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
>>
2015
>>
[2015] ZAWCHC 92
|
|
Kolbe v S (A108/2014) [2015] ZAWCHC 92 (23 June 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
Case no: A108/2014
DATE: 23 JUNE 2015
In the matter between:
GEORGE AUGUSTUS
KOLBE
.............................................................................................
Appellant
v
THE
STATE
............................................................................................................................
Respondent
Court: Justice A Le Grange et
Justice J Cloete
Heard: 22 May 2015
Delivered: 23 June 2015
JUDGMENT
THE COURT:
Introduction
[1] The appellant, who had pleaded not
guilty, was convicted in the Oudtshoorn regional court on 2 July 2013
on two of the nine
counts that he faced, being one of fraud and one
of contravening s 11 of the Banks Act 94 of 1990 (‘the Banks
Act’).
On 2 December 2013 he was sentenced on the fraud count
to three years imprisonment suspended for five years on the usual
conditions,
and on the statutory count to a fine of R20 000 or 2
years imprisonment suspended for five years. With the leave of the
trial court
he appeals against both his convictions and sentences.
[2] The appellant appeared as accused
no 2 in the trial. Accused no 1, his father, passed away before the
trial commenced. His remaining
two co-accused were discharged in
terms of s 174 of Act 51 of 1977 at the close of the state’s
case.
[3] The common cause facts which
emerged from the s 115 plea explanation and testimony of the various
witnesses in the trial are
as follows.
[4] The appellant held a majority 60%
member’s interest in Kontantvloei Regmakers BK trading as Cash
Friend (‘the CC’)
which he acquired on 7 December 1998
when he was 19 years old. His father, the driving force in the
business of the CC, namely
microlending, was disqualified from
holding this member’s interest in terms of
s 47
of the
Close
Corporations Act 69 of 1984
because he was an unrehabilitated
insolvent. The appellant thus effectively held the member’s
interest on his late father’s
behalf.
[5] The CC operated from two branches
in Oudtshoorn and three in George, Knysna and Malmesbury
respectively. The appellant was employed
by the CC as the manager of
its branch in High Street, Oudtshoorn. Over the period November 1998
to October 2000 the CC took monies
totalling R650 000 from eight
unrelated investors, ostensibly to invest in the business, in return
for which they were promised
interest on their investments at 24% per
annum which was to be paid to them in monthly instalments, and which
was considerably
higher than the rate of interest offered by banks.
None of these investors were ever repaid their capital.
[6] The appellant himself was the
manager of one of the branches, and was to all intents and purposes
his late father’s right
hand man. He took instructions from his
late father and reported to him.
[7] Ms Mietjies Sampson (‘Sampson’)
became one of these ‘investors’. At the appellant’s
instance she
paid over R30 000 to him on 23 October 2000. She
received the promised interest on her investment in monthly
instalments of R600
for two months until December 2000. The CC ceased
trading in early 2001 and, apart from a few further payments to her
thereafter
of R450 each, she was not repaid anything including the
capital of R30 000 which she had invested.
[8] These events ultimately led to the
appellant and his co-accused being charged on the various counts. He
was convicted only on
the count of fraud in respect of Sampson, as
well as the contravention of the Banks Act. He was acquitted on the
seven unrelated
counts of fraud pertaining to the remaining
investors.
The evidence before the trial court
[9] The state called three witnesses in
respect of its case in relation to Sampson. The appellant testified
in his own defence and
called no other witnesses, save for an expert
(an auditor) whose evidence the parties agree is irrelevant for
purposes of this
appeal.
[10] The first state witness, Ms Sonja
Greeff (‘Greeff’) (previously Willemse), testified that
she commenced employment
with the CC during 1999 as a collections
clerk. The CC also employed, amongst others, a Ms Julies whose
function was to actively
seek out potential investors and to bring
them to the attention of the appellant and/or his late father. During
the course of her
employment Greeff become familiar with some of the
individuals who became clients of the business. By 2000 she had
become concerned
because she was aware that certain of the clients
were not being paid their promised returns, and the appellant was
well aware
of this, as she had personally referred the clients to him
to deal with their complaints.
[11] On one occasion during 2000 Greeff
and a colleague Ms Zenobia Visagie were instructed by the appellant’s
late father
to collect Sampson from her home in Dysselsdorp and to
take her to the appellant at the Oudtshoorn High Street branch.
Greeff did
not attend their subsequent meeting and did not know what
they had discussed. However on the appellant’s instructions she
thereafter took Sampson to a bank to draw money which Sampson handed
over to him.
