[41] As observed in
Fraser
, the fact that the impugned
decision appears to be wrong does not constitute justification for
interfering with the exercise of
this type of discretion on appeal.
Reaffirming the principle in
Giddey NO v J C Barnard and
Partners
,
16
this Court said:
“
The
ordinary rule is that the approach of an appellate court to an appeal
against the exercise of a discretion by another court
will depend
upon the nature of the discretion concerned. Where the discretion
contemplates that the Court may choose from a range
of options, it is
a discretion in the strict sense. The ordinary approach on appeal to
the exercise of a discretion in the strict
sense is that the
appellate court will not consider whether the decision reached by the
Court at first instance was correct, but
will only interfere in
limited circumstances; for example, if it is shown that the
discretion has not been exercised judicially
or has been exercised
based on a wrong appreciation of the facts or wrong principles of
law.” (Footnotes omitted.)
17
[42] The NDPP, however, approached the present case on the footing
that it was the Full Court which exercised the discretion. The

argument advanced was that this Court should not have been satisfied
that the respondent is unable to meet legal expenses from
property
that was not subject to the preservation order. In support of this
contention counsel submitted that the respondent “enjoyed
what
appears on his own evidence to be a high standard of living since
2006, and was litigating over this period without the benefit
of any
assistance of an order under sections 44”. This indicates, it
was submitted, that he has other resources available
to him to meet
his expenses. Reference was made to the fact that he said he depended
on charity and loans from family and friends.
The charity and loans,
the submission continued, constitute income which is property
envisaged in section 44(2)(a).
[43] I will deal with this argument as if it were directed at the
Court of first instance. The flaw in the argument advanced by
the
NDPP lies in its foundation. First, it is based on assumptions which
were clearly dispelled by the respondent’s evidence.
The
assumption that the respondent has been able to afford a high
standard of living has been squarely controverted by his evidence
to
the effect that he had been unable to pay for even basic services
like water and electricity. Furthermore, the assumption that
he has
been able to litigate without the legal expenses he seeks is not
justified. There is evidence on record showing that he
was unable to
pay legal fees to his previous attorneys and that that led to a
termination of representation by them. The fact that
there were legal
practitioners who were willing to take up his cause without
pre-payment of legal fees cannot be a basis for the
inference that he
has resources from which he can pay legal expenses.
[44] Second, I have considerable difficulty in appreciating how loans
and charity can constitute property that is not subject to
the
preservation order and from which the Court of first instance had to
be satisfied that the respondent is capable of meeting
legal
expenses. The evidence on record points in the opposite direction. It
shows that the respondent is unable to meet most of
the financial
obligations he had at the time the preservation order was granted. He
may have enjoyed a high standard of living
before the granting of the
order but after it was granted the evidence shows that he was
struggling to meet his financial obligations.
[45] Counsel for the NDPP further submitted that the respondent had
failed to make the disclosure contemplated in section 44(2)(b).
He
argued that this subsection implicitly requires an applicant to
submit a sworn statement of current assets and liabilities.
The fact
that the respondent relied on affidavits which were three years old,
it was contended, meant that he did not comply with
the prerequisite
of disclosure. I have already found that the subsection does not lay
down prerequisites.
[46] To illustrate this non-disclosure, counsel drew our attention to
the allegations set out above in paragraph 10 and with reference
to
the respondent’s reply set out above in paragraph 14, counsel
contended that section 44(2)(b) was not complied with. Although
the
reply furnished by the respondent was unsatisfactory, I cannot uphold
the contention advanced by the NDPP. The amounts of R5.4
million and
R1.7 million were sufficiently explained. In respect of the latter
amount, the respondent said he was a signatory on
the account of SA
Homestead because he was an employee of that entity and not that it
was his own account. This appears elsewhere
in the respondent’s
papers, as does the explanation relating to the R5.4 million which
appears in his affidavit dated 15
June 2006.
[47] The part that is unsatisfactory in his reply relates to the
transfer of $22 000 into foreign bank accounts, including
that
of Ben Hamo. The respondent failed to deal with the allegation except
saying that he is not Hamo. In this regard the respondent
was clearly
not open and frank. But these transactions, which apparently were
done before the granting of the preservation order,
fall short of
controverting the evidence which satisfied the Court of first
instance on the respondent’s inability to meet
legal expenses.
More importantly, the unsatisfactory reply does not relate to a
disclosure of interest in the preserved property.
Therefore, it
cannot be invoked in support of the assertion that there was
non-disclosure.
[48] Moreover, in so far as the property covered by the preservation
order is concerned, there was a disclosure of interest. As
the
respondent did not acquire assets from the date on which the
preservation order was granted, he had nothing to list as an asset.

With regard to liabilities, it cannot be disputed that the loans he
received after the preservation order constituted liabilities.

Therefore, he has failed to submit the list to the Court.
[49] The question that arises in this regard is whether in the light
of this failure alone, the Court of first instance ought to
have
refused the relief it granted. Put differently, the question is
whether that Court failed to exercise its discretion judicially
in
the manner described above. In my view, the failure to update the
list of liabilities cannot support the finding that the discretion

was not exercised judicially. I agree with counsel for the NDPP that
the purpose for the list of assets and liabilities is to help
the
court to determine whether an applicant is possessed of property not
subject to the preservation order and from which he is
able to meet
the relevant expenses. Where, as here, the court is so satisfied from
other evidence, the need for the list falls
away. Moreover,
liabilities cannot be proof of an ability to meet expenses. Nor do
they constitute property. On the contrary, if
their list had been
submitted, it would have reinforced the Court’s finding that
the respondent was not able to meet legal
expenses.
[50] In these circumstances, I find that the NDPP has failed to
establish a ground justifying interference with the exercise of
a
discretion by the Court of first instance. Accordingly, the Full
Court was right in dismissing the appeal. It follows that in
this
Court too, the appeal must fail.
The
other judgments
[51] I have read the judgments prepared by my colleagues Cameron J
and Zondo J setting out their approach to the matter and the

construction they accord to section 44. Before I give reasons why I
do not agree with their interpretation, I must make the following

observations and clarify some issues. First, it is asserted that
Mr Elran, who is yet to be convicted, did not suffer unfairness

flowing from a preservation order that prevented him from dealing
with his entire estate.
18
This assertion is made notwithstanding the fact that the order was
obtained in the absence of the party concerned (
ex parte
). Two
reasons are offered in its support. The one reason is that the order
would lapse upon the expiry of 90 days if no forfeiture
application
is made. However, the record shows that the expiry of the order was
prevented by the NDPP instituting forfeiture proceedings
within 90
days.
[52] The other reason is that Mr Elran was free to apply for
rescission of the preservation order if it caused him hardship.
But
for him to do so, he required legal representation which on the facts
on record he could not afford because his whole estate
was under a
preservation order. Proceedings involving POCA are complex because
the Act is complex and difficult to interpret.
19
To have legal representation is therefore necessary. The record does
not show that Mr Elran was aware that he could seek rescission.

Even if he was, the likelihood is that he would have battled to
understand POCA which is difficult to interpret, even to Judges.
The
importance of legal representation in complex court proceedings in a
country like ours cannot be overemphasised. The disparities
in our
society where the levels of poverty and illiteracy are high have been
noted by this Court in a number of decisions.
20
[53] The interpretation preferred in my Colleagues’ judgments
is that section 44(2) sets preconditions for the exercise of
the
discretion conferred by section 44(1). Absent these preconditions,
the power to authorise payment of legal expenses does not
exist.
21
Bearing in mind that here we are concerned with the exercise of a
narrow discretion, interference will be justified only if one
of the
recognised grounds exist. The relevant one here would be that the
High Court did not have the power to authorise payment
of legal fees
from the preserved property. I accept that if section 44(2) creates
preconditions which must all be in existence
before a court may
exercise the discretion, then the High Court ought not to have
granted the order because the respondent had
not submitted a list of
liabilities pertaining to loans he received from friends and family
for his living expenses.
[54] The question whether section 44(2) lays down preconditions or
jurisdictional facts lies at the heart of our disagreement.
For his
interpretation Cameron J relies heavily on
Naidoo
.
22
But
Naidoo
dealt with a different issue. The question there
was whether a court can order payment of legal expenses from assets
held by a third
party and against whom there was a restraining order
in place.
23
Moreover, in
Naidoo
this Court was concerned with the
interpretation of section 26 of POCA.
24
However, my Colleague holds that sections 26 and 44 are similar. I am
unable to agree. To start with, the structures of the relevant
parts
(sections 26(6) and 44(2)) are different. I will deal with this in
detail when I consider the text of section 44(2) relied
on by my
Colleague.
[55] Furthermore, the requirements set out in these sections are in
material respects different. Section 26(6) contains two requirements

