National Director of Public Prosecutions v Van der Merwe and Another (A338/2010) [2011] ZAWCHC 8; 2011 (2) SACR 188 (WCC); [2011] 3 All SA 635 (WCC) (24 February 2011)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2011
>>
[2011] ZAWCHC 8
|

|

National Director of Public Prosecutions v Van der Merwe and Another (A338/2010) [2011] ZAWCHC 8; 2011 (2) SACR 188 (WCC); [2011] 3 All SA 635 (WCC) (24 February 2011)

REPORTABLE
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
CASE NO: A338/2010
In the
matter between:
THE NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
…...........................................................................
Appellant
and
EDWARD JOHN VAN DER MERWE
….................................................
1
st
Respondent
RUGAYA SOLOMONS
…......................................................................
2
nd
Respondent
JUDGMENT DELIVERED: 24 FEBRUARY 2011
BINNS-WARD J:
The National Director of Public Prosecutions (‘the NDPP’),
who is the appellant before us, applied at first instance,
in terms
of s 48(1) of the Prevention of Organised Crime Act 121 of 1998
(‘the Act’), for an order declaring
forfeit to the State
certain property which had been earlier made subject to a
preservation order in terms of s 38 of the
Act. The property
concerned comprised of (i) an immovable property registered in
the name of the second respondent, and
(ii) the sum of
R115 862, 35, being the total of various amounts of cash
which had been seized by the police during
raids made at the address
of the immovable property in the course of anti-narcotic operations.
The first respondent, who is alleged
to be the lessee of the fixed
property, claimed that the cash represented the takings of a taxi
business that he said he operated
from the premises. The second
respondent is the first respondent’s former wife. She and the
first respondent had lived
together at the immovable property for
some years, but had moved to another address a year or two before
their separation.
The NDPP alleged that the immovable property was susceptible to
forfeiture because it was an ‘
instrumentality of an
offence
’
1
as defined in s 1 of the Act. It was alleged that the property
was used for the purposes of the unlawful dealing in drugs,
which is
one of the types of offence listed in Schedule 1 of the Act. He
sought a forfeiture order in respect of the cash
on the basis that
the money comprised the ‘
proceeds of unlawful activities
’.
2
The court of first instance granted a forfeiture order in respect of
the cash, but refused the application in respect of the
immovable
property. With the leave of the court
a quo
, the NDPP appeals
against the refusal of the application for the forfeiture of the
fixed property; and the first respondent cross-appeals
against the
order declaring the cash forfeit and the attendant adverse costs
order. In the court
a quo
the second respondent had been
represented by the same counsel who appeared there on behalf of the
first respondent.
3
There was, however, no appearance on behalf of the second respondent
before us to oppose the NDPP’s appeal.
Proceedings in the court
a quo
took place in two stages. At
the first stage, in a judgment given on 31 December 2007 (‘the
first judgment’),
the court determined that the immovable
property was an instrumentality, as defined, but having been
requested by the respondents’
counsel to make an order of the
nature made by the Supreme Court of Appeal (‘the SCA’)
in paragraph 2 of the
order made in
National Director of
Public Prosecutions v Parker
2006 (3) SA 198
(SCA),
4
the court, following the wording of the order made in
Parker
,
ordered that ‘
the respondents’ knowledge insofar as
the defences provided for in s 52(2A)(a) and (b)
,
the
so-called ‘innocent owner defences’, are concerned
’
be referred for the hearing of oral evidence. The learned judge also
referred what he considered to be relevant disputes
of fact in
respect of the characterisation of the cash as ‘
proceeds of
unlawful activities
’ to oral evidence.
Before turning to deal in turn, first with the appeal and then with
the cross-appeal, it will be useful - particularly in view
of what I
consider to have been the misdirected grant of an order referring
issues that would arise for consideration in terms
of s 52 of
the Act for oral evidence when there had been no application by the
respondents in terms of s 48(4)(b) for
an order in terms of
that provision - to contextualise the nature of the proceedings at
first instance within the framework of
the Act. The exercise is also
useful to assist an understanding of the basis of the criticism
later in this judgment of the court
a quo
’s treatment
of the evidence concerning the second respondent’s alleged
ignorance that her property was being used
for the purposes of drug
dealing, and the apparent effect of that treatment on the court
a
quo
’s approach to determining whether or not the NDPP had
discharged the
onus
in respect of showing that a forfeiture
order was a proportionately appropriate means of achieving the
objects of the Act.
The proceedings in the court
a quo
occurred in terms of the
provisions of chap 6, which is comprised of ss 37 - 62 of
the Act. The purpose of the Act
and the role within it of chap 6
were explained by Ackermann J in
National Director of Public
Prosecutions and Another v Mohamed NO and Others
2002
(4) SA 843 (CC) at para 14-22. At para 16-18
of the Constitutional Court’s judgment the learned
judge made
the following observations of particular relevance in the current
matter:
[16] The present Act (and particularly chaps 5 and 6
thereof) represents the culmination of a protracted process of law
reform which
has sought to give effect to South Africa's
international obligation to ensure that criminals do not benefit from
their crimes.
The Act uses two mechanisms to ensure that property
derived from crime or used in the commission of crime is forfeited to
the State.
These mechanisms are set forth in chap 5 (comprising ss 12
to 36) and chap 6 (comprising ss 37 to 62). Chapter 5 provides for
the
forfeiture of the benefits derived from crime but its
confiscation machinery may only be invoked when the 'defendant' is
convicted
of an offence. Chapter 6 provides for forfeiture of the
proceeds of and instrumentalities used in crime, but is not
conviction-based;
it may be invoked even when there is no
prosecution.
[17] …… Chapter 6 provides for forfeiture
in circumstances where it is established, on a balance of
probabilities,
that property has been used to commit an offence, or
constitutes the proceeds of unlawful activities, even where no
criminal proceedings
in respect of the relevant crimes have been
instituted. In this respect, chap 6 needs to be understood in
contradistinction to
chap 5 of the Act. Chapter 6 is therefore
focused, not on wrongdoers, but on property that has been used to
commit an offence or
which constitutes the proceeds of crime. The
guilt or wrongdoing of the owners or possessors of property is,
therefore, not primarily
relevant to the proceedings.
[18] There is, however, a defence at the second stage of
the proceedings when forfeiture is being sought by the State. An
owner
can at that stage claim that he or she obtained the property
legally and for value, and that he or she neither knew nor had
reasonable
grounds to suspect that the property constituted the
proceeds of crime or had been an instrumentality in an offence ('the
innocent
owner' defence).
Proceedings in an application for forfeiture of property in terms of
chap 6 of the Act are civil in nature and subject to
the rules
of evidence applicable in civil proceedings.
5
As observed in
National Director of Public Prosecutions v RO Cook
Properties (Pty) Ltd; National Director of Public Prosecutions v 37
Gillespie
Street Durban (Pty) Ltd and another; National Director of
Public Prosecutions v Seevnarayan
[2004] 2 All SA 491
(SCA) at
para 14, ‘
The purpose of Chapter 6’s
forfeiture provisions is signalled in the part of the Act’s
Preamble that states that
“no person should benefit from the
fruits of unlawful activities, nor is any person entitled to use
property for the commission
of an offence”. The “use”
of property “for” the commission of crime denotes a
relationship of direct
functionality between what is used and what
is achieved.
’ Regard to the relevant purpose of the Act
impels a relatively restricted construction of the term
‘
instrumentality of an offence
’.
6
Property only incidentally connected with the commission of an
offence is thus not subject to forfeiture in terms of the
provision.
7
The implications of the property clause in the Bill of Rights, which
proscribes any law that purports to permit the arbitrary
deprivation
of property, also impel a rationally purposive rather than a
strictly literal application of the relevant provisions
of the Act.
8
By construing the applicable provisions in a manner that implies the
requirement of a proportionality enquiry, the operation
of the
forfeiture provisions in a manner that could offend against s 25
of the Constitution is avoided.
Forfeiture in terms of chap 6 of the Act, while it inevitably bears
with it a measure of penal effect, is primarily intended
to achieve
socially remedial objectives
9
.
A non-exhaustive list of such objectives was identified at para 18
of
Cook Properties
: ‘
(a) removing incentives for
crime; (b) deterring persons from using or allowing their property
to be used in crime, (c) eliminating
or incapacitating some of the
means by which crime may be committed (“neutralising”…property
that has been
used and may again be used in crime); and… (d)
advancing the ends of justice by depriving those involved in crime
of the
property concerned
’. That is why, notwithstanding
its undeniably penal effects, the primary focus in using forfeiture
of property as a means
under civil law of achieving the remedial
objects of chap 6 is not on the guilt or wrongdoing of the owners or
possessors of
the property liable to forfeiture, but on the
functional role of the property in the commission of criminal
offences, or the
character of the property as the proceeds of
unlawful activities, as the case might be.
In accordance with the procedural order provided in chap 6,
10
the proceedings in the court
a quo
commenced with an
application by the NDPP in terms of s 38 for a preservation
order. After the prescribed notice of the
making of the preservation
order had been given, the application in terms of s 48(1) for a
forfeiture order followed on
notice to those parties who had entered
an appearance in terms of s 39(3) of the Act.
Any person who has an interest in the property which is the subject
of a forfeiture application has the right, in terms of s 48(4)(a),