[12] Greeff was concerned that Sampson,
who had young children, would find herself in the same position as
the other disgruntled
investors. She had overheard a discussion
between the appellant and his father where they decided to distribute
the funds of an
investor, Mr Plaatjies, of R150 000 across the
various branches of the CC. Her evidence was that meetings had been
held over this
period with some of the “investors” who
were told by the appellant’s late father that Cash Friend was
no longer
operating, but that they could obtain shares in another
business, Debt Help 4 U, which was to be operated from the same
premises.
Greeff could recall that the appellant had attended at
least one of these meetings, and testified that shortly after Debt
Help
4 U commenced trading he left the business.
[13] Greeff was told that the
appellant’s explanation was that there had been an economic
downturn in the microlending industry
which caused a number of these
businesses to close. This was exacerbated by competition in the form
of African Bank and the regulatory
authorities tightening controls
over the industry, which led to Cash Friend no longer having control
over the manner in which returns
were paid to investors. These
factors, coupled with certain undertakings given by his late father
which had not been fulfilled,
had caused him to leave the business.
The appellant would confirm that the meeting or meetings with
investors had been held, but
would maintain that he had not been
involved in those meetings in any way. Greeff replied that she knew
of at least one meeting
at the High Street branch when the appellant
was present. She was one of the employees who had driven to collect
investors for
the purpose of attending.
[14] Sampson testified that her husband
had been fatally injured in an accident. She was paid the proceeds of
what appears to have
been his insurance policy of R50 000 by cheque.
She deposited the cheque into her bank account on 16 October 2000,
and was told
that it would take seven days to clear. At the time she
was unemployed with three children and without any source of income.
She
approached Cash Friend in Oudtshoorn for a small loan to tide her
over in the interim. She had a meeting with the appellant and
explained her predicament, while at the same time providing him with
proof of the amount that she had deposited at the bank.
[15] The appellant immediately enquired
if she had children and suggested that she invest R30 000 in the
business (R10 000 per child)
because it could pay a higher return
than the bank and would be just as safe. He loaned her R1000 and she
told him that she would
consider his proposal. Seven days later two
women (Greeff and Visagie) arrived at her home and told her that they
had been instructed
by the appellant to fetch her. Upon her arrival
at his office she was asked if she accepted his earlier proposal. He
told her that
she would be paid R600 per month interest. She agreed
and was driven by one of the women to the bank to draw the money.
Upon her
return she was presented with a written agreement by the
appellant and told to sign. Its contents were not explained to her.
She
duly signed the agreement, handed over the cheque to the
appellant and left.
[16] Although she had been given a copy
of the written agreement before leaving the appellant’s office
she had not been informed
of its contents until they were explained
to her months later by a social worker who she had approached for
advice. The appellant
did not challenge Sampson’s evidence
other than to claim that all queries regarding non-payment had been
referred to his
late father on the latter’s instructions.
[17] The third state witness was
Visagie whose evidence was that she commenced employment at Cash
Friend during 1998. The appellant
had started working there as
manager of the High Street, Oudtshoorn branch shortly prior to July
1999. She and other employees
were instructed by the appellant’s
late father to actively seek out individuals who were due to receive
retirement or retrenchment
packages to take out loans from the
business pending payment thereof and to thereafter invest their
‘packages’ in the
business. Visagie confirmed that she
was one of the two women who had been instructed to fetch Sampson
from her home by the appellant’s
late father. She corroborated
Greeff’s evidence in relation to Sampson in all material
respects. She testified that she too
had been concerned at the time,
given that other clients were struggling to obtain their monthly
returns from the business. Her
impression was that while there were
sufficient funds to make loans to clients there was a problem in
repaying investors.
[18] During cross-examination Visagie
was asked if there was any reason why the appellant should not have
trusted his late father.
She expressed the opinion that the appellant
had trusted his father completely, and that in her view his father
had been in complete
control of the business. She herself had not
collected anyone to be taken to the business on the instructions of
the appellant
himself.
[19] The appellant testified that he
had no training or experience when he initially commenced employment
for his father in a previous
business just after matriculating in
1997. The little that he subsequently learnt was from his late father
and uncle. In mid-1999
he was appointed by his late father as trainee
manager, then assistant manager, and within three months of his
commencing employment
as manager of the High Street, Oudtshoorn
branch of Cash Friend.
[20] At the time when he acquired the
majority member’s interest at the age of 19 years he was still
a minor and his late
father co-signed the relevant documentation in
his capacity as his guardian.