only and provides that the High Court may order provision of legal
expenses—
“
if the
court is satisfied that the person whose expenses must be provided
for has disclosed under oath
all
his or her interests in property subject to a restraint order
and that the person cannot meet the expenses concerned out of his or
her unrestrained property.” (Emphasis added.)
[56] The section stipulates these requirements: the inability to meet
expenses out of unrestrained property and a full disclosure
of
interest in the restrained property. The nature of the disclosure is
specific. It is a disclosure of interest and not of property.
The
reason for this requirement is that the court must be informed of the
nature of the applicant’s entitlement to payment
of expenses
from the restrained property. Significantly, apart from the inability
to meet expenses, the reach of section 26 does
not extend beyond
property subject to a restraint order. Whereas section 44(2) requires
a full list of assets and liabilities.
In so far as assets are
concerned, this requirement is directed at unpreserved property.
Section 26(6) does not require such a
list.
[57] Therefore, the similarities between the two sections are limited
to the disclosure of interests and the inability to meet
expenses.
But as I will demonstrate below, while section 26(6) requires that
both conditions be met before the order could be made,
section 44(2)
does not require that all the conditions be satisfied. However, it is
important to point out at this stage that
the complaint of
non-disclosure raised in this case relates to the respondent’s
living expenses after the granting of the
preservation order. In the
light of the above analysis, the complaint is misconceived. The
disclosure Mr Elran was required
to make is a disclosure of
interest in the preserved property.
[58] In further support of his interpretation, Cameron J invokes the
text of section 44(2). Relying on the use of the words
“shall
not” he holds that the section creates “threshold
preconditions without the fulfilment of which the court
cannot
exercise the section 44(1) power.”
25
I accept that the use of the words “shall not” indicates
peremptoriness. But I read section 44(2) as limiting the peremptory

condition to the inability to meet expenses. My Colleague relies on
the use of the word “and” between subsections (2)(a)
and
(2)(b) for the conclusion that all conditions are “cumulative .
. . and interlinked”.
26
[59] While I accept that the use of the word “and” may be
read as my Colleague does, I think that in the present context
it
should not be so read. I say this for two reasons. The first is
textual and contextual. The context is provided by section 44(1)

which confers the discretion. Like section 44(2), section 44(1) has
two subsections. And like section 44(2), it employs the word
“and”
between the two subsections. Subsection (1)(a) deals with living
expenses and subsection (1)(b) is concerned
with legal expenses. Yet
it can hardly be argued that the Court must order provision of both
living and legal expenses in every
case where such an order is made.
In the text nothing indicates that the word “and” which
occupies the same position
in both sections carries different
meanings. Therefore, the use of “and” in section 44(2) is
not different from its
use in section 44(1). It has no cumulative
effect.
[60] The second reason is that on the interpretation favoured by both
my Colleagues, the failure to submit a list of liabilities
alone will
mean that the discretion cannot be exercised, irrespective of how
much of an injustice the consequences may be. In a
case where, as is
the position here, the whole estate of the applicant is placed under
preservation and the applicant places on
record uncontroverted
evidence that he or she has acquired no assets since the granting of
a preservation order, on my Colleagues’
interpretation, the
Court would equally have no power to exercise. In my view this
construction does not promote the spirit, purport
and the objects of
the Bill of Rights, an obligation which is imposed on every court
when interpreting legislation.
[61] In his judgment, Zondo J holds that section 44 confers power and
that the discretionary part of that power is restricted to

determining whether the amount of expenses claimed is reasonable or
not.
27
I do not agree. In similar circumstances this Court in
Fraser
held
that section 26(6) of POCA gives the High Court a discretion to
authorise payment of legal expenses. The Court stated:
“
Section
26(6) gives a discretion to the High Court which issues a restraint
order to make provision for the reasonable living
and legal expenses
of the defendant, who (as stated earlier) is also an accused. This
case is concerned with that discretion.
The Court must be satisfied
that the defendant has disclosed all of his or her interests in
property subject to the restraint
order and that he or she cannot
meet the expenses out of property which has not been restrained.”
28
[62] The reading of the judgment in
Fraser
reveals that the
case was not solely about the intervention of a creditor. Mr Fraser
had applied for payment of legal expenses
from the restrained
property. The creditor sought to intervene in that application so
that it could oppose payment of legal expenses.
Therefore, the
interpretation of section 26(6) and the nature of the power it
confers were some of the issues to be determined.
Accordingly, that
interpretation must be followed when the section is dealt with
unless it is shown to be wrong. Section 44(1)
confers a similar
discretion.
[63] The approach adopted by Zondo J to the assessment of evidence
and the conclusion he reaches was influenced by the premise
from
which he departs. I agree that an application to strike out alluded
to by the Full Court would have failed. The allegation
that Mr Elran
survived on loans and gifts was a reply to what was raised in the
NDPP’s answering affidavit. A party is
entitled to reply to
allegations in answering affidavits. However, I do not agree that in
setting out the reply, the replying
affidavit breached the rule that
requires a party to stand or fall by what appears in the founding
affidavit. That rule prohibits
parties from raising new causes of
action in reply. That is not the position here. Nor does section 44
require that all relevant
facts be contained in the founding
affidavit. The real question is whether on the totality of evidence
placed before the Court
of first instance, it should have been
satisfied that Mr Elran had no unpreserved property from which he
could meet legal expenses.
The record shows that on the evidence as
a whole the finding that he did not have such property was not
improper.
[64] I would have granted leave to appeal and then ordered that the
appeal be dismissed with costs.
CAMERON J
(Mogoeng CJ, Froneman J, Van der Westhuizen J (except for [90]) and
Zondo J concurring):
[65] I am grateful to my colleague Jafta J for setting out the facts
and issues so lucidly in his judgment (main judgment), but
I differ
from his reasoning and conclusion. My differences go to the main
judgment’s overall approach to the legislation,
its
interpretation of the specific provisions at issue, as well as its
inferences from the facts. In my view, the appeal by the
National
Director of Public Prosecutions (NDPP) should succeed.
[66] To start with approach. The Prevention of Organised Crime Act
29
(POCA) has been described as draconian.
30
It is necessarily and rightly far-reaching and robust. Two principal
reasons have impelled modern democratic states to enact
asset
forfeiture legislation like POCA. The first is that, given the
fantastically rich spoils the international economy offers,
the
deterrent effects of even long prison sentences fade. Hence the need
for civil recovery mechanisms under which the state
can seize
property obtained through unlawful activities without having to
secure a conviction in a criminal court.
31
Crime must be tackled independently of the criminal justice system,
and at source – by inhibiting its rewards.
[67] The second reason POCA-like legislation is indispensable is the
intricacy and complexity of modern law-breaking. No longer
is
economic crime committed only through romantically imaginable
methods like piracy, highway robbery and smuggled contraband.
All
that, if not past, is now of comparatively lesser importance. Most
modern crime is committed through infinitely more sophisticated

means – indirect and electronic. More importantly even, it is
then concealed through those same means. The internet, electronic

communication and the arcane recesses of the international banking
system have enabled criminals to outsmart even the smartest
of law
enforcement systems.
[68] Hence, here and elsewhere, the indispensable response has been
asset forfeiture legislation. Follow the money. Seize the
profits.
Target the spoils of criminality. This is what POCA does. As in
other democracies,
32
it creates broad, new categories of offences. These include offences
relating to racketeering activity,
33
dealing in the proceeds of unlawful activities
34
(money laundering,
35
assisting another to benefit from the proceeds of unlawful
activities
36
and acquisition, possession or use of proceeds of unlawful
activities
37
)
and criminal gang-related activities.
38
It targets the proceeds of unlawful activities
39
by enabling confiscation of their proceeds upon a criminal
conviction, as well as restraint orders
40
and realisation of property after a confiscation order has been
made.
41
In addition, civil recovery of property is made possible through
preservation and forfeiture orders.
42
[69] This Court has repeatedly affirmed the constitutionality of
this statutory scheme.
43
In
Mohamed 1
,
44
it did so observing that “conventional criminal penalties are
inadequate as measures of deterrence when organised crime
leaders
are able to retain the considerable gains derived from organised
crime, even on those occasions when they are brought
to justice.”
45
And it noted that the problems POCA targets “make a severe
impact on the young South African democracy”.
46
[70] There is no constitutional challenge to these provisions. We
therefore have no reason to approach the powers POCA confers
on
courts with reserve. We should embrace POCA as a friend to
democracy, the rule of law and constitutionalism – and as

indispensable in a world where the institutions of state are
fragile, and the instruments of law sometimes struggle for their

very survival against criminals who subvert them.
[71] The NDPP obtained a preservation order against Mr Elran in
March 2006 because reasonable grounds existed for believing that
the
property the order covered constituted the proceeds of his
drug-dealing activities and associated money laundering. It is

correct that a preservation order under POCA may be obtained without
notice to a respondent (ex parte),
47
but there are sound grounds for sanctioning this procedure in cases
where those targeted, if given notice, may thwart the object
by
dissipating the very assets sought to be preserved.
[72] In this specific case, even though Mr Elran has not yet been
convicted, there was no unfairness. On the contrary: the order

would, in the absence of a forfeiture application, expire 90 days
after notice of it was published.
48
Meanwhile, Mr Elran, as the person most affected by the order, was
free to apply for its rescission if it caused him undue hardship,

and the hardship outweighed the risk that the property the order
covered might be destroyed, lost, damaged, concealed or
transferred.
49
[73] The NDPP in fact instituted forfeiture proceedings promptly, in
July 2006. It is those proceedings that became mired in
delays,
partly because Mr Elran never filed an affidavit in answer to them.
He claims that this is because he is out of funds.
Meanwhile, he
says he is living on gifts and loans, none of the details of which
he discloses. To his current application for
payment of legal
expenses out of the preserved property, filed in June 2009, he
attached affidavits nearly three years old.
[74] The main judgment notes that Mr Elran’s reply to the
NDPP’s challenge was “unsatisfactory”,
50
and that he made no disclosure at all of his liabilities, despite
the statute’s requirement that he should. The main judgment

concludes that, despite these shortcomings, the grant to Mr Elran of
the relief he sought was impeccable because the disclosure