to oppose the making of the order, or, in terms of s 48(4)(b),
to apply for an order excluding the interest from the operation
of
the forfeiture order, or varying its operation.
11
The nature of the order that may be made on application in terms of
s 48(4)(b) is provided for in s 52 of the Act.
The
consideration of any application in terms of s 48(4)(b) by a
respondent claiming exclusionary relief occurs in ‘the
second
stage of the proceedings’ referred to by Ackermann J at
para 18 of
Mohamed
, quoted above.
12
13
A person seeking an order in terms of s 52 (and thereby raising
what has been loosely called
14
the ‘innocent owner defence’)
15
must satisfy the court on a balance of probabilities of the
existence of the requirements set out in s 52(2)
16
(in respect of the ‘proceeds of unlawful activities’),
or in s 52(2A)
17
(in respect of property characterised as ‘an instrumentality
of an offence’). Section 52 of the Act thus burdens
a
respondent asserting the so-called ‘innocent owner defence’
with what has been referred to on occasion as a ‘reverse
onus
’.
18
The ‘innocent owner defence’ is, however, not a defence,
properly so called, because it does not arise to be asserted
against
the entitlement of the NDPP on the facts to a forfeiture order, but
rather by way of an application for an order excluding
the affected
party’s interest from the effect of a forfeiture order to
which the NDPP has proven an entitlement.
19
It is thus in the second stage of the proceedings, if it is reached,
that the owner or affected interest holder’s innocence
or
culpability arises becomes the focus of enquiry, and the
onus
is on such person to establish his or her innocence or lack of
culpability.
20
In the context of a matter such as the present case, in which the
primary issues were the character of the subject property as
either
the ‘
instrumentality of an offence
’ or, in
respect of the cash, the ‘
proceeds of unlawful activities
’,
the relevant bases for opposition in the sense contemplated by
s 48(4)(a) of the Act would be founded in grounds
to oppose
fixing the property under the Act with either of those statutory
labels. Although the word ‘
or
’, between the
provisions of s 48(4)(a) and s 48(4)(b) might on the face
of it suggest that a respondent in an
application brought by the
NDPP in terms of s 48(1) must make an election as to which of
the two courses provided in the
respective paragraphs of the
provision to follow, it seems to me that it would be permissible for
a respondent to oppose a forfeiture
application in the manner
provided for in paragraph (a), and also, contingently on the failure
of its opposition, to avail of
paragraph (b) to seek exclusionary
relief in terms of s 52. In the current matter the respondents
contended that the property
was used as the base for a taxi business
and that the cash found there was generated in the conduct of such
business. The essence
of the opposition to the application for
forfeiture was that the incidents of drug-dealing or possession of
drugs that had occurred
at the property were merely incidental and
the manifestations of the private misconduct of delinquent
employees. The respondents
did not apply in terms of s 48(4)(b)
for an exclusion order.
A High Court’s power to make a forfeiture order in terms of
s 48(1) read with s 50 of the Act is a discretionary
one
in the broad sense of the concept explained in
Knox D'Arcy Ltd
and Others v Jamieson and Others
[1996] ZASCA 58
;
1996 (4) SA 348
(A) at
360D-362G.
21
This court’s ability to interfere on appeal with the decision
made by the court of first instance is therefore less constrained

than in the case in which the court of first instance has exercised
its discretion in the strict or narrow sense. This means
that this
court may substitute its own view for that of the court below if its
view of the merits impels a different outcome
to the case. It will,
of course, do so with due consideration of its role as an appellate
court and will interfere only if it
concludes that the decision of
the court of first instance was wrong.
The wide discretionary nature of the High Court’s power in
treating with a forfeiture application in terms of the Act
22
is manifest in the fact that a decision to grant or refuse to make
an order is made upon a weighing up of any number of relevant

disparate and incommensurable considerations arising from the
peculiar facts of a given case to determine whether the means of

forfeiture is a rationally and proportionately appropriate manner of
achieving the ends of the Act.
23
Thus, even in a matter in which an affected party does not seek an
exclusion order in terms of s 52, the effect of any forfeiture

on the respondents is a matter that will generally be taken into
account as part of the proportionality enquiry.
24
The very availability of the remedy of an application for an
exclusion order is also a factor that bears relevance in any
proportionality
enquiry.
The consideration of the effect of a forfeiture on a respondent as
part of the proportionality enquiry in the first stage of
the
proceedings bears a quite different character from that which arises
in the context of ‘the innocent owner defence’.
The
innocence or guilt or culpability of the respondent plays no role in
the consideration in the proportionality enquiry.
25
The relevant consideration in the proportionality context is whether
the effect of a forfeiture on the respondent, irrespective
of the
latter’s blameworthiness or innocence, might not show that a
civil
forfeiture order would in the circumstances be a
disproportionate measure to achieve the legislation’s ends.
26
Prima facie
that would be the case when the personally
punitive effect of the postulated forfeiture would materially
outweigh the measure
of achievement of the broader societal purposes
at which the remedy of civil forfeiture is directed.
27
For reasons that will become apparent in the discussion of the
current matter, below, it is important for a court seized with
an
application for forfeiture under chap 6 of the Act to be astute
to the difference between the nature of the consideration
of the
respondent’s position in regard to the effect of a forfeiture
in the context of the proportionality enquiry and
the nature of the
consideration of the case of the respondent who seeks to satisfy the
requirements of an application in terms
of s 48(4)(b) for an
exclusion order in terms of s 52. The dichotomy between these
discrete undertakings is obviously
important in the determination of
whether the applicable
onus
has been discharged.
The NDPP is burdened with the
onus
of proving an entitlement
to a forfeiture order pursuant to an application by that functionary
in terms of s 48(1) of the
Act. As is generally the position in
regard to a true
onus
, the incidence of which is fixed by
law, nothing in the character of a particular case can shift that
onus
to the other party. The ambit of the
onus
on the
NDPP in all forfeiture applications, irrespective of whether or not
the respondent claims an exclusionary order in terms
of s 52,
includes the
onus
of establishing on a balance of
probabilities that the remedy sought is proportionate, in the
context of realising the objects
of the Act, to the ends sought to
be achieved by its grant – and therefore, by implication,
would not amount to an arbitrary
deprivation of property. The case
of the respondent who applies for exclusionary relief in terms of
s 48(4)(b) read with
s 52 of the Act falls to be
considered only if it is found that the NDPP has discharged the
onus
in the application in terms of s 48(1). That much follows from
the wording in s 52(1) to the effect that a court may
exercise
the power to make an exclusion order ‘
on application…and
when it makes a forfeiture order
’. Because the ambit of an
exclusion order might on the peculiar facts of a case be wide enough
to render the making of
a forfeiture order nugatory,
28
the words ‘
when it makes a forfeiture order
’ fall
to be construed to denote ‘
when a forfeiture order is
liable to be made
’.
When, pursuant to an application in terms of s 48(4)(b), a
second stage of proceedings occurs in a chap 6 forfeiture

application, both stages must be decided
pari passu
. This is
because of the condition (i.e. ‘
subject to section 52’
)
to which the power to make a forfeiture order in terms of s 50(1)
is subject. This characteristic of the procedure does
not, however,
derogate from the effect of the provisions that a respondent’s
case for exclusionary relief in terms of s 52
of the Act in the
so-called second stage falls to be considered quite discretely from
the matters germane to the determination
of the first stage.
The discrete character of the second stage of the proceedings is
underscored by the difference in the incidence of the
onus
in
that stage. In the second stage of the proceedings the
onus
is, as mentioned, on the party applying for exclusionary relief to
prove that the requirements described in s 52(2), s 52(2A)
29
and - if applicable on the facts - s 52(3), have been
satisfied. Should a respondent who could have availed of the right

to claim an exclusion order fail to exercise it by not bringing an
application for relief in terms of s 52 of the Act, such