[21] The appellant’s evidence was
further that his function as manager was only to ensure that monies
loaned by the business
were repaid on due date in accordance with
payment terms contained in the relevant written agreements. His late
father was responsible
for ensuring that there were sufficient funds
in the business to finance these loans. He was not party to how these
loans were
funded. All potential investors were referred to his late
father at the Knysna branch on the latter’s instructions. The
appellant
had a very basic knowledge of what he personally was
required to do and the procedures to be followed, which had been
explained
to him by his late father and his uncle who was also the
auditor of the business, Mr Gert Labuschagne (‘Labuschagne’),
who had passed away on 17 June 2001. His late father and uncle had
made the decision in 2000 to fix the return on investments at
24% per
annum. He had no involvement in that decision.
[22] According to the appellant the
only knowledge which he had of the microlending industry, apart from
what had been conveyed
to him by his late father and uncle, was that
there were organisations to which the business belonged. A monthly
fee had to be
paid in return for which newsletters were received
informing members about developments in the industry. During the
course of his
employment as manager he had come to hear of the
industry becoming regulated. It was the appellant’s testimony
that, whereas
previously his modus operandi had been to retain the
identity documents and bank cards of the various debtors of the
business so
that he could physically draw the repayments out of their
bank accounts each month, he was no longer permitted to do so. This
resulted
in a huge increase in bad or irrecoverable debt.
[23] It was the appellant’s
evidence that when he became aware that investors were not being
repaid timeously, he raised this
with both his late father and
Labuschagne, who assured him that this was only a temporary situation
which had arisen because of
loans made to clients in advance of them
(and others) paying over their “investments” to the CC.
This made sense to
the appellant and he accepted it as such. He also
accepted that his father was acting in good faith when he himself
made attempts
to collect the outstanding monies due, even handing
over some of the clients to local attorneys for formal collection.
The appellant
further accepted without question the explanation which
his late father had provided to him about the “investment”
by individuals in the business which involved purchasing a portion of
his member’s interest. Such was the appellant’s
trust in
his late father that he even encouraged his own father-in-law to
invest. Ultimately his father-in-law lost R200 000. This
caused a
rift between him and his late father to the extent that they did not
have any contact for five years.
[24] The appellant testified that
during 2001 his late father broke certain promises made to him. He
told him that he could no longer
continue in the business and he
resigned. It was also his evidence that when disgruntled investors
approached him demanding payment
of their monthly returns he referred
them to his late father in accordance with the latter’s
specific instruction to this
effect. He had only signed the
agreements with the various investors because his father had told him
that he must do so, given
that he was reflected as the majority
member in the CC. The first occasion on which the appellant became
aware of any irregularities
actually committed was when he was
contacted by the investigating officer two years after he resigned,
in 2003.
[25] During cross-examination the
appellant denied that when Sampson had paid over R30 000 (at which
stage he had been the branch
manager for about two years) he had been
aware that the business would be unable to meet the monthly returns
or ultimately to repay
her. He repeated that he had previously
expressed concern to his late father and Labuschagne and had been
assured that the business
was only experiencing a temporary cash flow
problem. He had trusted both men, having had no reason at that stage
not to do so.
The appellant could not recall his dealings with
Sampson and thus did not dispute her evidence in this regard. He
maintained however
that any dealings which he had with investors were
on his late father’s instruction.
[26] The appellant conceded that at a
stage it was decided that individuals such as Sampson would purchase
a portion of his member’s
interest in the CC. He explained that
he had been told by his father and Labuschagne that the former wanted
to sell his “shares”
in the CC. His evidence was that:
‘ Wat is aan u verduidelik wat
gaan nou plaasvind? --- Daar is verduidelik dat die mense daai vorm
moet teken en my pa het
met hulle gepraat en ek weet ʼn paar van
hulle was reeds bestaande beleggers, my pa het met hulle gepraat en
hulle het die
vorms geteken en ek het dit ook geteken.’