requirement the statute specifies before an expenses order can be
granted is not a precondition, but merely a consideration to
be
‘balanced’ in exercising the statutory discretion to
make the order sought.
51
[75] I disagree. Section 44(1) empowers (“may”) a court
to make provision for living and legal expenses, but section
44(2)
says that a court “shall not” afford living and legal
expenses “unless it is satisfied” that—
“
(a)
the person cannot meet the expenses concerned out of his or her
property which is not subject to the preservation of property
order;
and
(b) the person has disclosed
under oath all his or her interests in the property and has
submitted to that Court a sworn and full
statement of all his or her
assets and liabilities.”
[76] In
Mohamed 1
,
52
this Court noted that provision for expenses “will not be made
unless the High Court is satisfied that the relevant person
cannot
meet the living or legal expenses out of his or her property not
subject to a preservation order and that the person has
disclosed on
oath all her property.”
53
This Court appears to have regarded the requirements of
sub-paragraphs (a) and (b) of section 44(2) as preconditions to the
exercise of the power in section 44(1). And quite rightly so. Why
else would the legislation say that a court “shall not”

make provision for expenses unless it is satisfied that the
specifications set out in 44(2)(a) and (b) have been met?
[77] In
Fraser
54
and
Naidoo
,
55
building on
Mohamed 1
,
56
this Court embraced this very approach to the interpretation of
section 26 of POCA. Section 26 relates to restraint

orders
57
and its provisions are similar to those of section 44. In
Fraser
,
58
this Court pointed out that a defendant who applies for living or
legal expenses “must satisfy”
59
the court in relation to the preconditions. As was explained in
Naidoo
:
60
“
To
interpret the wide discretion conferred by section 26(1) as
permitting an override of the preconditions expressly set in section

26(6) would run counter to the scheme of the provisions as a whole.
The provision for reasonable legal and living expenses in
section
26(6) is narrowly and finely crafted. Its careful mechanism should
not readily be overridden. And its overall legislative
purpose must
be borne in mind. It is to discourage defendants who face criminal
prosecution from hiding their assets. If a defendant
retains the
alleged proceeds of crime, they remain available for living and
legal expenses. But if these assets are donated away,
they become
unavailable for this purpose.
This is a legitimate statutory
objective. And our construction of the provisions should recognise
it.”
61
[78] The two sections of POCA at issue in
Naidoo
62
and before us here are similar. The only significant difference is
that section 44(2), at issue here, makes unequivocal the constraint

this Court in
Fraser
63
and
Naidoo
64
recognised as embedded in section 26(6). Section 44(2) expressly
stipulates that a court “shall not make” provision
for
legal or living expenses “unless” the person whose
assets are restrained or preserved satisfies it in the respects

required.
[79] This Court made three findings about the relevant provisions in
Naidoo
.
65
The first is that the requirements spelled out create
“preconditions” to the wide power to allow living or
legal
expenses.
66
The second is that to interpret the wide power as permitting an
override of the preconditions “would run counter to the
scheme
of the provisions as a whole”.
67
The third is that the provision for reasonable legal and living
expenses is “narrowly and finely crafted”, and its

careful mechanism “should not readily be overridden”.
68
This is because the legislative purpose is to discourage defendants
who face criminal prosecution from hiding their assets.
69
[80] Section 44(2) thus creates two preconditions for the exercise
of the power conferred in section 44(1). The first is need.
The
second is disclosure. Without their existence, to the court’s
satisfaction, the power does not exist. The words “shall
not”
do not leave enough wiggle space for interpreting the provision to
mean that the conditions thereafter specified are
merely factors to
be taken into consideration in exercising a discretion that can be
exercised regardless of their existence.
70
[81] No injustice or absurdity flows from this statutory scheme. The
property is preserved only because there are reasonable
grounds for
believing that it constitutes the proceeds of criminal activities.
71
The very point of requiring disclosure is to make sure that the
applicant cannot meet the expenses out of property not subject
to
the preservation order. In addition, it seems clear that the
disclosure requirement is broad (“all”; “interests

in the property”; “full”). Disclosure therefore
ought to be precisely tailored to the statute’s requirements.

In its absence, the court cannot make an order.
[82] So, in my view, “shall not” means what it clearly
says. The provision creates threshold preconditions without
the
fulfilment of which the court cannot exercise the section 44(1)
power. The threshold preconditions of need and disclosure
are both
cumulative (“and”) and interlinked, since a court cannot
determine need (“cannot meet”) without
the information
required to be disclosed. The main judgment appears to accept that
the requirement of need in section 44(2)(a)
is a minimum threshold.
72
Yet the clear wording of the provision, and the interlinking of the
two requirements, shows that both constitute preconditions.
[83] Here, those preconditions were not met. The main judgment finds
that the precondition in section 44(2)(a) is met even though
it
accepts that Mr Elran did not comply with section 44(2)(b). In June
2009, Mr Elran launched the present expenses application,
solely for
legal expenses. In his founding affidavit he denied having any funds
or property not subject to the preservation order.
He therefore
attached his two previous affidavits from May and June 2006. He
provided no update.
[84] In answer, the NDPP assailed the extent of Mr Elran’s
disclosure. In particular, the NDPP pointed out that he had
been
able to meet his living and legal expenses over a period of three
years. The NDPP further pointed out that Mr Elran had
failed to
lodge a sworn and full statement of assets and liabilities. Nor had
he disclosed his current income.
[85] In reply, Mr Elran said that he was not in a position to pay
his legal and living expenses and that he had “been forced
to
live on loans and charity from friends and family.”
[86] The NDPP’s main argument was this. Mr Elran had lived for
three years since his last affidavits. He did not disclose
how he
lived, or from where his means had come. All he said was that he
relied on charity and loans. Given that he carried the
burden of
establishing his entitlement to an expenses order, specifically by
proving full disclosure, his mere say-so that he
had no assets and
that he was receiving gifts and loans was not enough. His averments
created a considerable suspicion that he
had other means that he had
not disclosed. Therefore, neither of the statutory preconditions
required for the court to exercise
its power in favour of granting
him legal expenses was fulfilled.
[87] This is by no means unpersuasive. Indeed, simple logic
indicates that gifts would become assets unless consumed totally
at
the time when Mr Elran should have made disclosure; that loans were
liabilities unless paid back at the same date of disclosure;
and
that if Mr Elran is to be believed the miraculous effect would be
that the gifts he received were exactly enough to pay back
all his
loans as at the date when he had to make disclosure.
[88] However, while Mr Elran’s propagation of his lifestyle in
the absence of any visible means of support certainly arouses

considerable suspicion, the clearest basis for finding that the High
Court had no power to make an expenses order in his favour
lies on
narrower grounds. It is this. Mr Elran claims to be living off
loans. Section 44(2)(b) required that he submit “a
sworn and
full statement of all his or her assets and liabilities.” As
his counsel conceded, and the main judgment finds,
73
the loans must be liabilities. They must have arisen since May and
June 2006. Therefore, Mr Elran had to disclose them. He has
not done
so. The point of requiring disclosure of liabilities like loans is
to enable a court properly to assess whether an applicant
has
adequately disclosed his property not subject to the preservation
order. Mr Elran did not do so. The High Court therefore
had no
discretion to make an order in his favour.
[89] The scheme is clearly constitutional. Its words should be taken
to mean what they say.
[90] I have had the benefit of reading the judgment by my colleague
Zondo J, in which he considers the nature of the power section
44(1)
confers on a court, the differences between section 26 and section
44 and the application of the relevant provisions of
POCA to the
facts of the case. I agree with his exposition, and concur in his
judgment.
Order
[91] The following order is made:
Leave to appeal is granted.
The appeal is allowed.
The orders of the Full Court
and the High Court are set aside.
In their place, there is
substituted the following order –
The application is dismissed.
There is no order as to costs.
ZONDO J (Mogoeng CJ, Cameron J and Froneman J concurring):
Introduction
[92] I have had the opportunity of reading the judgments prepared by
my Colleagues, Jafta J and Cameron J. Jafta J finds
that there
is a constitutional issue in this matter and that leave to appeal
should be granted but concludes that the appeal
should be dismissed.
I agree with him on the first two issues. However, on the third
issue I take a different view. In my view
the appeal should be
upheld. I concur in Cameron J’s judgment. However, in the
light of the importance of the matter and
the fact that there are
other important aspects of the case which are not covered in Cameron
J’s judgment which I think
should be dealt with, I consider it
important to set out my views in a separate judgment.
The
law
[93] In their respective judgments both Jafta J and Cameron J have
said enough about the reason for and the objectives of the