failure does not operate to make evidence about the innocence or
reasonable ignorance of the respondent that would have been
relevant
in the second stage somehow relevant by default in the determination
of the first stage, nor, in a case in which the
forfeiture of the
instrumentality of an offence is sought, does such failure by the
respondent burden the NDPP with proving that
the owner or other
affected respondent knew or should have known that the property was
an instrumentality, or that it had not
taken all reasonable steps to
prevent the use of the property as an instrumentality.
In matters in which the material evidence is on paper, the discrete
nature of each of the stages, as aforementioned, has implications
in
respect of the application of the
Plascon-Evans
rule.
30
The NDPP is the applicant in the s 48(1) application for relief
in terms of s 50(1) in the first stage of the proceedings
and
the affected respondent in the s 48(1) application is the
applicant in terms of s 48(4)(b) for relief in terms
of
s 52(1). The position is quite distinguishable from a matter in
which a defence, properly so-called, in respect of which
the
respondent bears the
onus
, such as extinctive prescription,
or justification - as in the example of
Adbro Investment Co Ltd v
Minister of the Interior
1956 (3) SA 345
(A) at 349 used by
Rabie ACJ in
Ngqumba/Damos NO/ Jooste v Staatspresident
1988
(4) SA 224
(A) at 262B-D - is raised in motion proceedings.
31
That, no doubt, explains Nkabinde AJA’s finding in
National
Director of Public Prosecutions v Parker
2006
(3) SA 198
(SCA) at para 22, that the property owner’s
protestations of ‘
lack of
knowledge
’
in affidavits
considered by the court in the first stage of the forfeiture
application proceedings had ‘
no
bearing
’
in the first stage
enquiry and ‘
in so far as they
relate
[d]
to
the first stage inquiry, d
[id]
not,
in any event, establish any material dispute of fact
’.
The
Plascon-Evans
rule thus falls to be applied with
due regard to the fact that in the second stage in the proceedings
the court is considering
a second application by a different
applicant.
32
That both applications arise within the ambit of the single
proceedings contemplated by s 48(3) of the Act does not
derogate
from this conclusion; the position is closely analogous to
that which obtains when an application and a counter-application in

terms of rule 6 of the Uniform Rules are heard at a single sitting
and determined
pari passu
.
The rationale for the
Plascon-Evans
rule was explained in the
Appellate Division’s judgment in
Ngqumba
supra, loc cit
as being to exclude the granting of final relief to an applicant who
chooses to proceed on motion in a matter
in which material disputes
of fact might reasonably be anticipated. Motion proceedings are
prescribed in terms of the relevant
provisions of Chapter 6 of the
Act for both forfeiture orders and orders for exclusion of interests
from the effect of forfeiture
orders. Accordingly, it would be
inappropriate for a court to penalise an applicant under those
provisions for using motion proceedings
notwithstanding that
relevant disputes of fact might be eminently foreseeable. On the
contrary, the court will always accede
to a request for such
disputes on the papers to be referred for oral evidence. If the
party applying for an exclusion order fails
to adduce persuasive
oral evidence in respect of disputes of fact on the papers arising
from that party’s application in
terms of s 48(4)(b), it
is that party, and not the NDPP, who must bear the adverse
consequences of the application of the
Plascon-Evans
rule.
As mentioned, the second respondent did not apply in terms of
s 48(4)(b) for an exclusion order in terms of s 52. The

learned judge appears to have considered, however, that his finding
that the property was an instrumentality made it appropriate,
even
in the context of their having made only flimsy and unconvincing
protestations of ignorance in their affidavits opposing
the
forfeiture order, to afford the respondents the opportunity to seek
exclusionary relief. He therefore made an order at the
conclusion of
a first stage hearing providing (in para 3 thereof):
The immovable property in question….having been
found to be an instrumentality of an offence, and there being a
dispute on
the affidavits on the issue of the respondents’
involvement in illegal activities at the property and the
respondents’
knowledge insofar as the defences provided for in
s 52(2A)(a) and (b) are concerned, the matter is referred for
the hearing
of oral evidence on that issue.
The judge’s reference of the identified issues to oral evidence
was underpinned by an understanding that the evidence on
the
affidavits had to be treated at both stages indiscriminately. This
much was apparent from paragraph 10 of the first judgment:
The applicant is seeking final relief on notice of
motion on affidavit evidence. The matter must therefore be approached
on the
basis set out in
Plascon-Evans Ltd v
van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
[1984
(3) SA 623
(AD) at 635]
on the facts stated by
the respondents together with the facts as stated by the respondents
together with the facts in the applicant’s
affidavits that are
admitted and those facts, it is clear, that cannot be denied. In
addition, where the allegations or denials
of the respondents are so
far fetched or clearly untenable the Court will be justified in
rejecting them merely on the papers.
This applies to disputes of fact
in both stages of the enquiry, despite the fact that in regard to the
second stage, the respondents
are saddled with an
onus
.
[Ngqumba/Damos NO/ Jooste v Staatspresident
1988 (4) SA 224
(A) at
260H-263H]
(The passages between square brackets are the content of footnote
references at the indicated places in the main text.)
For the reasons discussed above, this approach was incorrect in my
respectful view.
The reference of the forfeiture application by the court of first
instance to a second stage, when there had been no application
for
an exclusion order, was not indicated. As mentioned earlier,
33
it was requested by the respondents’ counsel, apparently
inspired by the course manifested in para 2 of the order
made
by the SCA in
Parker
. In my view the remittal to oral
evidence directed in terms of para 2 of the order made in
Parker
should not be misconstrued as having been intended to
derogate from the scheme of the relevant provisions of the Act. Had
there
been any intention by the SCA to hold that the innocent owner
defences could be raised absent any form of application in terms
of
s 48(4)(b) of the Act, it would no doubt have stated any such
conclusion - which would be at odds with the literal import
of the
relevant statutory provisions - clearly. Significantly, it did not.
The only issue before the SCA in
Parker
was the High Court’s
decision that the property in question in that matter was not an
instrumentality. At para 23
of
Parker
it was recorded
that the respondent had not (expressly) applied for an exclusion
order. The SCA nevertheless considered it ‘
appropriate
’
to remit the case to the High Court for oral evidence; apparently
because the papers revealed a dispute of fact on issues
that, if
decided in the respondent’s favour, might establish an
innocent owner defence, including, one must assume, allegations
by
the respondent that she not only did not know that the property was
an instrumentality, but also that she had no reasonable
grounds to
suspect that it was. If that were so one can understand, having
regard to the gravity of any decision by the court
to render a
person’s fixed property forfeit, that the SCA would have had
regard to the substance over the form in which
the so-called
innocent owner defence was raised and concluded that it was
appropriate that even a tacitly made application for
exclusionary
relief should be considered.
34
In
Parker
, at para 24, Nkabinde AJA appears also, in
part, to have founded the order made by the SCA to refer the matter
back to the
High Court for the respondent to lead oral evidence to
establish her innocence, on the ‘constitutional
caveat
’
sounded in
Cook Properties
at para 24-26. It is thus
necessary when considering the appropriateness of making an order
like that made in
Parker
also to appreciate just what the
nature of that ‘
caveat
’ was.
The mention,
obiter
, at para 26 of
Cook Properties
of
a ‘
serious constitutional question
’ concerned the
issue (which did not arise for decision either in that case, or in
Parker
) of a constitutionally compatible construction of
s 52(2A) of the Act to the position of a truly innocent owner.
The issue
was mentioned by Mpati DP and Cameron JA, referring
to Kennedy J’s minority opinion in
Austin v United
States
[1993] USSC 98
;
509 U.S. 602.
35
Justice Kennedy’s reference in that case to ‘
a
serious constitutional question
’ was founded on Brennan J
remarks in an analogous context in the earlier US Supreme Court
decision in
Calero-Toledo v. Pearson Yacht Leasing Co
[1974] USSC 126
;
416
U.S. 663.
The notion of the forfeiture of the property of a ‘truly
innocent owner’s’ property had been said by Brennan J