[27] The appellant was referred to the
agreement which he had concluded with Sampson on 23 October 2000, in
which she purchased
2% of his member’s interest in the CC for
R15 000 (1% being valued at R7 500) and simultaneously made an
unsecured loan of
a further R15 000 to the CC. He was asked how he
could have represented to her that her money was secure in
circumstances where:
(1) he knew that at the very least the CC was
experiencing cash flow problems; and (2) a portion of the money
“invested”
by Sampson was entirely unsecured. He
responded that:
‘Ek het die vraag gevra en dis
aan my verduidelik dat hierdie paragraaf 3 ʼn norm in die
besigheidswêreld is, as
dit by leningsrekening ensovoorts kom…
Die verduideliking aan my is dis
onverseker maar jy is wel ʼn lid van die BK…
Soos ek gesê het ek het nie enige
rede tot kommer gehad op daai stadium met die inligting wat ek tot my
beskikking gehad het
en die kennis nie. Ja daar was ʼn
kontantvloei probleem maar die verduideliking was vir my goed genoeg
wat ek aanvaar het op
daardie stadium en dis die vorms wat vir my
gegee was dit is wat sy geteken het…Ek het my opdragte
uitgevoer so goed as
wat ek kon.’
[28] It was also his evidence that it
was only when his father broke promises made to him that the
appellant came to suspect that
investors were also being misled, and
resigned in 2001. The appellant also maintained that he had not been
aware of any statutory
requirements relating to the management of
investor funds. He had never even heard of the Banks Act during his
employment at Cash
Friend. He had relied completely on his late
father and also what Labuschagne had told him.
The trial court’s judgment
[29] The trial court found the state
witnesses to be honest and reliable. It accepted that the appellant
had not contradicted himself
in any material respect during his
testimony but found him, without providing details, to be an
unimpressive witness, in particular
in relation to his dealings with
Sampson and one other investor, a Mr Saaimans.
[30] The trial court found that given
the common cause fact that there were problems with repaying
investors by October 2000 when
Sampson had paid over R30 000, and the
suspicions that both Greeff and Visagie had harboured at the time,
the appellant, who was
more intimately involved in the business,
should himself have been even more concerned. The trial court thus
found that the state
had proven beyond a reasonable doubt that the
appellant had subjectively foreseen that when he had persuaded
Sampson to invest,
there was a reasonable possibility that she would
not be paid the promised returns and nonetheless reconciled himself
to that possibility.
It convicted the appellant on the count of fraud
on the basis of dolus eventualis.
[31] After considering various
authorities the trial court found that the wording of s 11 of the
Banks Act is wide enough for a
finding of negligence to result in a
conviction for a contravention of the section, and that the
appellant’s positions as
manager and majority member of the CC
placed an obligation on him to educate himself on the relevant
statutory requirements, which
he had negligently not done. It thus
convicted the appellant on the statutory count as well.
Grounds of appeal
[32] On appeal the appellant advanced
three grounds, namely that: (1) the prosecutor had conducted himself
in an improper manner
during the trial; (2) the trial court erred in
finding that the state had proven its case beyond a reasonable doubt;
and (3) it
misdirected itself in rejecting the evidence of the
appellant, contending that it did so on the basis of his demeanour.
Neither
the first nor third grounds were pursued during argument and
the focus correctly centred on the second ground. The appellant’s
counsel also informed us that, were the convictions to be upheld, it
would no longer be contended that the trial court had misdirected
itself on sentence.
[33] The state submitted that in
convicting the appellant the trial court correctly evaluated the
relevant evidence and properly
interpreted s 11 of the Banks Act.
Discussion
[34] In S v Humphreys 2013 (2) SACR
(SCA) 1 at paras [12] – [13], [15] and [17] the Supreme Court
of Appeal dealt with the
requirements for dolus eventualis as
follows:
‘[12] …In accordance with
trite principles, the test for dolus eventualis is twofold:
(a) Did the appellant subjectively
foresee the possibility of the death of his passengers ensuing from
his conduct; and
(b) did he reconcile himself with that
possibility (see eg S v De Oliveira
1993 (2) SACR 59
(A) at 65i-j)?
Sometimes the element in (b) is
described as “recklessness” as to whether or not the
subjectively foreseen possibility
ensues (see eg S v Sigwahla
1967
(4) SA 566
(A) at 570). I shall return to this alternative
terminology, which sometimes gives rise to confusion.
[13] For the first component of dolus
eventualis it is not enough that the appellant should (objectively)
have foreseen the possibility
of fatal injuries to his passengers as
a consequence of his conduct, because the fictitious reasonable
person in his position would
have foreseen those consequences. That
would constitute negligence and not dolus in any form. One should
also avoid the flawed
process of deductive reasoning that, because
the appellant should have foreseen the consequences, it can be
concluded that he did.