Prevention of Organised Crime Act
74
(POCA).
75
Accordingly, I do not propose to deal with those matters in this
judgment. Section 38(1) of POCA
76
confers upon the National Director of Public Prosecutions (NDPP) the
right to apply to the High Court on an ex parte basis for
an order
prohibiting any person from dealing in any manner with any property
that is the subject of the order (referred to in
this judgment as a
preservation order). If the High Court makes a preservation order,
it may make it subject to such conditions
and exceptions as it may
specify. The High Court can only grant a preservation order if there
are reasonable grounds to believe
that the property is an
instrumentality of an offence or proceeds of unlawful activities or
associated with terrorist and related
activities.
77
[94] I draw attention to the definition of “property”
which is “money or any other movable, immovable, corporeal
or
incorporeal thing and includes any rights, privileges, claims and
securities and any interest therein and all proceeds thereof”.
78
The term “instrumentality of an offence” is defined as
“any property which is concerned in the commission or

suspected commission of an offence at any time before or after the
commencement of this Act, whether committed within the Republic
or
elsewhere”.
79
[95] Section 38 does not require that, before the court may make a
preservation order, it should have reasonable grounds
to suspect
that the property is an instrumentality of an offence or is proceeds
of unlawful activities. It requires that the court
be satisfied
that there are reasonable
grounds to believe
that it is so.
This choice of words is not without significance. The requirement of
reasonable grounds to suspect is a lower
threshold than the
requirement of being satisfied that there are reasonable grounds to
believe that the property is an instrumentality
of an offence or is
proceeds of unlawful activities. There is a difference between
saying: “I suspect that” and saying:
“I believe
that”.
[96] Part of the effect of the above is that this matter must be
approached on the acceptance that the court which made the
preservation order based its order on a belief on reasonable grounds
that the property under the preservation order was an
instrumentality
of an offence or the proceeds of unlawful
activities. Until that order is set aside, we must take it that the
court made it in
accordance with the requirements of the statute. I
say this despite the fact that a preservation order is granted on
the strength
of one side of the story without the respondent’s
version. Once a High Court has made a preservation order, any person

is prohibited from dealing in any manner with the preserved property
except in accordance with the order or directions of that
court.
80
I now turn to consider section 44 of POCA.
81
Section 44
Section
44(1) reads as follows:
“
A
preservation of property order may make provision as the High Court
deems fit for—
(a) reasonable living expenses
of a person holding an interest in property subject to a
preservation of property order and his
or her family or household;
and
(b) reasonable legal expenses
of such a person in connection with any proceeding instituted
against him or her in terms of this
Act or any other related
criminal proceedings.”
POCA goes
on to provide as follows in section 44(2)(a) and (b):
“
A
High Court shall not make provision for any expenses under
subsection (1) unless it is satisfied that—
the person cannot meet the
expenses concerned out of his or her property which is not subject
to the preservation of property
order; and
the person has disclosed
under oath all his or her interests in the property and has
submitted to that Court a sworn and full
statement of all his or
her assets and liabilities.”
[97]
Section 44(1) serves the purpose of conferring power on the High
Court which made the preservation order to provide for the
living
and legal expenses of a person holding an interest in the preserved
property. Section 44(2) precludes the High Court from
making
provision for any living or legal expenses in favour of the person
contemplated in section 44(1) unless two conditions
are met. The
conditions are that the court must be satisfied that:
“
(a)
the person cannot meet the expenses concerned out of his or her
property which is not subject to the preservation of property
order;
and
(b) the person has disclosed
under oath all his or her interests in the property and has
submitted to that Court a sworn and full
statement of all his or her
assets and liabilities.”
That the
High Court is precluded from providing for such expenses when it is
not satisfied as to the two conditions prescribed
in section
44(2)(a) and (b) is based on the phrase in section 44(2): “A
High Court shall not make provision for any expenses
under
subsection (1)
unless it is satisfied that
. . .”.
[98] The effect of section 44(2) is that, when the High Court
considers an application by a person holding an interest in
preserved
property for it to provide for his or her expenses
contemplated in section 44(1), it must inquire into two matters. The
one is
whether or not the person concerned “cannot meet the
expenses concerned out of his or her property which is not subject
to the preservation of property order”. If it concludes that
the person can meet the expenses from his or her property that
is
not subject to the preservation order, that is the end of the
inquiry and the court must dismiss the application. In such
a case
that person will have failed to meet the condition prescribed in
section 44(2)(a). In this regard it needs to be pointed
out that the
mere fact that the person has unpreserved property does not on its
own mean that the condition in section 44(2)(a)
is not met. The
court must first inquire into whether, having regard to all the
relevant factors, it can be said that that unpreserved
property is
sufficient to enable the person to meet the expenses in question out
of it. The relevant factors will include that
person’s other
commitments. This means that it is possible to have a case where
such person can meet, for example, his
or her living or legal
expenses partly from his or her unpreserved property and partly from
his or her preserved property.
[99] If the court concludes that the person concerned cannot meet
the expenses in issue from his or her unpreserved property,
the
court must proceed to inquire into the second condition. That is
whether or not the person concerned has “disclosed
under oath
all his or her interests in the property and has submitted to that
Court a sworn and full statement of all his or
her assets and
liabilities” as required by section 44(2)(b).
[100] If the court is also satisfied that the person has disclosed
under oath all his or her interests in the property and has

submitted to that court “a sworn and full statement of all his
or her assets and liabilities”, the court has no discretion

but must make provision for the expenses requested. It cannot find
that the person cannot meet expenses from unpreserved property
and
that he or she has disclosed under oath all his or her interests in
the property and has submitted to it a sworn and full
statement of
all assets and liabilities and yet not order a provision of
expenses. In other words section 44(2) means that
if the High
Court is satisfied that—
(a) the person cannot meet the expenses concerned out of his or her
unpreserved property; and
(b) the person has disclosed under oath all his or her interests in
the property and has submitted to that Court a sworn and
full
statement of all his or her assets and liabilities,
it must
make provision for any expenses contemplated in subsection (1). This
construction of section 44(2) is justified by the
language employed
in the provision. Accordingly, if the court is satisfied as to the
two conditions in section 44(2)(a) and (b),
it has no discretion but
to authorise the payment of the expenses.
[101] If the High Court is not satisfied as to the two conditions,
it also has no discretion but must dismiss the application.
It
cannot say: I am satisfied that the applicant can meet living or
legal expenses from the unpreserved property and that he
or she has
withheld information about the extent of interests in the property
and has not submitted a statement of all assets
and liabilities but
I will, in any event, grant legal expenses from the preserved
property. Accordingly, it seems to me that,
despite the use of the
word “may” in section 44(1), the High Court actually has
no discretion to provide or not to
provide for the expenses
contemplated in section 44(1) once it has completed its inquiry into
whether the person applying for
the provision of such expenses meets
the conditions prescribed in section 44(2). If the two
conditions have been met, the
court must make an order providing for
the expenses in question. If any one of the two conditions has not
been met, the court
is precluded from making provision for expenses.
[102] The way that the provisions of section 44(1) and (2) are
formulated has strong similarities to the way the provisions of

section 34(5) and (6) of the Restitution of Land Rights Act
82
(RLRA) are formulated. Section 34(5) and (6) reads as follows:
“
(5)
After hearing an application contemplated in subsection (1), the
Court may—
dismiss the application;
order that when any claim in
respect of the land in question is finally determined, the rights
in the land in question, or
in part of the land, or certain rights
in the land, shall not be restored to any claimant;
(c) make any other order it
deems fit.
(6) The Court shall not make an
order in terms of subsection 5(b) unless it is satisfied that—
(a) it is in the public
interest that the rights in question should not be restored to any
claimant; and
(b) the public or any
substantial part thereof will suffer substantial prejudice unless an
order is made in terms of subsection
5(b) before the final
determination of any claim.”
[103] In
Minister of Defence and Another v Khosis Community at
Lohatla and Others
83
the Land Claims Court held that the use of the word “may”
in section 34(5) of the RLRA gave the court a discretion
to dismiss
an application brought under section 34 even if the
jurisdictional requirements of section 34(6) had been met.
In
Khosis
Community, Lohatla, and Others v Minister of Defence and Others
84
(
Khosis
) the Supreme Court of Appeal, on appeal, rejected the
Land Claims Court’s construction of section 34(5) read with
(6).
The Supreme Court of Appeal said:
“
I do
not agree that there is such an overriding discretion. Apart from
the fact that it would not make sense to provide for such
a
discretion in the light of the stringent threshold requirements, the
word ‘may’ in this context does not indicate
the
presence of any discretion. It simply defines the possible orders,
depending on the court’s findings. In other words,
it performs
a purely predicative function.”
85
(Footnote omitted.)
I think
that the use of the word “may” in section 44(1), when
read in context, may well be linked to “reasonable
living
expenses” in para (a) and to “reasonable legal expenses”
in para (b). If it relates to a discretion,
it would have to be the
discretion relating to the determination of what are reasonable
living expenses and what are reasonable
legal expenses and not to a
discretion whether to grant or not to grant such expenses when the
condition prescribed in section
44(2)(a) and (b) have been met or
have not been met, as the case may be.
[104] In
Fraser v ABSA Bank Ltd (National Director of Public
Prosecutions as
Amicus Curiae
)
86
this Court had to consider whether or not a creditor may join
proceedings under section 26(6) of POCA when a “defendant”

applies to the High Court for an order providing for reasonable
legal expenses out of property that is subject to a restraint
order.
The High Court had held that a creditor had no standing (
locus
standi
) to be joined in the proceedings. On appeal the Supreme
Court of Appeal held that the High Court had a discretion to join
such
a creditor in such proceedings.
[105] The question before the Court in
Fraser
was whether
under section 26(6) of POCA
87
the High Court has a discretion to allow a creditor of a “defendant”
to intervene in section 26(6) proceedings, and,
if so, the nature
and extent of the discretion to grant an order authorising living or
legal expenses. Section 26(1) reads as
follows:
“
The
National Director may by way of an
ex
parte
application apply to a competent High Court for an order prohibiting
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.”
[106]
Section 26(6) reads as follows:
“
Without
derogating from the generality of the powers conferred by subsection
(1), a restraint order may make such provision as
the High Court may
think fit—
(a) for the reasonable living
expenses of a person against whom the restraint order is being made
and his or her family or household;
and
(b) for the reasonable legal
expenses of such person in connection with any proceedings
instituted against him or her in terms
of this Chapter or any
criminal proceedings to which such proceedings may relate,
if the court is satisfied that
the person whose expenses must be provided for has disclosed under
oath all his or her interests
in property subject to a restraint
order and that the person cannot meet the expenses concerned out of
his or her unrestrained
property.”
[107] In
Fraser
this Court made statements to the effect that
section 26(6) conferred upon the High Court a discretion to make
provision for living
or legal expenses. However, in reading those
statements one must bear in mind that the real question before this
Court in that
matter was not whether section 26(6) conferred a
discretion on the High Court to make an order providing for living
or legal
expenses. That question was considered within the context
of this Court seeking to answer the real question before it. Van der