in
Calero-Toledo
(at 689-690) to give rise to ‘
serious
constitutional questions
’. The expression ‘
truly
innocent owner
’ in that context was employed by Blackmun J
in the majority opinion in
Austin
, referring to the passage
just cited in
Calero-Toledo
. It is evident from Brennan J’s
opinion in
Calero-Toledo
loc cit that what Blackmun J
later called a ‘
truly innocent owner
’ denoted an
owner whose property had been ‘
taken from him without his
privity or consent
’ and then used for the purposes that
rendered it subject to forfeiture, or an owner who was able to prove
‘
not only that he was uninvolved in and unaware of the
wrongful activity, but also that he had done all that reasonably
could be
expected to prevent the proscribed use of his property
’.
In the minority opinion in
Austin
referred to in
Cook
Properties
, Kennedy J stated ‘
At some point, we
may have to confront the constitutional question whether forfeiture
is permitted when the owner has committed
no wrong of any sort,
intentional or negligent. That for me would raise a serious
question.
’ It was in that context that the ‘constitutional
caveat
’ in
Cook Properties
was uttered against
construing s 52(2A)(a) of the Act to impose impossible demands
on a truly innocent owner seeking to
exclusion under the provision
from a forfeiture order. It was uttered in response to the ‘
examples
of the untoward results a literal reading
[of the provision]
could produce
[that]
proliferated in argument
’
in
Cook Properties
.
36
.
In the current matter it was evident at the time the court
a quo
gave its first judgment that the facts on record were such for it to
be apparent that they did not bring this case within the
spectrum of
examples in which a strictly literal and insufficiently contextual
reading of s 52(2A)(a) might give rise to
a need to confront
the serious constitutional question postulated in
Cook
Properties
. Furthermore, as stressed earlier, the respondents
had not applied for, or made out a case for relief in terms of s 52.
As evident from
Cook Properties
at para 26, the scheme
of the statute requires the owner or interest holder to ‘
invoke
the second stage of the chapter’s procedures’ (my
emphasis). Even the tacit invocation of the second stage procedures

would entail the applicant for exclusionary relief having to make
averments in its papers opposing the NDPP’s application
in
terms of s 48(1) which, if accepted on their face, would
satisfy the requirements of s 52(2) or s 52(2A). Palpably

implausible averments of the nature that would be disregarded in the
manner described in the qualification to the
Plascon-Evans
rule
37
would, I venture, not be sufficient for such purpose. The provisions
of ss 48-50 and 52 of the Act indicate that the invocation
of
the innocent owner defence, whether on its own, or in contingent
relationship to opposition to the application on the grounds
that
the subject property is not liable to forfeiture, should ordinarily
be raised in such a manner that its existence is apparent
when the
hearing of the proceedings commences. This incidence of the
procedures that pertain is confirmed by the provisions of
s 39(3)
and s 39(5), which require any person having notice of a
preservation order and intending to oppose an ensuing
application
for a forfeiture order to give notice within 14 days of his/her
intention to oppose such application or to apply
for exclusionary
relief and to state on affidavit at that stage, amongst other
things, ‘
the basis of the defence upon which he or she
intends to rely in opposing a forfeiture order or applying for the
exclusion of
his or her interests from the operation thereof
’.
When the innocent owner defence is raised, the respondent should
also ordinarily clearly formulate the nature of the
exclusion order
that is sought.
Despite having in the first judgment referred the issue of the
respondents’ ‘knowledge insofar as the defences provided

for in s 52(2A)(a) and (b) are concerned’ to oral
evidence, the court
a quo
, in its second and determinative
judgment, given on 21 August 2009, did not deal with the matter
in any manner consistent
with an apprehension that it was seized
with an application for exclusionary relief in terms of s 52 by
either of the opposing
respondents. Indeed, at paragraph 3 of
the judgment, the judge stated:
It was common cause that since the respondents were not
applying in terms of section 48(4)(b) of POCA for the respondents’

interests in the cash and the [immovable] property to be excluded
from the forfeiture order sought by the applicant, the
onus
rested on the applicant to establish all the
requirements for a forfeiture order in terms of section 50, including
the proportionality
of the order sought, [had] be[en] met.
The statement that the NDPP bore the
onus
of establishing all
the requirements for the grant of a forfeiture order, including that
the relief sought was proportionate in
the sense discussed above, was
unexceptionable. However, if the learned judge understood, as the
passage quoted above suggests,
that the nature of the
onus
or
of the requirements which the NDPP had to discharge or meet was in
any manner affected by the respondent’s failure to
apply for an
exclusionary order, he was, with respect, misdirected. It may be,
however, that the passage was just loosely expressed
and that all
that the judge intended to emphasise was that it burdened the NDPP to
convince the court on the proportionality of
the relief sought.
After disposing of two points
in limine
raised by the
respondents, which do not concern us at this stage, the court
a
quo
proceeded in respect of the application for the forfeiture
of the immovable property to summarise the oral evidence that had

been given by the second respondent pursuant to the order quoted in
paragraph , above, as follows:
[26] The second respondent gave oral evidence on the
issue of the forfeiture of the property. She is 46 years old. She
left school
after she completed standard seven and she then worked in
a number of clerical positions. She has not been employed or sought
employment
for the last fifteen years. She was formerly married to
the first respondent. She resided at the property in a backyard
structure
since about 1995. At the time drug dealing was taking place
at the premises. Her mother Miriam Morgan acquired ownership of the

property in 1997. The second respondent continued living there and
later moved into the main house on the property. During her
lifetime,
her mother, who owned a number of properties, expressed the wish that
the property should go to the second respondent
after her death. Her
mother died in 1999 and on 27 March 2000 the property, together with
other immovable properties were transferred
out of her mother’s
estate to her sister Janap Miller. On 22 June 2000 Janap Miller
‘sold’ the property to the
second respondent for R140
000,00 and on 19 September 2000 the property was transferred into her
name.
[27] The respondents continued to reside in the house on
the property until about 2002/2003 when they moved from the property
to
reside in Costa da Gama at Muizenberg. From about 2001/2002, the
first respondent rented the property from the second respondent
for
R2 000,00 per month and used the property to operate his taxi
business.
[28] The respondents’ marriage terminated during
2004 and the second respondent moved to 56 Consort Road, Retreat, a
property
owned by her sister Janap Miller, where she presently
resides rent free with her two uncles, neither of whom are employed
on a
full time basis. Janap Miller is a married housewife and resides
with her husband and three children whose ages range from
approximately
16 years to 22 years in another one of her properties
which is situated at 9
th
Avenue, Retreat.
[29] The second respondent’s only income is the
rental of R2 000,00 per month, which she received from the first
respondent.
[30] Although the second respondent and her sister
concluded a contract of sale for the property for an amount of R140
000,00, it
is clear from the evidence of her sister that she would
never, in deference to her mother’s wish that the property go
to
the second respondent, require her sister to pay the purchase
price. The respondent has no other assets.
[31] Although the second respondent has known of drug
dealing at the property while she lived there, she stated that after
her departure
from the property in 2002/2003 she had heard from the
first respondent about incidents involving dealing in alcohol and
drugs taking
place at the property in about 2004 and 2005.
[32] The second respondent’s evidence is that she
requested the first respondent do something about the issue and that
he
then “chased the guys away”. According to the second
respondent the incidents of drug dealing then stopped as far as
she
knew. It is not without significance that apart from the raid on 4
December 2008, the last time the police found drug dealing
taking
place at the property was on 21 January 2005. I return hereunder to
the raid on 4 December 2008. The second respondent stated
that she
had never been approached by members of South African Police Service
or members of the office of the National Director
of Public
Prosecutions and informed of unlawful activities taking place at the
property involving alcohol and drugs.
[33] The second respondent testified that forfeiture of
the property will leave her with no assets and no income. While she
lived
rent free in her sister’s house, she was not certain that
her sister would, if she became destitute, support her financially

because she had her own family. Janap Miller, who also testified
stated that if the second respondent were to become destitute,
she
would make an effort to support her, because ‘blood is thicker
than water’. I doubt very much that the second respondent
will,
at her age and with her skills be able to find employment. The second
respondent conceded in cross-examination that she and
the first
respondent had been arrested with Ludick (the third respondent) after
Ludick was found in possession of drugs at the
property. Following
the incident Ludick was asked by the first respondent to leave the
property.
[34] The second respondent had previously deposed to two
affidavits, the contents of which, she states, came largely from what
the
first respondent had told their attorney. According to the second
respondent she had no personal knowledge of what went on at the

property. She claims that since leaving the property in 2002 or 2003,
she had never been back and relied on the first respondent
to see to
the property and to control what occurred there.
[35] According to the second respondent, she knew little
of the first respondent’s taxi business. She stated that while
she
was living at the property, the drivers and guards would collect
the vehicles that were parked on the property overnight in the

morning and return there in the evening. The fares collected by the
drivers were paid over to persons who assisted the first respondent,