That would conflate the different tests for
dolus and negligence. On the other hand, like any other fact,
subjective foresight
can be proved by inference. Moreover, common
sense dictates that the process of inferential reasoning may start
out from the premise
that, in accordance with common human
experience, the possibility of the consequences that ensued would
have been obvious to any
person of normal intelligence. The next
logical step would then be to ask whether, in the light of all the
facts and circumstances
of this case, there is any reason to think
that the appellant would not have shared this foresight, derived from
common human experience,
with other members of the general
population. …
[15] This brings me to the second
element of dolus eventualis, namely that of reconciliation with the
foreseen possibility. The
import of this element was explained by
Jansen JA in S v Ngubane
1985 (3) SA 677
(A) at 685A-H in the
following way:
“A man may foresee the
possibility of harm and yet be negligent in respect of that harm
ensuing, eg by unreasonably underestimating
the degree of possibility
or unreasonably failing to take steps to avoid that possibility . . .
The concept of conscious (advertent)
negligence (luxuria) is well
known on the Continent and has in recent times often been discussed
by our writers. . . .
Conscious negligence is not to be
equated with dolus eventualis. The distinguishing feature of dolus
eventualis is the volitional
component: the agent (the perpetrator)
‘consents’ to the consequence foreseen as a possibility,
he ‘reconciles
himself’ to it, he ‘takes it into
the bargain’. . . . Our cases often speak of the agent being
‘reckless’
of that consequence, but in this context it
means consenting, reconciling or taking into the bargain . . . and
not the ‘recklessness’
of the Anglo American systems nor
an aggravated degree of negligence. It is the particular, subjective,
volitional mental state
in regard to the foreseen possibility which
characterises dolus eventualis and which is absent in luxuria.”
[17] …The true enquiry under
this rubric is whether the appellant took the consequences that he
foresaw into the bargain;
whether it can be inferred that it was
immaterial to him whether these consequences would flow from his
actions. Conversely stated,
the principle is that if it can
reasonably be inferred that the appellant may have thought that the
possible collision he subjectively
foresaw would not actually occur,
the second element of dolus eventualis would not have been
established.’
[35] The central issue for
consideration on count 6 (the fraud count) is whether the evidence
established beyond a reasonable doubt
that the appellant
intentionally made a misrepresentation that caused real or potential
prejudice to the complainant. In respect
of count 9 the question is
essentially whether s 11 of the Banks Act requires criminal liability
(mens rea) in the form of negligence
(culpa) or intent (dolus) to be
proven.
[36] On the one hand it can be argued
that the evidence showed that the appellant was a young and naïve
individual who had
trusted his father completely and was easily
controlled and manipulated by him. The appellant had no direct role
in seeking out
investors and to the extent that he interacted with
them he did so on his late father’s instructions. He played no
part in
the structuring of the business and took no management
decisions. He referred to the investor agreements as ‘forms’.
His primary and simple function was to collect payments from debtors.
[37] It is correct that the appellant
at a relatively youthful age (19 years old) held the majority
member’s interest in the
CC. It is not in dispute that his late
father was an unrehabilitated insolvent. The appellant as a result
effectively held the
member’s interest on his late father’s
behalf and by all accounts, the late father was the driving force in
the business.
[38] However the evidence of Sampson on
count 6 was not seriously challenged during cross-examination. Its
stands largely uncontroverted
and in our view should be preferred
above that of the appellant. On her version of events the appellant
can hardly be described
as a young and naïve individual whose
primary and simple function was to collect payments from debtors. In
fact her evidence
paints a rather different picture of the appellant.
[39] At the time the appellant was
doing business with Sampson he was 21 years of age. He had by that
time been involved for more
than two years with his late father in
the business. He was the branch manager in Oudtshoorn and at the time
had an intimate knowledge
of the business. Sampson’s evidence
clearly demonstrates that it was indeed the appellant who persuaded
her in October 2000
to withdraw her monies from the bank and to
invest it with him for a better return. On Sampson’s
uncontroverted evidence
it was the appellant who made the sales talk.
According to her, after she showed the appellant her bank deposit
slip he immediately
enquired about her children. He suggested she
invest R10 000 per child with him. The appellant then represented
that he would pay
her a better rate of interest on her investment
than the bank and that her monies would be as safe as in a bank.
Sampson was also
adamant that the appellant never explained to her
the details and content of the document at the time she signed it.
She only found
out about the true nature and contents thereof when
they were pointed out to her by a social worker months after the
event.
[40] Both Greeff and Visagie testified
about the disgruntled investors who, before Sampson invested her
monies, regularly came to
the office to complain about their monthly
interest payments that they did not receive. In fact Greeff in
particular expressed
the view that she was concerned about Sampson
investing her monies in the CC as a result of the many complaints
they received from
other investors. She also testified about the
discussion between the appellant and his late father concerning the
investment of
Mr Plaatjies (‘Plaatjies’).