Westhuizen J formulated the real question before this Court in that
case as follows: “The question central to this application
is
whether a creditor of a defendant may join proceedings when the
defendant applies to a court to provide in a restraint order
for
reasonable legal expenses connected to his criminal trial.”
88
This Court’s decision on that central question was that the
High Court had a discretion to allow a creditor to intervene
in
section 26(6) proceedings.
Similarities
and differences between sections 26(6) and 44(1) and (2)
[108] The terms of section 26(6)(a) and (b) are, to some extent,
similar, though not identical, to the terms of section 44(1)(a)
and
(b) and section 44(2)(a) and (b). In section 26(6) it is, amongst
others, provided that, without derogating from the generality
of the
powers conferred by section 26(6), “a restraint order
may
make such provision as the High Court
may think
fit”
(my emphasis). Section 44(1) makes no reference to a derogation from
the generality of any powers but does provide
that “a
preservation of property order may make provision as the High Court
deems fit
for . . .” (my emphasis). What
comes after “may think fit . . .” in
section 26(6)
is:
“
(a)
for the reasonable living expenses of a person against whom the
restraint order is being made and his or her family or household;

and
(b) for the reasonable legal
expenses of such person in connection with any proceedings
instituted against him or her in terms
of this Chapter or any
criminal proceedings to which such proceedings may relate;
if the court is satisfied that
the person whose expenses must be provided for has disclosed under
oath all his or her interests
in property subject to a restraint
order and that the person cannot meet the expenses concerned out of
his or her unrestrained
property.”
What
comes after “deems fit for” in section 44(1) are paras
(a) and (b) which are not, for purposes of the present
matter,
materially different from paras (a) and (b) of section 26(6) if one
excludes that part of section 26(6)(b) that comes
after the word
“relate”.
[109] The
last part of section 26(6) that starts with the words, “if the
court is satisfied that the person whose expenses
must be provided
for has disclosed under oath all his or her interests in property
subject to a restraint order” has some
similarities with
section 44(2) but is formulated differently. As already stated,
section 44(2)(a) and (b) reads:
“
A
High Court shall not make provision for any expenses under
subsection (1) unless it is satisfied that—
the person cannot meet the
expenses concerned out of his or her property which is not subject
to the preservation of property
order; and
the person has disclosed
under oath all his or her interests in the property and has
submitted to that Court a sworn and full
statement of all his or
her assets and liabilities.”
[110] The last part of section 26(6) is to the effect that, if the
High Court is satisfied as to the matters provided for therein,
a
restraint order may make such provision as the High Court may think
fit for the reasonable living expenses or legal expenses
in section
26(6)(a) and (b). However, section 44(2) is rather different
but very clear. It contains an injunction that the
High Court “shall
not make provision for any expenses under subsection (1) unless it
is satisfied” as to the conditions
stipulated in paras (a) and
(b) of section 44(2). Section 26(6) has no similar injunction.
I am inclined to think that this
injunction constitutes a material
difference between the provisions of section 26(6)(a) and (b)
and those of section 44(1)(a)
and (b) and (2)(a) and (b). Since
this Court was not dealing with section 44(1) and (2) in
Fraser
, care must be taken in applying to section 44(1)
and (2) certain statements made in
Fraser
in considering
section 26(6) and other provisions of POCA. In particular I do
not think that the statements in
Fraser
to the effect that
section 26(6) gives the High Court a discretion can necessarily be
said to apply in section 44(1) and
(2).
[111] What is the relevance of the requirement in section 44(2)(b)
that the person applying for an order providing for expenses
from
the preserved property must disclose “under oath all his or
her interests in the property” and that he or she
must submit
“to that Court a sworn and full statement of all his or her
assets and liabilities”? The reason for requiring
the person
to disclose all his or her interests in the preserved property is
obvious. The court needs to know whether his or
her interest covers
the whole property or whether it covers only part of the property.
In the latter event, the court would also
need to know the extent of
the part of the property that is covered by his or her interest or
interests. The reason for this
is that, in considering whether or
not to provide for the expenses and how much provision it should
authorise for such expenses,
the court should know the precise
extent of his or her interest in the property.
[112] Without knowing the extent of a person’s interest in the
preserved property, the court may have difficulty in establishing

how much is available in the preserved property from which it can
authorise payment of expenses. The reason why the person is
required
by section 44(2)(b) to submit to the court “a sworn and full
statement of all his or her assets and liabilities”
is to
enable the court to have a full picture before it determines whether
he or she has unpreserved property from which he or
she can meet the
expenses and, if so, how much provision can reasonably be made from
the unpreserved property for such expenses.
[113] Furthermore, section 44(1) authorises the High Court to
provide only for “reasonable” living expenses and
“reasonable” legal expenses. The High Court would be
exceeding its powers if it made an order authorising unreasonable

legal expenses or unreasonable living expenses. The determination of
what legal expenses or living expenses are reasonable in
a
particular case depends in part on what assets and liabilities the
person applying for such expenses has. That is part of the
reason
why the person applying for expenses must disclose all his or her
assets and liabilities. Even if he or she does not have
unpreserved
property, the court needs to have a full picture of his or her
assets and liabilities before it can decide on the
reasonableness of
the expenses that it must authorise for him or her from the
preserved property. Needless to say, if all the
unpreserved property
has to be used to meet the person’s liabilities, the court
will realise that the unpreserved property
is not property from
which the person can be expected to get the required expenses. Then,
provided both requirements of section 44(2)(a)
and (b) are met,
the expenses must be provided for from the preserved property.
[114] If the person says to the court that he or she does not have
unpreserved property, it means that all the property he or
she has
is the property that is subject to the preservation order. The fact
that he or she tells the court that he or she does
not have
unpreserved property does not relieve him or her of the section
44(2)(b) obligation to submit to the court a sworn and
full
statement of all his or her liabilities. This is because, even if he
or she does not have unpreserved property from which
he or she can
meet the expenses in issue, the court must know the full extent of
his or her liabilities before it can decide
how much of the
preserved property should be made available to enable him or her to
meet the expenses in issue. The more liabilities
he or she has, the
more careful the court needs to be in regard to how much should be
taken from the preserved property to meet
the expenses in question.
The fewer the liabilities the person has, the more prepared the
court may be to make provision for
his or her expenses from the
preserved property. Accordingly, if the person does not furnish the
court with all his or her liabilities,
the court is precluded by
section 44(2) from granting him or her expenses contemplated in
section 44(1).
[115] In any event whatever the reason for the requirement that the
person disclose all his or her liabilities may be, the fact
would
remain that the statute makes the disclosure of his or her
liabilities a condition that must be met before the court can
grant
him or her expenses from the preserved property. In this regard it
is important to bear in mind that the constitutionality
of section
44 has not been challenged in this matter. Once the person has not
submitted to the court the liabilities as required
by
section 44(2)(b), he or she has failed to meet a condition
precedent for the grant of the expenses and the court should
dismiss
the application.
[116] When a High Court is called upon to consider whether to
provide for living or legal expenses of a person holding an interest

in preserved property under section 44(1) read with section
(2), the first matter that it must satisfy itself about is the

extent of the preservation order affecting that person. This is
necessary in order for the court to establish whether that order

covers all the property of that person as at the date when that
order was made or whether it left out some property. In turn
the
significance of establishing this at the outset lies in the fact
that section 44(1)(a) requires the court to establish whether
or not
the person applying for the provision of expenses has property other
than the preserved property from which he or she
could meet his or
her expenses.
[117] If the court finds that the person has unpreserved property,
the next question will be whether from the unpreserved property
the
person can meet the expenses he or she is asking the court to grant
him or her from the preserved property. This is important
because it
is clear from section 44(2)(a) that the court is required to order
the provision of legal or living expenses from
the preserved
property only as a measure of last resort. If the court finds that
the person does not have unpreserved property
but the court is
satisfied that both conditions prescribed in section 44(2)(a) and
(b) have been met, the court would have to
consider what amount
should be provided from the preserved property for the expenses in
question in the light of his or her statement
of assets and
liabilities submitted in compliance with section 44(2)(b). In terms
of section 44(1) the amount must be reasonable.
Application of the law to the facts
[118] I have said earlier that, in my view, the first thing that the
High Court needs to satisfy itself about when it is called
upon to
consider whether to make provision for living or legal expenses
under section 44(1) is the extent of the preservation
order. The
court needs to immediately know whether it is dealing with the case
of someone whose property is all subject to the
preservation order
or whether he or she has unpreserved property. If it appears that
the preservation order covers all the property
that the person had
as at the date of the preservation order, the most obvious question
that should immediately arise is: how
has this person been earning a
living from the time the preservation order was made to date? If the
person has been working and
earning a salary or if he or she has a
business that he or she has been running after the preservation
order was made, the court
may proceed to consider other relevant
factors in the application. However, if the application before the
court does not deal
with how the person has been earning a living,
particularly if the period from the date of the preservation order
to the date
of the launching of the application before court is
long, the court should be concerned about what that person’s
source
of livelihood has been over the period. Once the court has
become aware that the person has neither been working nor running

any business over the period that would have given him or her an
income, the court should, naturally, also ask itself the question:

how has this person survived over this period without any income?
[119] If the founding affidavit does not contain any explanation
about how the person has survived over a lengthy period, this
should
constitute “brightly flashing red lights”
89
indicating to the court that the source of that person’s
livelihood during the period may well have been unpreserved property