who had a safe on the premises to keep the money and his fire arm.
While still living, 2 to 3 drivers and/or guards resided at
the
property. When she and the first respondent moved out the others also
moved in to live there.
[36] After their separation the first and second
respondent remained friends and she saw the first respondent once a
month when
he came to pay her the R2 000,00, which had remained
unchanged since 2001/2002.
The oral evidence of the second respondent summarised in the passage
just quoted was led on 20 October 2008. Thereafter,
and after
an adjournment in the hearing, the NDPP adduced evidence, on
11 December 2008, by Constable Branders who had been
involved
in a search of the premises at the immovable property during the
course of a police raid on the property on 4 December
2008.
According to Branders he had established during the search that a
certain Cecilia Beckett was the person in charge of the
premises. He
discovered documentation addressed to the second respondent in one
of the rooms being a property rates account and
an electricity
account in respect of the property together with receipts in respect
of the payment of the said accounts in cash.
Branders’
evidence, given without objection from the respondents’
counsel in the court
a quo
, was that Cecilia Beckett informed
him that the second respondent came to the property every month and
gave her cash to settle
the municipal accounts. The court
a quo
dealt with this evidence as follows at para 43 of its second
judgment:
The second respondent was not called back to deal with
this evidence. No weight can consequently be given to this evidence
that
the second respondent regularly visited the property, which it
is common cause is situated very close [to] where she lives in
Consort
Road, with substantial cash amounts to enable Beckett to
settle the monthly municipal accounts.
Having (accurately) summarised the evidence in the manner described,
the learned judge
a quo
reiterated that the second respondent
had not invoked the innocent owner defence by means of an
application in terms of s 48(4)(b)
of the Act and, bearing in
mind that a finding had already been made in the first judgment that
the immovable property was an
instrumentality, characterised the
issue that remained for decision in respect of this aspect of the
case as being the ‘
question whether the forfeiture of the
second respondent’s property would amount to an arbitrary
deprivation of property
in contravention of section 25(1) of the
[C]
onstitution
’. In the course of his ensuing
analysis of the evidence in respect of the indicated question of the
proportionality of
a forfeiture order, the learned judge made the
following findings:
In this case the second respondent was aware of the fact
that drugs had been sold from the premises. While she is not directly
implicated
in the commission of the offences, she is not an ‘innocent
owner’ in the sense that she was not aware of what had happened

at the premises. The extent to which, if at all, the second
respondent continued to be aware of the sale of drugs at the property

after she had according to her asked the first respondent to see to
it that the people selling drugs are removed from the property,
is
not clear. According to her oral testimony, she never visited the
property after leaving it and relied on [the first] respondent
for
what went on at the property. Brander’s evidence that he was
told by Beckett that the second respondent came to the property
at
least once a month with cash to pay the municipal accounts, (the
November 2008 account totalled almost R1 600,00 more than 75%
of her
monthly income of R2 000,00), is hearsay and in the circumstances,
cannot be taken into account. Such evidence would, if
it were
admissible, have contradicted the second respondent’s evidence
in an important and crucial respect. There is no indication
of why
the first had evidence was not adduced.
(para 46)
and
On the other hand, the property constitutes the second
respondents only asset and her only source of income. In the absence
of admissible
evidence to contradict that the second respondent was
not involved (save as owner/lessor) with the property and was not
aware of
what was taking place there since 2004 or 2005 (the last
raid, before December 2008, having taken place on 21 January 2005),
the
forfeiture of the property has in my view, not been shown by the
applicant, given the effect it would, on the evidence presented
in
this case, have on the second respondent, to be proportionate, to the
public purpose it is intended to serve. The forfeiture
of immovable
property is a drastic step. It is often sanctioned by our courts,
especially where it is employed as a means to combat
the very serious
crimes of dealing in drugs. The cases relied upon by the applicant’s
counsel, illustrate this. These crimes
have a devastating effect on
the community. Each case must, however, be decided on the facts
presented in the particular case.
In this case, in my view, the
onus
has not been discharged.
(para 48)
It is evident from the passages in the second judgment of the court
a quo
, quoted above, that the consideration that
the NDPP
had not established the extent to which the second respondent was
aware of the use of the property for drug dealing since she
had left
the property in 2002/3, or positively contradicted her evidence that
she had not visited the property since she had
left it played a
material, if not central, role in the court’s conclusion that
that the NDPP had failed to establish that
a forfeiture of the
property would be proportionate in the relevant sense. In this
respect I consider, with respect, that the
court
a quo
’s
approach was demonstrably inconsistent with the provisions of the
Act (the constitutionality of which was not impugned).
As observed
earlier in this judgment, the remedial objectives of chap 6 of
the Act require a court seized with an application
for a forfeiture
order to focus, in the context of property established to be ‘an
instrumentality of an offence’,
primarily on whether the
‘broader societal purposes served by civil forfeiture’
are justified in the circumstances
notwithstanding the unavoidably
punitive consequences for the owner or other affected interest
holder. The justification, which
is established if the means of
forfeiture is proportionate to the achievement of the statutory
ends, has little, if anything,
to do with the innocence, complicity
or negligence of the affected owner or interest holder; those being
issues falling to be
dealt with, if they arise to be addressed, in a
discrete and second stage enquiry in which the incidence of the
onus
does not burden the NDPP. The purpose of the proportionality enquiry
is really to check that the forfeiture sought substantially
serves
the purposes of the Act and that it would not constitute an
arbitrary
deprivation of property (as to which see
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance
[2002] ZACC 5
;
2002 (4) SA 768
(CC) at para
61-100). (Furthermore, even if I were wrong, and the respondents’
‘innocence’ were relevant, to
burden the NDPP at the
first stage with the
onus
of negativing it would be to adopt
a position in contradiction of the express imposition of the Act of
the
onus
on the respondents at the second stage to establish
their innocence.)
The evidence before the court
a quo
proved that the immovable
property had been used for a period of more than ten years for drug
dealing. The dangerous and destructive
social effects of the
widespread unlawful use of narcotics in the Western Cape are
notorious, as indeed acknowledged in the Constitutional
Court’s
judgment in
Prophet
at para 68.
38
The evidence showed that during the period from June 1995 to March
2006, at least 41 search and seizure operations were conducted
by
the police at the property. As a consequence of these operations the
first and second respondents were themselves charged
with possession
of cannabis (dagga) in 1995 and with dealing in drugs in 1997. Many
other persons were also charged with possession
or dealing in drugs
at the premises during the aforementioned period. During the raids
quantities of a variety of dangerous and
undesirable
dependence-producing substances listed in schedule 2 to the
Drugs
and Drug Trafficking Act 140 of 1992
were seized at the property.
So, for example, during a raid on 19 October 2004, 713
Mandrax (which contains methaqualone)
tablets, 509 Ecstasy
(methamphetamine) tablets, 216 units of LSD (which contains
lysergide/lysergic acid diethalmide), 273 units
of tik
(methamphetamine) and 28 units of crack cocaine
39
were seized. On 1 December 2004, 95 mandrax tablets and 123
units of tik were seized and, on 21 January 2005, 75 mandrax

tablets, 65 Ecstasy tablets and 90 units of crack cocaine. The
uncontraverted statement of one Januarie to the police in 2004
was
to the effect that dealing in drugs at the property generated a
daily revenue of between R20 000 and R50 000. During
the
raid on 19 October 2004 cash totalling R26 870 was found
at the property; on 1 December 2004, nearly R32 000
and on
21 January 2005, R23 640. Traces of methamphetamine and
methaqualone were found on some of the cash seized.
Various alterations and modifications had been effected to the
property to facilitate the unlawful activities conducted there:
a
wooden vault had been created under the paving of the courtyard to
conceal drugs, a secret compartment had been created in
the domestic
workers’ quarters which served a similar purpose; there were
spaces behind concealed panels in cupboards in
the main bedroom and
in the kitchen. There were also concealed spaces in the kennels and
the pigeon loft on the property. A window
in the main house had been
modified to serve as a service hatch. It can be seen clearly from
the photographic evidence that this
was designed and used for the
sale of drugs. The property was heavily secured and the barriers
created by this security had been
used to good effect on occasion to
delay or impede entry to the property by the police when they had
arrived to conduct searches
of the property.
It was manifest that frequent and ongoing police activity against
the unlawful activity conducted at the property during the
more than
five years that intervened between the second respondent becoming
the owner of the property and the institution of
proceedings for a
preservation order at the end of March 2006 had been unsuccessful in
stopping the use of the property as a
drug den. In other words, it
is evident that conventional crime fighting measures were inadequate
to deal with the scourge created
by the use of the specially adapted
property for nefarious purposes of the nature that the Act is
directed to combat.
All of the aforementioned evidence concerning the activity at and
the adaptation of the property was on record in the first stage
of
the proceedings. The second respondent had furthermore not made out
a case for exclusion. In her affidavit made in terms of
s 39 of
the Act she made various factual averments, stated to be in respect
of matters within her personal knowledge and
belief, quite
inconsistent with her later protestations of ignorance. She averred,
for example, that ‘the property is well
maintained and kept in
good condition by myself and the First Respondent’. How could
she make such an averment if she had
not been to the property for
three or more years? And if she had been to the property, as the
aforementioned averment implied,
or if she had been involved in
keeping it in good condition, how could she not have been aware of
the alterations described earlier,
which were photographed by the
police in 2004, two years before the second respondent deposed to
the affidavit in 2006? Her averment
that she had no knowledge of the
alleged unlawful activity at the property was manifestly untrue. The
second respondent had been
present during police raids there and had
herself been arrested there on two occasions. The claim was also
contradicted in her
subsequent affidavit, in which she admitted to
knowledge of a ‘sorry trend’ of drugs-related offences
being committed
at the property.
In the subsequent affidavit made by the second respondent in support
of her opposition to the forfeiture application as contemplated
by
s 48(4)(a) of the Act, she again made averments to which she
could only have deposed if she had a direct involvement
with the
property. In the second affidavit, she admitted that she was aware
of the adapted window referred to above. Her evidence
to the effect
that she accepted the first respondent’s alleged explanation
that the window and table were used ‘to
accept monies when
taxis return late at night from a trip and for a tuck shop’
was positively risible. Why should taxi
money be put through the
window when her evidence was that the taxi drivers and taxi guards
lived on the premises? (In her oral
evidence the second respondent
said there was no specific place at which the taxi drivers would pay
in the money when they returned
in the evenings and said that she
had no knowledge about the procedure of payment being made through
the window or even of the
existence of the window.) The bald denials
or professions of ignorance about the photographed places for
secreting drugs on the
property was entirely irreconcilable with the
position of any property owner showing the reasonable diligence to
ensure that
property is not used for the purposes of crime required
by the Act. Taken at face value they indicated, by their implication