[41] On the appellant’s own
version, before receiving the monies from Sampson, he was aware of a
number of complaints by disgruntled
“investors”,
including Plaatjies. The complaint of these “investors”
was in fact about their promised monthly
returns on their investments
that were not paid regularly or at all by the CC. During
cross-examination the appellant conceded
that at the time he
recruited Sampson to invest her monies he knew there were
insufficient monies in the business to cover its
monthly obligations
and that the more deposits people made the more obligations arose for
the CC.
[42] According to the appellant he
discussed these problems with his father and was given the assurance
that it was a short-term
cash-flow problem and that it is part of
business. At some stage he had also a discussion with Labuschagne,
his late uncle and
accountant of the CC who explained to him that all
the capital funds had been invested and it would just be a matter of
time before
the CC would be liquid again. On the available evidence
the timeline as to when these discussions took place is unclear. We
will
accept in favour of the appellant that they must have taken
place when the investors started to complain about the non-payment of
their promised monthly returns. The appellant in cross-examination
conceded that he knew what an unsecured loan was. Furthermore,
he
conceded that the unsecured loans made by the investors to the CC
were not as safe as a deposit in a normal bank.
[43] While some of the evidence
indicates that the appellant’s late father was a dominant
figure in the business and the appellant
may have acted on some of
his instructions, in the case of Sampson, the undisputed evidence
shows that the appellant was the first
person who interacted with her
regarding a loan. He thereafter solely convinced her to invest R30
000 with him. The crucial question
now is whether the appellant
intentionally expressed a distortion of the truth at the time he
entered into the agreement with Sampson;
knowing full well that there
was never an intention to sell any membership interest to the
complainant, properly invest her monies,
repay any loans that she
would make to the CC and that she would not benefit from any
profit-sharing, which resulted in her suffering
a financial loss.
[44] In our view, on the undisputed and
accepted facts the question must be answered in the affirmative for
the following reasons.
The evidence shows beyond a reasonable doubt
that at the time Sampson invested her monies and signed the agreement
“Memorandum
Van Koorooreenkoms (sic)” she relied entirely
on the information the appellant provided to her. The appellant by
then had
over two years’ experience in the business and had
intimate knowledge of the CC workings to the extent that he at one
stage
had a discussion with his late father how to distribute the
monies of Plaatjies. He operated in Oudtshoorn as the branch manager
and was in charge of the daily running of the business. His father
was doing business from Knysna. On more than one occasion, before
the
event with Sampson, investors came to the appellant to complain
bitterly about their guaranteed monthly returns they did not
receive.
He knew about the investors’ frustration and that they wanted
their monies. In the appellant’s favour it is
accepted that he
had a discussion with his late father and uncle, but whatever
information they gave him, he was at least nonetheless
aware that
there was a serious cashflow problem in the business to the extent
that from June 2000 investors were not being paid
their guaranteed
monthly returns and profit-sharing advances or when paid, it was done
erratically.
[45] The appellant was also fully aware
that the member’s interest in the CC rarely, if ever, was
actually transferred to
the investors as promised. He was further
fully acquainted with the fact that an unsecured loan to the CC could
hardly be regarded
as proper security in the same manner as a deposit
in a normal bank, having conceded as much.
[46] Moreover, the appellant conceded
in cross-examination that at the time he recruited Sampson to invest
her monies he knew full
well there was a serious liquidity problem in
the CC to cover its monthly obligations. In fact the appellant
admitted that the
more deposits received the more obligations there
were for the CC. Viewed cumulatively, the inescapable conclusion is
that the
appellant subjectively foresaw the possibility that Sampson
would not be paid the monthly guaranteed returns and advances on the
profit-sharing as stipulated in the contract but nevertheless
reconciled himself to that possibility. He deliberately
misrepresented
and distorted the true facts and proceeded to conclude
the contract in his own name with the resultant prejudice that was
actually
caused to Sampson.
[47] The appellant’s testimony
leads us to form the firm view that he continuously downplayed and
minimized his moral and
legal blameworthiness and desperately tried
to shift all blame to his late father. However on the proven facts,
it cannot be reasonably
possibly true that the appellant was entirely
ignorant of his late father’s modus operandi and slavishly
followed instructions
when he contracted with Sampson. The fact that
the appellant later resigned from the CC is not necessarily only
indicative of his
naïvety. It is more probably a case of
realising that he could be caught out about the true state of affairs
in the CC and
its fraudulent activities.