which he or she has not disclosed to the court and that that
property may well be an instrumentality of an offence or may
constitute
proceeds of unlawful activities. The court should at that
stage be alive to the fact that the preservation order that was
granted
against that person was granted after the court had
satisfied itself that there were reasonable grounds that that
person’s
property was an instrumentality of an offence or
constituted proceeds of unlawful activities.
[120] If,
having considered the affidavits and heard the applicant, the court
still remains in serious doubt about whether or
not the applicant
has unpreserved property from which the living or legal expenses can
be provided rather than them being provided
from the preserved
property, the court cannot possibly be satisfied as required by
section 44(2)(a) that the person cannot
meet such expenses from
his or her unpreserved property. Where the court has such a doubt or
where the court is satisfied that
the person can meet the expenses
from his or her unpreserved property, it cannot authorise the
payment of such expenses from
the preserved property. The same will
apply if the court is satisfied that the person has not made the
disclosures contemplated
in section 44(2)(b) or has not submitted to
that court a statement of all his or her assets and liabilities. In
such a case the
court is required to dismiss the application.
[121] In this matter the preservation order was granted on 6 March
2006. The terms of the preservation order were so wide that
the
order covered all of the property which belonged to Mr Elran as at 6
March 2006. Mr Elran says in his affidavit that, prior
to the
granting of the preservation order, he used the funds standing to
his credit in his various bank accounts to support himself,
his
common law wife and minor child. In the light of this, the question
that immediately arises is: how was Mr Elran expected
to
support himself and his family when the preservation order covered
all his property?
[122] The answer to this question is that Mr Elran was expected to
apply to the High Court under section 44(1)(a) for an order

authorising the payment of his reasonable living expenses. Indeed,
that is what Mr Elran did in July 2006. In that application
he
sought an order authorising not only payment of his living expenses
but also his legal expenses as provided for in section
44(1)(b). His
application was dismissed by Kumalo AJ in the Johannesburg High
Court in 2007. Subsequently, Mr Elran applied
for leave to
appeal. Although he was granted leave to appeal, Mr Elran later
abandoned that appeal. He says that this was because
he did not have
funds to pay lawyers.
[123] After Mr Elran had abandoned his appeal, he waited until about
June 2009 – i.e. three years after all his property
had been
placed under a preservation order – and then launched in the
High Court the application which gave rise to the
present
proceedings in this Court. Anyone who appreciates that the
preservation order granted against Mr Elran covered all
his
property as at 6 March 2006 and that he had not at any stage in the
meantime received any funds or property from the preserved
property
to support himself and his family, ought to be curious to find out
how Mr Elran had made a living over the three years.
Why was Mr
Elran’s application for living and legal expenses not dealt
with on an urgent basis or why was it not given
priority? Did he ask
that it be dealt with on an urgent basis or that it be given
priority? These questions are not addressed
in Mr Elran’s
founding affidavit.
[124] One would have expected that in the founding affidavit in the
High Court Mr Elran would have taken the Court into
his
confidence and explained how he had made his living from March 2006
to June 2009. Mr Elran failed to address this question
in his
founding affidavit. I find this very strange. I cannot accept that
anyone in Mr Elran’s position would not
know that he
should explain to the Court how he had made a living over such a
long period of time when, on his version, he had
no access to his
only property, namely, the preserved property. A person finding
himself in Mr Elran’s position would
be particularly
alive to the need to explain the source of his livelihood. This is
so because the mere granting of a preservation
order meant that the
High Court was satisfied that there were reasonable grounds for
believing that he had earned his property
through crime.
[125] One would have expected that when, in 2009, Mr Elran brought
the application for legal expenses which gave rise to this
appeal,
he would also apply at the same time for an order authorising the
payment of his living expenses. However, Mr Elran did
not ask for
his living expenses. Of course, this must have been a decision that
he consciously took. This means that, after he
had lived for three
years without access to his preserved property, Mr Elran elected
that he should be paid legal expenses and
not living expenses from
the preserved property. In this regard it is important to note that
his attitude is that Kumalo AJ wrongly
dismissed his application for
living and legal expenses in 2007.
[126] The previous application that Mr Elran had brought before the
High Court was an application for his living and legal expenses
from
the preserved property. I have referred above to the fact that Mr
Elran did not see fit to explain in his founding affidavit
what the
source of his livelihood was for the period March 2006 to June 2009.
He also did not take the High Court into his
confidence and explain
why he did not include an application for an order authorising
payment of living expenses at the same
time as he was applying for
an order authorising payment of legal expenses.
[127] Mr Elran’s election not to apply for living expenses was
even stranger because in the High Court he was the one who

complained in his replying affidavit that since March 2006 he had
not been able to pay his living and legal expenses and had
been
forced to live off loans and charity from his friends and family. I
would not accept that Mr Elran did not realise that
there was a need
to explain to the Court why he was not applying for living expenses
at the same time that he was applying for
legal expenses. Mr Elran
should have explained all this because otherwise anyone aware of
the
width and effect of the preservation order against him is likely to
conclude that he had a source of livelihood that he had
failed to
disclose to the Court on which he had supported himself and his
family from March 2006 to June 2009. One would
also be driven
to the conclusion that Mr Elran’s source of livelihood
was illegal and that is why he did not disclose
it to the Court. If
that conclusion was reached, the result would be that the Court
could not be satisfied that Mr Elran could
not meet his legal
expenses from his unpreserved property and it would then dismiss his
application because the condition prescribed
in section 44(2)(a)
would not have been met.
[128] If Mr Elran’s application to the High Court that gave
rise to the present appeal were to be decided on the basis
of his
case as set out in his founding affidavit, it fell to be dismissed
on the ground that, in the above circumstances, the
Court could not
be satisfied that Mr Elran had no unpreserved property from which he
could meet his legal expenses and, therefore,
the condition in
section 44(2)(a) was not met. However, after the NDPP had taken the
point in its answering affidavit that Mr
Elran must have had or did
have property (other than the preserved property) which he had not
disclosed, Mr Elran stated in his
replying affidavit that he did not
have any property other than the preserved property and that he
lived off charity and loans
from family and friends. Except for the
loan of R60 000,00 that Mr Elran said he received from his mother,
he did not disclose
who precisely had given him loans, how much the
loans were, when he received them nor did he explain the terms and
conditions
of such loans. Mr Elran also did not disclose who had
made donations to him, the amounts of the donations and when the
donations
had been made. He just made a bald statement that over the
period he had depended on donations and loans from family and
friends.
[129] The first question that arises with regard to the explanation
that Mr Elran gave in reply is whether or not it should have
been in
the founding affidavit. It should have been in the founding
affidavit because the question of how Mr Elran had earned
his
living in the meantime was relevant to satisfying the Court that he
had no unpreserved property from which he could meet
his legal
expenses.
90
In this regard it must be remembered that in motion proceedings an
applicant must make out his or her case in the founding papers
and
not in reply.
91
The Full Court took the view that the NDPP should have applied to
strike out that part of Mr Elran’s reply and, since the
NDPP
failed to do so, the Court was entitled to take that part of the
reply into account in deciding the matter.
[130] In my view the Full Court erred in saying that it was open to
the NDPP to apply to strike out Mr Elran’s reply that
he had
lived off loans and donations. The NDPP could not have shown that
all the requirements for an application to strike out
were present.
Applications to strike out are governed by Rule 23(2) of the Uniform
Rules of Court. Rule 23(2) reads:
“
Where
any pleading contains averments which are scandalous, vexatious, or
irrelevant, the opposite party may, within the period
allowed for
filing any subsequent pleading, apply for the striking out of the
matter aforesaid, and may set such application
down for hearing in
terms of paragraph (f) of subrule (5) of rule (6), but the court
shall not grant the same unless it is satisfied
that the applicant
will be prejudiced in the conduct of his claim or defence if it be
not granted.”
[131] Firstly, Rule 23(2) requires that the matter that is sought to
be struck out should be shown to be irrelevant, scandalous
or
vexatious. The statement in question was neither scandalous nor
vexatious. Indeed, it was not irrelevant either. It was highly

relevant but should have been included in the founding affidavit and
not in reply. Secondly, another requirement for a striking
out order
is that an applicant for such an order must show that he or she will
be prejudiced in the conduct of his or her case
or defence by the
presence of such matter in the affidavits or pleadings. The NDPP
could not satisfy this requirement because
the Court was not
entitled to take into account a statement made in reply which should
have been made in the founding affidavit.
Accordingly, I am of the
view that the Full Court was not entitled to take that statement
into account in deciding the matter.
[132] If the statement in question is not taken into account in
deciding the matter, one is left with a founding affidavit that
is
silent on a very critical aspect of the matter that would have
rendered the Court unable to be satisfied as to the matter
in
section 44(2)(a). The result would be that the Court could not
have been satisfied as to the condition in section 44(2)(a)
and the
High Court was precluded from making the order that it made.
[133] Even if the Full Court was entitled to take the statement in
question into account, it could still not have been satisfied
that
Mr Elran did not have unpreserved property from which he could meet
his legal expenses. Why did someone who genuinely believed
that a
preservation order had been wrongly granted against him which denied
him access to a lot of his money choose not to apply
for an order
for living expenses but lived off loans and charity? Why would such
a person, when he has lawyers who are prepared
to represent him in
bringing an application for an order authorising payment of legal
expenses not instruct them to include in
the application an order
authorising payment of his living expenses? I have immense
difficulty in understanding the logic of
his election. How can
anybody who has preserved property which he genuinely believes was
wrongly placed under a preservation
order prefer to depend on
donations and loans from other people for a living when he can, by
an order of court, obtain payment
of his living expenses from his
preserved property? In fact all he needs to do to obtain an order of
court authorising payment
of his living expenses from the preserved
property is to apply to court for such an order and meet the two
conditions prescribed
by section 44(2)(a) and (b). When a person has
nothing to hide, these conditions are very easy to meet.
[134] Another question that arises when one
considers Mr Elran’s election is: did Mr Elran disclose
to those he approached
for donations and loans that the law gives
him a right to ask the High Court to authorise payment of his living
expenses from
his preserved property but that he had elected not to
approach the Court for such relief? I doubt that he did. It seems to
me
that the most obvious and logical thing to do for a person whose
property has been placed under a preservation order and who has
no
other property he can use to earn a living is to apply to the High
Court which made the preservation order and seek an order