that the second respondent had not even troubled to physically check
her property after the institution of proceedings to check
on the
alleged presence of such secret hiding places, that she was
indifferent or utterly supine about the alleged state of affairs

there.
Her supineness, which is the most indulgent view that can be taken
on the evidence showing her failure to take effective steps
to stop
the property being used as a drug-den, continued even after the
first judgment in the court
a quo
, in which the property was
held to be an instrumentality. It gave the lie to her evidence
implying that the failure by the police
or any organ of state to put
on her notice before the institution of proceedings was material.
There was much denying and putting
to the proof, but no evidence by
the second respondent on affidavit which came close to establishing
on its face grounds to support
an application in terms of s 48(4)(b)
read with s 52 of the Act. Thus, my reason for holding that the
court
a quo
should not have acceded to the request to make an
order mirroring that made in para 2 of the order made in
Parker
in respect of the application for the forfeiture of the immovable
property. It could not cogently be found in the first stage
of
proceedings in the court
a quo
that the second respondent had
made allegations in her opposing papers that might be construed as
averments that could support
an application for an exclusion order.
The purposes of the Act would undoubtedly be served by the grant of
a forfeiture order. The only reason why the court
a quo
refused to make such an order was because the learned judge
considered that effect of forfeiture on the second respondent would

be disproportionate. In this regard, as mentioned, his consideration
that the NDPP had not negatived the second respondent’s
claim
to have been ignorant about the use of the property appears to have
weighed materially. For the reasons mentioned, in the
absence of an
application by her in terms of s 48(4)(b) of the Act, and a
discharge by her of the attendant onus, this was
misdirected.
The relevant considerations were that the second respondent on her
own account derived no personal use of the property. She had

acquired the property at no consideration and, despite its
residential character and the fact that she had no home of her own,

she did not live there. On her version, she showed no interest in
it, even though she stayed only a short walking distance from
where
it is situated. The court
a quo
gave no consideration to the
fact that on the second respondent’s evidence the property was
in any event an under-utilised
asset. The second respondent had
rented the property to the first respondent at a constant rental of
R2 000 per month over
several years notwithstanding the eroding
effect of inflation on the nominal value of money over time and
despite the fact that
it was reportedly the second respondent’s
only source of income. The effect of the second respondent’s
evidence was
therefore that the property was rented out by her at an
ever diminishing real return. Doubtfully credible as it was, the
effect
of the second respondent’s evidence assessed against
the conspectus of the evidence as a whole was that she lived very

modestly and was dependant on the support of her family. Accepting
that evidence at face value, the court
a quo
should have
concluded that the indications were that the forfeiture of the
property would have little or no material effect on
the second
respondent’s ability to continue living modestly with her
brothers as she claimed to be. It was evident from
the testimony of
the second respondent’s sister that, to the extent necessary,
the second respondent would probably be
maintained at a reasonable
level of subsistence by her family should the property be declared
forfeit. Indeed Ms Miller,
the second respondent’s
sister, confirmed the provisions of their mother’s will
enjoined her to provide for the second
respondent by seeing to it
that she had a roof over her head and food and clothing.
The court
a quo
also erred in my view by according the effect
of a forfeiture of the property on the second respondent an
inappropriately determinative
weighting in the context of the
proportionality enquiry. In the current case the ends to be served
by the forfeiture within the
scope of the objects of the Act were
very compelling and the likely result of the unavoidably punitive
effects of forfeiture
on a completely supine property owner
qualitatively much less so, especially in the absence of any basis
for her to obtain an
exclusion order. There is no warrant in the
proportionality enquiry for the personal circumstances of the
affected property owner,
assessed by themselves, to trump the
realisation of the objects of the legislation. The effect of the
forfeiture on the owner,
while an important consideration, is but
one of the relevant factors to be taken into account in the
proportionality enquiry;
it falls to be weighed in the balance with
all the other factors that are relevant on the evidence in the case.
The realisation
of the objects of the statute therefore also demands
proper consideration in the proportionality enquiry.
In
Prophet
(CC), the court described as ‘
salutary
’
an approach to the proportionality enquiry similar to that
enunciated in
S v Manamela and Another (Director-General of
Justice intervening)
2000 (3) SA 1 (CC), at para 33,
in respect of the determination under s 36 of the Constitution
of the reasonableness
and justifiability of limitations on rights in
the Bill of Rights. In that regard the majority of the Court held
‘
In essence, the Court must engage in a balancing exercise
and arrive at a global judgment on proportionality and not adhere
mechanically
to a sequential check-list. As a general rule, the more
serious the impact of the measure on the right, the more persuasive
or
compelling the justification must be
.’ The corollary is
that in a context in which the justification for forfeiture is
compelling the owner who is not able
to establish the innocent owner
defences is required to suffer the impact, serious though it might
be.
The facts of the case, which showed that the second respondent, on
her own account, remained supine in her dealing with the property
in
the hands of the first respondent even when the property continued
to be used for drug dealing purposes after the institution
of the
forfeiture application, suggest that the pressing public objects of
the Act would be entirely subordinated to the personal

considerations of an undeserving owner were a forfeiture order to be
denied. It is evident that if the property is not forfeited
to the
state, there is no basis to believe that the second respondent will
do anything at all to end its use for the purposes
of crime. It is
evident that the property has been especially adapted for use as a
drug-den. In the context of what the probabilities
suggest is the
enterprise of the first respondent, it is evident that the property
serves a similar purpose that a shop would
afford a greengrocer –
appropriately equipped accommodation at a fixed location which, by
reason of those attributes, will
be of assistance in attracting
custom and contributing towards what in a conventional business
context would be described as
the goodwill of the enterprise. It is
evident that conventional crime fighting exercises undertaken over
an extended period have
not been successful in stopping the use of
the property for these destructively anti-social purposes. All that
is achieved is
that minions employed front of house in the business
are arrested and prosecuted while the organisational management
(‘
the high-flyers
’, as one of the policemen
testified they were colloquially called), which is evidently
responsible for holding and maintaining
the property, remains beyond
effective reach.
Weighed against the aforegoing considerations, as already noted, the
evidence suggests that the second respondent will not be
without a
roof over her head and family support for her essential requirements
should the property be declared forfeit. In my
view in all the
circumstances the justification for a forfeiture order to be made
was sufficiently compelling to bring the scales
down in favour of
such a result despite the adverse consequences for the second
respondent. The broad societal objectives that
would be served by
neutralising the immovable property from use for drug dealing
purposes far outweigh the considerations attending
the personal
consequences of forfeiture for the second respondent. I therefore
consider that the court
a quo
wrongly concluded that the NDPP
failed to discharge the
onus
in respect of proportionality. I
would thus uphold the NDPP’s appeal.
Turning now to consider the first respondent’s cross-appeal
against the order declaring that the cash seized at the immovable

property be forfeited to the State as the proceeds of unlawful
activities. Despite the issue of the characterisation of the cash

being referred to oral evidence to resolve the factual disputes
arising from the evidence on affidavit, neither party adduced

further evidence at the second hearing.
It will be recalled that the first respondent claimed that the cash
was the proceeds of the lawful conduct by him of a taxi business.