[48] The remarks of Lord Halsbury in
Aaron’s Reefs Ltd v Twiss
1896 AC 273
(HL) which are quoted
with approval in S v Ressel
1968 (4) SA 224
(A) and in S v Mbokazi
1998(1) SACR 438 NPD at 445 g-h seem to be apposite in the present
case:
‘It is said there is no specific
allegation of fact which is proved to be false. Again I protest, as I
have said, against
that being the true test. I should say, taking the
whole thing together, was there a false representation? I do not care
by what
means it is conveyed – by what trick or device or
ambiguous language; all those are expedients by which fraudulent
people
seem to think they can escape from the real substance of the
transaction. If by a number of statements you intentionally give a
false impression and induce a person to act upon it, it is not the
less false, although if one takes each statement by itself there
may
be a difficulty in showing that any specific statement is untrue.’
[49] Turning now to the conviction on
count 9. S 11 of the Banks Act provides that:
11. Registration a pre-requisite for
conducting business of bank.---(1) Subject to the provisions of
section 18A, no person shall
conduct the business of a bank unless
such person is a public company and is registered as a bank in terms
of this Act.
(2) Any person who contravenes a
provision of subsection (1) shall be guilty of an offence.’
[s 18A deals with branches of foreign
institutions and is not relevant for present purposes].
[50] S 1 of the Banks Act contains a
comprehensive definition of the ‘business of a bank’. For
present purposes, it
includes the acceptance of deposits from the
general public (including persons in the employ of the person so
accepting deposits)
as a regular feature of the business in question;
the soliciting of or advertising for deposits; and the utilisation of
money accepted
by way of deposit for the granting of loans to other
persons.
[51] There can be little doubt that the
business of the CC fell squarely into this definition. The question
which arises is whether
the appellant himself was guilty of
contravening s 11. The trial court found that he had been negligent
and that negligence suffices
for purposes of a contravention.
[52] In S v De Blom
1977 (3) SA 513
(A)
the court considered what the state was required to prove on a count
of contravening
s 9(5)(a)
of the
Currency and Exchanges Act 9 of 1933
and held at 532E-H that:
‘In ʼn saak soos die
onderhawige moet aanvaar word dat wanneer die Staat getuienis
voorgelê het dat die verbode
handeling begaan is, ʼn
afleiding gedoen kan word, na gelang van omstandighede, dat die
beskuldigde willens en wetens (d.w.s.
ook met
onregmatigheidsbewussyn) die handeling begaan het. Indien die
beskuldigde op ʼn verweer wil steun, soos in die onderhawige
geval, dat sy nie geweet het dat daar handeling onregmatig was nie,
kan haar verweer slaag indien van die getuienis as geheel afgelei
kan
word dat daar ʼn redelike moontlikheid bestaan dat sy nie geweet
het dat haar handeling onregmatig was nie; en verder,
wanneer slegs
culpa en nie dolus alleen as mens rea vereis word nie, daar ook ʼn
redelike moontlikheid bestaan dat sy nie juridies
geblameer kan word
nie, d.w.s. dat, wat al die omstandighede betref, dit redelik
moontlik is dat sy met die nodige omsigtigheid
te werk gegaan het om
haar op hoogte te stel van wat van haar verwag word in verband met
die vraag of toestemming om geld uit te
neem nodig is of nie. Sou
daar op die getuienis as geheel, d.w.s. insluitende die getuienis dat
die handeling gepleeg is, ʼn
redelike twyfel bestaan of daar wel
mens rea, in die sin soos hierbo beskryf, by die beskuldigde bestaan
het, sou die Staat sy
saak nie sonder redelike twyfel bewys het nie.’
[emphasis supplied]
[53] On appeal before us the state
argued that in De Blom the court did not specify which form of
culpability was required, i.e.
intention or negligence, and submitted
therefore that either can suffice.
[54] However in De Blom the court was
dealing in general with the issue of culpability in relation to
statutory offences when it
made the findings which we have quoted. In
essence what it found is that, even in instances where negligence
suffices for a conviction
on a statutory contravention, the accused
can avoid liability if there is a reasonable possibility that he
acted with the necessary
circumspection in order to inform himself of
what was required of him. It made no specific finding that, in all
instances of statutory
contraventions, negligence suffices, nor of
course did it make any such finding in respect of a contravention of
s 11 of the Banks
Act.