authorising payment of his living expenses.
[135] I find it difficult to understand why such
a person would elect to live like a beggar when he has his own
property from
which he can earn a living. Such conduct is so
illogical that it is difficult to resist the temptation to think
that the source
of such person’s livelihood is illegitimate
and probably illegal. It may well be that Mr Elran lived off loans
and charity
but, if those loans and charity were legitimate and
above board, let him disclose those who provided him with loans, how
much
the loans were and when they were given. In my view, if he
brings an application for living or legal expenses but fails to meet

one or both of the conditions prescribed in section 44(2)(a) and
(b), he is not precluded from later on bringing another similar

application that complies with the statute. Accordingly, it is not
as if, once his application has been dismissed for failure
to meet
the conditions prescribed in section 44(2)(a) and (b), he will never
qualify for such expenses if later on he is able
to meet the
prescribed conditions.
[136] In any event, donations constitute assets
in one’s estate. Accordingly, in so far as Mr Elran received
donations on
which he depended for a living between March 2006
and June 2009, those donations would have fallen within the
definition
of the word “property” in section 1 of POCA
and, therefore, constituted unpreserved property.
The
donations received by Mr Elran would also have constituted assets
and Mr Elran should have disclosed them in the statement
required by
section 44(2)(b). He did not disclose them and, therefore, did not
meet the conditions prescribed by section 44(2)(b).

Furthermore, the loans which Mr Elran says he received were
liabilities to his estate and he should have disclosed them in the