The moneys were allegedly collected from the taxi drivers on his
behalf by his employees and kept on the premises. The first

respondent’s affidavits made in response to the application
for the preservation order and in opposition to the application
for
a forfeiture order were bald and completely lacking in corroborative
detail.
The greater part of the cash seized on different occasions and at
different places on the property between 19 October 2004
and
21 January 2005 either bore traces of different types illegal
drugs, or was found stored together with such drugs. In
my view the
court
a quo
was correct to hold that the evidence called for
an explanation from the first respondent as to the system by which
the proceeds
of his taxi business were collected and administered;
and that the failure to adduce such evidence, either by himself or
through
someone involved therewith, justified the inference that the
cash was most probably the proceeds of the ongoing drug-dealing

demonstrably conducted from the premises. This inference was in
particular justified by the first respondent’s failure to

engage at all with the detail in the evidence of one Januarie who
had deposed that he had been instructed by the first respondent
to
disguise the proceeds of the drug dealing activities as being those
of the taxi business, or with the evidence that during
one of the
raids the first respondent did not challenge the claim by one of the
other persons present (one Ludick, who appears
to have been an
employee of the first respondent) that part of the cash seized on
that date (R5 810) belonged to him.
I agree with the submission by Mr
Breitenbach
SC,
who (assisted by Ms
Witten
) appeared in this court on behalf
of the NDPP, that the first respondent signally failed to say enough
in his affidavits to enable
the court to conduct a preliminary
examination and ascertain whether his denials that the cash was the
proceeds of the drug dealing
demonstrably carried on at the property
were not fictitious. He thereby failed to create a
bona fide
dispute of fact on the papers in the sense famously described by
Murray AJP in
Room Hire Co (Pty) Ltd v Jeppe Street Mansions
(Pty) Ltd
1949 (3) SA 1155
(T) at 1165.
As pointed out by Heher JA in
Wightman t/a JW Construction v
Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) ([2008]
2
All SA 512)
, at para 13: ‘
A real, genuine and bona
fide dispute of fact can exist only where the court is satisfied
that the party who purports to raise
the dispute has in his
affidavit seriously and unambiguously addressed the fact said to be
disputed. There will of course be
instances where a bare denial
meets the requirement because there is no other way open to the
disputing party and nothing more
can therefore be expected of him.
…... When the facts averred are such that the disputing party
must necessarily possess
knowledge of them and be able to provide an
answer (or countervailing evidence) if they be not true or accurate
but, instead
of doing so, rests his case on a bare or ambiguous
denial the court will generally have difficulty in finding that the
test is
satisfied.’
The learned judge of appeal concluded
that if the content of answering papers did not engage ‘
with
facts which
[the respondent]
disputes and reflect such
disputes fully and accurately … it should come as no surprise
that the court takes a robust view
of the matter
’.
Ms
Carter
, who appeared in this court for the first
respondent, stressed that the court
a quo
had found in the
first judgment that the NDPP had not discharged the
onus
of
proving that all the seized cash was the proceeds of unlawful
activities. She submitted that as that no additional evidence
was
adduced before the court finally determined the matter in its second
judgment, it had not been open to it to conclude that
all the cash
was liable to forfeiture.
In my view the submissions by the first respondent’s counsel
in this regard do not bear scrutiny. The court
a quo
’s
first judgment stated in the relevant respect:
[17] Mr
van Rooyen
, on behalf of the applicant,
submitted that the dispute of fact which has arisen on the papers in
regard to the question whether
the cash is the proceeds of the
illegal dealing in drugs, is not a genuine and
bona fide
dispute, and that given the perfunctory and unsubstantiated reply
given by the respondents to the very specific allegations made
by
Januarie and given the strong circumstantial evidence put forward by
the applicant which supports the evidence of Januarie,
the
respondents’ denial falls to be dismissed out of hand on the
papers. This is in my view a borderline case. However, since
I have
to accept for purposes of a decision on the papers that the first
respondent does carry on a taxi business and that he parks
his
vehicles at the property and that he houses at least some of the taxi
drivers and guards on the premises, some at least of
the cash that
was seized on the various occasions was taxi money, the applicant has
not, on the papers, discharged the onus resting
upon it. Mr
van
Rooyen
has, in the alternative to a decision in regard to the
cash on the papers, asked that the matter be referred to oral
evidence.
This is, in my view the course that should be adopted.
That part of the first judgment was provisional in nature; it did not
finally determine the issue, and the order referring it for
oral
evidence was interlocutory. Accordingly, the court was at liberty,
when it finally determined the matter, to reconsider its
initially
stated position. The point may be illustrated by considering that the
undetermined issue could even have been referred
to another judge for
determination on the reference to oral evidence. Such other judge
would not have been bound to hear the oral
evidence which the learned
judge
a quo
afforded the parties the opportunity to adduce if
such other judge considered the matter could be decided on the papers
without
it. (Cf.
Wallach v Lew Geffen Estates CC
1993 (3) SA 258 (A) at 262G-263).
For the reasons already mentioned, I do not consider that the first
respondent had in fact created a
bona fide
dispute of fact on
the issue on the papers. I therefore consider that the learned judge
a quo
took an unduly generous view in favour of the first
respondent when he referred to the issue in the first judgment as ‘a

borderline case’. The judge was entitled to reconsider his
initially expressed view after neither party adduced oral evidence,

having been afforded the opportunity to do so. Insofar as might be
necessary, I would agree with the argument advanced on behalf
of the
NDPP that an adverse inference fell to be drawn against the first
respondent at that stage by reason of his failure to
avail of the
opportunity to cure, by way of oral evidence, the shortcomings
manifested by the baldness of his answering affidavits.
In this
respect Mr
Breitenbach
appositely relied on the approach
taken in analogous circumstances in a Full Bench decision of this
court in
Humphrys v Laser Transport Holdings Ltd and Another
1994
(4) SA 388
(C) at 400C-E.
I would therefore dismiss the first respondent’s cross-appeal.
In the context of the appeal being upheld and the cross-appeal
dismissed, it is appropriate that the costs order made by the
court
a quo
in its judgment given on 21 August 2009 be
substituted with an order directing that the costs of the
application be paid
by the first and second respondents jointly and
severally, the one paying, the other being absolved. The first
respondent should
be ordered to pay the appellant’s costs in
the cross-appeal and the second respondent should be ordered to pay
the appellant’s
costs in the appeal.
In the result I would make the following orders:
The appeal by the National Director of Public Prosecutions is
upheld.
The cross-appeal by the first respondent against the order made in
terms of paragraph 1 of the order made in the court
a quo
’s
judgment of 21 August 2009 is dismissed.
The second respondent shall be liable for the appellant’s
costs in the appeal.
The first respondent shall be liable for the costs incurred by the
appellant in opposing the cross-appeal.
Paragraphs 2, 3 and 4 of the order made by the court
a quo
on 21 August 2009 are set aside and substituted by the
following:
Erf 118368 Cape
Town, at Retreat, is declared forfeit to the State in terms of s 50
of the Prevention of Organised
Crime Act 121 of 1998 (‘the
Act’).
The forfeiture
in terms of para 2.1 hereof shall take effect subject to the
provisions of s 50(6) of the Act and shall
be further
regulated in accordance with ss 50(5), 56(2), 56(3) and 57 of
the Act.
3. The applicant’s costs of suit shall be paid by the first
and second respondents jointly and severally, the one paying, the

other being absolved.
A.G. BINNS-WARD
Judge of the High Court
I agree.
D.V. DLODLO
Judge of the High Court
I agree and it is so ordered.
N.C. ERASMUS
Judge of the High Court
Appeal heard : 28 January 2011
Judgment delivered 24 February 2011
Appellant’s counsel A.M. Breitenbach SC
S.K. Witten
First respondent’s
Counsel T. Carter
Appellant’s attorney The State Attorney
Cape Town
First Respondent’s
attorney Lionel Cay Attorneys
Wynberg, Western Cape
No appearance on behalf of the Second Respondent
1
The
term ‘
instrumentality of an offence
’ is defined
in s 1 of the Act to mean ‘
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
’.
2
‘
Proceeds
of unlawful activities
’
is defined in s 1 of the Act to mean ‘
any
property or any service advantage, benefit or reward which was
derived, received or retained, directly or indirectly, in the

Republic or elsewhere, at any time before or after the commencement
of this Act, in connection with or as a result of any unlawful

activity carried on by any person, and includes any property
representing property so derived
’.
3
Both
the appellant and the first respondent were represented on appeal by
different counsel from those by whom they had been represented
in
the court
a quo
.
4
See
para 25 of the judgment in
Parker
.
5
See
s 37 of the Act.
6
The
defined meaning of the term is set out in fn 1, above.
7
Cf.
Prophet v National Director of Public Prosecutions
[2006] ZACC 17
;
2006
(1) SA 38
(SCA);
2005 (2) SACR 670
;
[2006] 1 All SA 212)
at
paras 26-27 and
Cook Properties
, supra at paras 13-14.
8
Cf.
Prophet
v National Director of Public Prosecutions
[2006] ZACC 17
;
2007 (6) SA 169
(CC);
2006 (2) SACR 525
;
2007 (2) BCLR 140
, at para 61.
9
Described
by van Heerden AJ in
Mohunram and Another v National Director of
Public Prosecutions and Another (Law Review Project as amicus
curiae)
[2006] ZASCA 12
;
2007 (4) SA 222
(CC) at para 57 as ‘
broader
societal purposes served by civil forfeiture
’.
10
An
admirably succinct summary of the procedural order insofar as
relevant in the current matter is afforded in
National
Director of Public Prosecutions v Van Staden and Other
s
[2007]
2 All SA 1
(SCA) at para 3.
11
Section
48(4) of the Act provides:
Any person who entered an appearance in terms of
section 39 (3) may appear at the application under subsection (1)-
(a) to oppose the making of the order; or
(b) to apply for an order-
(i) excluding his or her interest in that property
from the operation of the order; or
(ii) varying the operation of the order in respect
of that property,
and may adduce evidence at the hearing of the
application.
12
At
para Error: Reference source not found.
13
The
label ‘
second stage of the
proceedings
’
is firmly
established, but it can be confusing because the application for a
preservation order and the subsequent application
for a forfeiture
order are also sometimes spoken of as the first and second stages,
respectively, of proceedings in terms of
chap 6 of the Act. And
in matters in which there is no application for exclusionary relief
in terms of s 52 of the
Act, the enquiry into whether a
forfeiture order is a proportionately appropriate remedy in respect
of property found to be an
‘instrumentality of an offence’
can be regarded as a stage in the proceedings. (In
Cook
Properties
, in which because the
property in question was found not to be an ‘instrumentality
it was not necessary to consider proportionality,
the postulated
proportionality enquiry was referred to as ‘
the
final stage
’
.)
14
See
Cook Properties
at para 24;
Mazibuko
and Another v National Director of Public Prosecutions
2009 (6) SA 479
(SCA) at para 40
.
15
National
Director of Public Prosecutions and Another v Mohamed NO and Others
2002 (4) SA 843 (CC) at para 18. The label
‘
innocent
owner defence
’
may have been inspired by the sub-heading to 18 U.S.C §983(d).
(The text of the USC is accessible at
http://law.cornell.edu/uscode/html
.) In terms of the US Code, the matters covered in terms of s 52(2A)
of the Act fall to be raised as defences proper in
civil forfeiture
proceedings, and not by means of an application for an exclusion
order. In Australia, by contrast, affected
interest holders are
required to apply, by way of a similar procedure to that which
applies in this country, for the exclusion
of their interests in
property liable to be declared forfeit in terms of the Proceeds of
Crime Act 2002 (Commonwealth).
16
Section
52(2) of the Act provides:
The High Court may make an order under subsection
(1), in relation to the forfeiture of the proceeds of unlawful
activities, if
it finds on a balance of probabilities that the
applicant for the order-
(a) had acquired the interest concerned legally and
for a consideration, the value of which is not significantly less
than the
value of that interest; and
(b)
where the applicant had acquired the interest concerned after the
commencement of this Act, that he or she neither knew nor
had
reasonable grounds to suspect that the property in which the
interest is held is the proceeds of unlawful activities.
17
Section
52(2A) of the Act provides:
The High Court may make an order under subsection
(1), in relation to the forfeiture of an instrumentality of an
offence referred
to in Schedule 1 or property associated with
terrorist and related activities, if it finds on a balance of
probabilities that
the applicant for the order had acquired the
interest concerned legally, and-
(a) neither knew nor had reasonable grounds to
suspect that the property in which the interest is held is an
instrumentality of
an offence referred to in Schedule 1 or property
associated with terrorist and related activities; or
(b)
where the offence concerned had occurred before the commencement of
this Act, the applicant has since the commencement of
this Act taken
all reasonable steps to prevent the use of the property concerned as
an instrumentality of an offence referred
to in Schedule 1 or
property associated with terrorist and related activities.
18
Prophet
(CC) supra, at para 27.
19
This
seems to me to follow from the words ‘
applicant for the
order
’ in the introductory part of s 52(2) and
s 52(2A) respectively and in s 52(3)(a) and (b). The
provisions
of s 52(3) also create a peculiar procedure which is
inconsistent with the procedure that would be followed in respect of

the raising of a defence by a respondent on ordinary motion
proceedings.
20
The
incidence in the Act of an
onus
on the owner or other
affected interest holder to prove innocence or reasonable ignorance
in order to avoid civil forfeiture
is not dissimilar to that
provided in equivalent legislation in other parts of the world; in
the USA and Australia, for example.
21
See
also
Hix Networking Technologies v
System Publishers (Pty) Ltd
[1996] ZASCA 107
;
1997 (1)
SA 391
(A) ([1996]
4 All SA 675)
at 401G-402C.
22
The
discretionary nature of the power, notwithstanding the literary
import of the statute’s language, which, on an
indiscriminative
reading, might be construed as peremptorily
obliging the court to make a forfeiture order, was identified in
Prophet
(SCA) supra, at paras 30 and 37, subsequently
confirmed by the Constitutional Court in
Prophet
(CC) supra,
at para 58-61.
23
Cf.
e.g.
Van Staden
supra, at para 4.
24
An
example of such a consideration is afforded in
National
Director of Public Prosecutions v Geyser
[2008] ZASCA 15
;
[2008]
2 All SA 616
(SCA);
2008 (2) SACR 103.
25
See
Parker
at paras 22 and 41;
Cook Properties
at
paras 19-21.
26
Cf.
V
an Staden
supra, at paras 8-9 and
Geyser
supra, at
para 19.
27
The
SCA’s judgment in
National Director of Public Prosecutions
and Others v Vermaak
[2008] 1 All SA 448
(SCA) affords a useful
illustration of how our courts are able by means of a
proportionality enquiry to refuse to declare an
instrumentality
forfeit when forfeiture in terms of chap 6 of the Act is sought
in circumstances in which the effect would
be ‘
little more
than an
additional
[criminal]
penalty
’
without any meaningful attendant achievement of the remedial
societal objects of the legislation.
28
Cf.
Cook Properties
at para 22.
29
The
provisions of s 52(2) and s 52(2A), respectively, are set
out above in fn. 16 and 17.
30
Plascon-Evans
Ltd v van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) at
634E-635C.
31
The
description of the second stage of the proceedings as being
concerned with the ‘innocent owner
defence
’ is a
label of convenience, hence it being described in
Cook Properties
(at para 24) as a ‘loosely’ made reference.
32
Cf.
Luster Products Inc v Magic Style Sales
CC
1997 (3) SA 13
(A) ([1997]
1 All SA
327)
at 21E-H (SALR);
Triomed (Pty) Ltd
v Beecham Group plc
2001 (2) SA 522
(T) ([2001]
2 All SA 126)
at 561C-D (SALR). The statement by
Nkabinde AJA in
Parker
at
para 23 that a respondent’s application for exclusionary
relief falls to be decided on the facts averred by the
respondent
and on those alleged by the NDPP which the respondent admits was
obiter
,
and in my respectful view,
per
incuriam
.
33
See
para , above.
34
When
I speak of a ‘tacitly made application’, I have in mind
proceedings in which the respondent makes averments in
its papers
opposing a forfeiture order that would on their face support an
application in terms of s 48(4)(b) for an exclusion
order in
terms of s 52, but omits to link such averments expressly and
formally to an application for such relief in the
manner
contemplated by the provisions.
35
See
Cook Properties
at
para 26 (fn. 33).
36
See
Cook
Properties at para 25.
37
See
Plascon-Evans
supra,
at 635C.
38
See
also
Mohunram
supra,
at para 147-148.
39
Described
by Cameron JA in
Parker
supra, at para 28, as ‘a viciously
destructive and addictive substance’.