statement of liabilities required by section 44(2)(b). He failed to
do so and, therefore, did not meet the condition prescribed
by
section 44(2)(b).
[137] In the result, on the strength of Mr Elran’s founding
affidavit read with or without the statement he includes in
his
replying affidavit which he should have included in his founding
affidavit, the Court should not have been satisfied, as
required by
section 44(2)(b), that Mr Elran could not meet his legal expenses
from his unpreserved property. The Court should
also not have been
satisfied that Mr Elran had submitted to the Court a full statement
of all his assets and liabilities as required
by section 44(2)(b).
Accordingly, the Court of first instance ought to have dismissed Mr
Elran’s application on the grounds
that it was not satisfied
as required by section 44(2)(a) and (b). The Full Court ought to
have upheld the appeal against the
order of the Court of first
instance.
[138]
In the result I agree with the order proposed by Cameron J.
For
the Applicant: Advocate A E Bham SC and Advocate R Keightley
instructed by the State Attorney.
For the Respondent: Advocate N P G Redman and
Advocate E Fasser instructed by I Mabunda Attorneys.
1
121
of 1998.
2
Section
38(2) of POCA provides:
“
The High Court shall make an
order referred to in subsection (1) if there are reasonable grounds
to believe that the property
concerned—
(a) is an instrumentality of an
offence referred to in Schedule 1; or
(b) is the proceeds of unlawful activities; or
(c) is property associated with terrorist and related
activities.”
3
Section
40 of POCA provides:
“
A preservation of property
order shall expire 90 days after the date on which notice of the
making of the order is published in
the
Gazette
unless—
(a) there is an application for a forfeiture order
pending before the High Court in respect of the property, subject to
the preservation
of property order;
(b) there is an unsatisfied forfeiture order in force
in relation to the property subject to the preservation of property
order;
or
(c) the order is rescinded before the expiry of that
period.”
4
Section
39(2) provides:
“
When interpreting any
legislation, and when developing the common law or customary law,
every court, tribunal or forum must promote
the spirit, purport and
objects of the Bill of Rights.”
5
Section
38 of POCA provides:
“
(1) The National Director may
by way of an
ex
parte
application
apply to a High Court for an order prohibiting any person, subject
to such conditions and exceptions as may be specified
in the order,
from dealing in any manner with any property.
(2) The High Court shall make an order referred to in
subsection (1) if there are reasonable grounds to believe that the
property
concerned—
(a) is an instrumentality of an offence referred to in
Schedule 1; or
(b) is the proceeds of unlawful activities.
(3) A High Court making a
preservation of property order may, when it makes the order or at
any time thereafter, make any ancillary
orders that the court
considers appropriate for the proper, fair and effective execution
of the order, including an order
authorising
the seizure of the property concerned by a police
official.
(4) Property seized under subsection (3) shall be dealt
with in accordance with the directions of the High Court which made
the
relevant preservation of property order.”
6
[2006]
ZACC 24
;
2007 (3) SA 484
(CC);
2007 (3) BCLR 219
(CC).
7
Id
at para 46.
8
Section
50 of POCA provides:
“
(1) The High Court shall,
subject to section 52, make an order applied for under section 48(1)
if the Court finds on a balance
of probabilities that the property
concerned—
(a) is an instrumentality of an offence referred to in
Schedule 1; or
(b) is the proceeds of unlawful activities.
(2) The High Court may, when it makes a forfeiture
order or at any time thereafter, make any ancillary orders that it
considers
appropriate, including orders for and with respect to
facilitating the transfer to the State of property forfeited to the
State
under such an order.
(3) The absence of a person whose interest in property
may be affected by a forfeiture order does not prevent the High
Court from
making the order.
(4) The validity of an order under subsection (1) is
not affected by the outcome of criminal proceedings, or of an
investigation
with a view to institute such proceedings, in respect
of an offence with which the property concerned is in some way
associated.
(5) The Registrar of the Court making a forfeiture
order must publish a notice thereof in the
Gazette
as soon as
practicable after the order is made.
(6) A forfeiture order shall not take effect—
(a) before the period allowed for an application under
section 54 or an appeal under section 55 has expired; or
(b) before such an application or appeal has been
disposed of.”
9
Fraser
above n 6 at para 43. See also
Phumelela Gaming and Leisure Ltd v
Gründlingh and Others
[2006] ZACC 6
;
2007 (6) SA 350
(CC);
2006 (8) BCLR 883
(CC) and
Carmichele v Minister of Safety and
Security and Others
[2001] ZACC 22
;
2001 (4) SA 938
(CC);
2001
(10) BCLR 995
(CC).
10
Daniels
v Campbell NO and Others
[2004] ZACC 14
;
2004 (5) SA 331
(CC);
2004 (7) BCLR 735
(CC) and
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
;
2001 (1) SA 545
(CC);
2000
(10) BCLR 1079
(CC) at paras 22-6.
11
Wary
Holdings (Pty) Ltd v Stalwo (Pty) Ltd and Another
[2008] ZACC
12
;
2009 (1) SA 337
(CC);
2008 (11) BCLR 1123
(CC).
12
Fraser
above n 6 at para 68.
13
Fraser
above n 6 at para 72.
14
Fraser
above n 6 at para 71. Section 26(6) of POCA provides:
“
Without derogating from the
generality of the powers conferred by subsection (1), a restraint
order may make such provision as
the High Court may think fit—
for the reasonable living expenses of a person against
whom the restraint order is being made and his or her family or
household;
and
for the reasonable legal expenses of such person in
connection with any proceedings instituted against him or her in
terms of
this Chapter or any criminal proceedings to which such
proceedings may relate,
if the court is satisfied that the
person whose expenses must be provided for has disclosed under oath
all his or her interests
in property subject to a restraint order
and that the person cannot meet the expenses concerned out of his or
her unrestrained
property
.”
15
S
v Basson
[2005] ZACC 10
;
2007 (3) SA 582
(CC);
2005 (12) BCLR
1192
(CC) at para 110.
16
[2006]
ZACC 13
;
2007 (5) SA 525
(CC);
2007 (2) BCLR 125
(CC). See also
Mabaso v Law Society of the Northern Provinces
[2004] ZACC 8
;
2005 (2) SA 117
(CC);
2005 (2) BCLR 129
(CC) and
National
Coalition for Gay and Lesbian Equality and Others v Minister of Home
Affairs and Others
[1999] ZACC 17
;
2000 (2) SA 1
(CC);
2000 (1)
BCLR 39
(CC).
17
Giddey
NO
at para 19.
18
Cameron
J’s judgment at [72] below.
19
National
Director of Public Prosecutions and Another v Mohamed and Others
[2002] ZACC 9
;
2002 (4) SA 843
(CC);
2002 (9) BCLR 970
(CC)
(
Mohamed I
).
20
Moise
v Greater Germiston Transitional Local Council
[2001] ZACC 21
;
2001 (4) SA 491
(CC);
2001 (8) BCLR 765
(CC) and .
Mohlomi v
Minister of Defence
[1996] ZACC 20
;
1997 (1) SA 124
(CC);
1996
(12) BCLR 1559
(CC).
21
See
Cameron J’s judgment at [80] below.
22
Naidoo
and Others v National Director of Public Prosecutions and Another
[2011] ZACC 24
;
2012 (1) SACR 358
(CC);
2011 (12) BCLR 1239
(CC)
(
Naidoo
).
23
Id
at para 1.
24
Id
at para 5.
25
See
Cameron J’s judgment at [82] below.
26
Id.
27
See
Zondo J’s judgment [103] below.
28
Fraser
above n 6 at para 13.
29
121
of 1998.
30
See
[23] above.
31
See
Leong
The Disruption of International Organised Crime: An
Analysis of Legal and Non-Legal Strategies
(Ashgate Publishing
Limited, Hampshire 2007).
32
Young
(ed)
Civil Forfeiture of Criminal Property: Legal Measures for
Targeting the Proceeds of Crime
(Edward Elgar Publishing
Limited, Cheltenham 2009).
33
Chapter
2, sections 2 and 3 of POCA create offences and penalties relating
to a “pattern of racketeering activity”.
This is defined
in section 1 as:
“
the planned, ongoing,
continuous or repeated participation or involvement in any offence
referred to in Schedule 1 and includes
at least two offences
referred to in Schedule 1, of which one of the offences occurred
after the commencement of this Act and
the last offence occurred
within 10 years (excluding any period of imprisonment) after the
commission of such prior offence referred
to in Schedule 1”.
Schedule
1 includes, amongst others: most serious common law crimes (murder,
rape, kidnapping, arson, public violence, robbery,
assault with
intent to commit grievous bodily harm); statutory sexual offences;
“any offence under any legislation dealing
with gambling,
gaming or lotteries”; extortion; child-stealing; theft; fraud;
forgery; “offences relating to the
coinage”; drugs
offences; arms offences; liquor offences; exchange-control offences;
precious metals and precious stones
offences; and perjury.
34
Chapter
3, sections 4-8 of POCA.
35
Id
section 4.
36
Id
section 5.
37
Id
section 6.
38
Id
chapter 4, sections 9-11.
39
Id
chapter 5, sections 12-36.
40
Id
sections 24A-29A.
41
Id
sections 30-6.
42
Id
chapter 6, sections 37-62.
43
Naidoo
v National Director of Public Prosecutions
[2011] ZACC 24
;
2012
(1) SACR 358
(CC);
2011 (12) BCLR 1239
(CC) (
Naidoo
);
Falk
v National Director of Public Prosecutions
[2011] ZACC 26
;
2012
(1) SACR 265
(CC); 2011 (11) BCLR 1134 (CC);
Fraser v ABSA
Bank Ltd
[2006] ZACC 24
; 2007 (3) SA 484 (CC);
2007 (3) BCLR 219 (CC) (
Fraser
);
National
Director of Public Prosecutions and Another v Mohamed NO and Others
[2003] ZACC 4
;
2003 (4) SA 1
(CC);
2003 (5) BCLR 476
(CC) (
Mohamed
2
); and
National Director of Public Prosecutions and Another
v Mohamed
NO and Others
[2002] ZACC 9
;
2002 (4) SA 843
(CC); 2002 (9) BCLR 970 (CC) (
Mohamed 1
).
44
Mohamed
1
above n 43.
45
Id
at para 15.
46
Id.
47
Section
38 provides:
“
38. Preservation of
property orders
(1) The National Director may by way of an ex parte
application apply to a High Court for an order prohibiting any
person, subject
to such conditions and exceptions as may be
specified in the order, from dealing in any manner with any
property.
(2) The High Court shall make an order referred to in
subsection (1) if there are reasonable grounds to believe that the
property
concerned—
(a) is an instrumentality of an offence referred to in
Schedule 1;
(b) is the proceeds of unlawful activities; or
(c) is property associated with terrorist and related
activities.
(3) A High Court making a preservation of property
order shall at the same time make an order authorising the seizure
of the property
concerned by a police official, and any other
ancillary orders that the court considers appropriate for the
proper, fair and
effective execution of the order.
(4) Property seized under subsection (3) shall be dealt
with in accordance with the directions of the High Court which made
the
relevant preservation of property order.”
48
Section
40 of POCA provides:
“
40. Duration of
preservation of property orders
A preservation of property order shall expire 90 days
after the date on which notice of the making of the order is
published in
the
Gazette
unless—
(a) there is an application for a forfeiture order
pending before the High Court in respect of the property, subject to
the preservation
of property order;
(b) there is an unsatisfied forfeiture order in force
in relation to the property subject to the preservation of property
order;
or
(c) the order is rescinded before the expiry of that
period.”
49
Section
47(1) of POCA provides:
“
A High Court which made a
preservation of property order—
(a) may on application by a person affected by that
order vary or rescind the preservation of property order or an order
authorising
the seizure of the property concerned or other ancillary
order if it is satisfied—
(i) that the operation of the 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 result of the order outweighs the risk that the property
concerned may
be destroyed, lost, damaged, concealed or transferred;
and
(b) shall rescind the preservation of property order
when the proceedings against the defendant concerned are concluded.”
50
See
[46] above.
51
See
[37]-[38]; [45]; and [49] above.
52
Mohamed
1
above n 43.
53
Id
at para 21.
54
Fraser
above n 43.
55
Naidoo
above n 43.
56
Mohamed
1
above n 43.
57
Section
26 of POCA provides in relevant part as follows:
“
26. Restraint orders
(1) The National Director may by way of an
ex parte
application apply to a competent High Court for an order prohibiting
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.
. . .
(6) Without derogating from the generality of the
powers conferred by subsection (1), a restraint order may make such
provision
as the High Court may think fit—
(a) for the reasonable living expenses of a person
against whom the restraint order is being made and his or her family
or household;
and
(b) for the reasonable legal expenses of such person in
connection with any proceedings instituted against him or her in
terms
of this Chapter or any criminal proceedings to which such
proceedings may relate,
if the court is satisfied that the person whose
expenses must be provided for has disclosed under oath all his or
her interests
in property subject to a restraint order and that the
person cannot meet the expenses concerned out of his or her
unrestrained
property.”
58
Fraser
above n 43.
59
Id
at para 55.
60
Naidoo
above n 43.
61
Id
at paras 30-1.
62
Naidoo
above n 43.
63
Fraser
above n 43.
64
Naidoo
above n 43.
65
Id.
66
Apart
from the passage quoted in the main body of this judgment at [77]
above,
Naidoo
above n 43 at para 20 also explains that
section 26(6) makes allowance for expenses “only on limited
terms”, including
the condition of full disclosure.
67
Naidoo
above n 43 at para 30.
68
Id.
See too
Naidoo
above n 43 at para 19, where the Court noted
that POCA’s objective is attained “through complex
machinery, whose
operation and effect must be carefully calibrated.”
69
Id.
70
See
Bishop and Brickhill “‘In the beginning was the word’:
The role of text in the interpretation of statutes”
(2012) 129
SALJ
681
where the authors argue that an unrestrained
interpretive method that wilfully ignores legislative text threatens
the rule of
law and the separation of powers.
71
Section
38(2) of POCA provides that a High Court shall make a preservation
of property order if there are “reasonable grounds
to believe
that the property concerned—
(a) is an instrumentality of an offence referred to in
Schedule 1;
(b) is the proceeds of unlawful activities; or
(c) is property associated with terrorist and related
activities.”
Section
1 of POCA defines “unlawful activity” as “conduct
which constitutes a crime or which contravenes any
law whether such
conduct occurred before or after the commencement of this Act and
whether such conduct occurred in the Republic
or elsewhere.”
The scope of criminal activities contemplated by
section 38(2) of POCA is thus wide and not limited to the prescribed
list of
crimes in Schedule 1 of POCA.
72
See
[38] above (“the threshold in every case will always be that
the court is satisfied that the applicant has no property
that is
not subject to a preservation order and from which the requested
expenses may be met.”)
73
See
[48] above.
74
121
of 1998
.
75
See
Jafta J’s judgment at [22] and Cameron J’s judgment at
[66]-[68] above.
76
Section
38(1) reads as follows: “The National Director may by way of
an
ex parte
application apply to a High Court for an order
prohibiting any person, subject to such conditions and exceptions as
may be specified
in the order, from dealing in any manner with any
property.”
77
Section
38(2) reads as follows:
“
The High Court shall make an
order referred to in subsection (1) if there are
reasonable
grounds to believe
that the property concerned—
(a) is an instrumentality of an
offence referred to in Schedule
1;
(b) is the proceeds of unlawful activities; or
(c) is property associated with terrorist and related
activities.” (My emphasis.)
78
Section
1 of POCA.
79
Id.
80
I
shall, for convenience, refer to such property as the “preserved
property” and to property that is not subject to
a
preservation order as “unpreserved property” where the
distinction is important.
81
Any
reference to section 44 in this judgment is a reference to section
44 of POCA.
82
22
of 1994.
83
[2002]
ZALCC 39
, available at http://www.saflii.org/za/cases/ZALCC/
2002/39.pdf, accessed on 11 February 2013.
84
2004
(5) SA 494
(SCA).
85
Id
at para 7.
86
[2006]
ZACC 24
;
2007 (3) SA 484
(CC);
2007 (3) BCLR 219
(CC).
87
Any
reference to section 26 in this judgment is a reference to section
26 of POCA.
88
Fraser
above n 86 at para 2.
89
Democratic
Alliance v President of the Republic of South Africa and Others
[2012] ZACC 24
;
2013 (1) SA 248
(CC);
2012 (12) BCLR 1297
(CC) at
para 52.
90
Section 44(2)(a).
91
Director
of Hospital Services v Mistry
1979 (1) SA 626
(A) at 635H-636B.