[55] Presently in our law there appears
to be no general rule as to which form of criminal liability or fault
(mens rea) be it negligence
(culpa) or intention (dolus) is required
to be proven in statutory offences. See Burchell, The South African
Law Criminal and Procedure
Vol 3 Statutory offences at RS 9, 1997,
chapter 2 at p5; Criminal Law CR Snyman Fourth Edition p244 para [5].
There may also be
instances where a statute explicitly excludes
culpability as a requirement, but in the present matter that issue
does not arise
and is not necessary to consider.
[56] It is well accepted in our law
that where a statute is silent as to what form of mens rea is
required in respect of a particular
offence, the answer is to be
sought in the interpretation of the relevant statute itself. In S v
Arenstein
1964 (1) SA 361
(A) at 366 the Appeal Court held the
following:
‘There is no general rule in
regard to the degree of mens rea required for the violation of a
statutory prohibition or injunction,
and it is clear that
“negligence may constitute
sufficient proof of mens rea even in cases where negligence is not
the gist of the offence charged,
if there was a duty on the part of
the person charged to be circumspect…” – per
CENTLIVRES, J.A., in R. v. H.,
supra, at p. 130. The degree of
blameworthiness required for a culpable violation of a statutory
prohibition or injunction must
in the first place be sought in the
language used by the lawgiver. The requirement of intentional
wrongdoing is usually indicated
by such words as “willfully”,
“intentionally” or “maliciously”, and in the
absence of any words
expressly indicating the particular mental state
required, the degree of mens rea must depend on that foresight or
care which the
statute in the circumstances demands.” ’
[57] This approach was also followed in
Amalgamated Beverage Industries Natal v City Council of Durban
1994
(1) SACR 373
(A) at 378 h. The correct approach in matters of this
nature thus appears to be, having regard to the decided case law and
legal
commentators, that where a high degree of care or
circumspection is required, then the legislation clearly contemplates
culpa as
the mens rea of the offence. The less onerous the duty to
take care and exercise circumspection, the less likely it is that
negligence
was intended as the form of mens rea. In this regard see
Burchell in The South African Law Criminal and Procedure – Vol
3
– Statutory Offences at RS 9, 1997 ch2 – p35.
[58] If one has regard to the words
used in section 11, and its setting in the Banks Act itself, there is
no clear indication as
to the form of mens rea required in respect of
this offence. Upon closer scrutiny, however, there is in our view
little doubt that
the legislature contemplated negligence (culpa)
rather than intent (which would require proof of subjective knowledge
of the law),
to be proven as the mens rea requirement in respect of
the offence in s 11.
[59] The very regulatory character of
the statute, and the clear overriding concern of the protection of
the interests of the public,
necessarily demand a high level of
circumspection and care from those who enter the banking industry. It
could not have been the
intention of the legislature that
practitioners could escape liability purely on the grounds of lack of
knowledge of the law, even
where such lack of knowledge was
unreasonable. The statute in our view must be read in the light of
the complexity of the field
of banking, and the potential of harm to
the public should practitioners act without a high degree of care and
skill.
[60] A further clear indication that
the legislature contemplated negligence as the mens rea of the
offences in the Banks Act is
to be found in respect of the
contravention of s 38 where s 40 provides as follows:
‘40. Absence of wrongful intent
If a bank or a controlling company or
any director, officer, employee or agent of a bank or controlling
company in good faith and
on the strength of information reasonably
obtained acts or fails to act and thereby unknowingly contravenes
the provisions of
section 38, such act or failure to act shall not
constitute an offence.’
[61] The fact that the legislature has
deemed it fit to indicate with regard to a specific offence (s 38)
that the form of mens
rea required to be proven, is negligence,
suggests that it contemplated with regard to the other offences, that
either strict liability
applies i.e. no requirement of mens rea, or
mens rea in the form of culpa must be proven. In the light of what we
have stated above,
it is our view that negligence is the applicable
fault standard.
[62] Returning to the facts of this
case. The conduct of the appellant in the present instance clearly
falls short of what a reasonable
person in his circumstances would
have foreseen or done. He held a position of authority in a
particular field of activity, which
any reasonable person would
realise, in light of the complexity of the industry and the inherent
risk involved, was subject to
many laws and regulations. His failure
to acquaint himself with such laws in the circumstances was and is
negligent.
[63] In contending that mens rea in the
form of dolus is required, the appellant’s counsel relied on S
v Clifford, an unreported
judgment of Kroon J in the Eastern Cape
Division (case no CC 62/04). The court in that matter was also
dealing with the Banks Act,
and at para [1054] held that:
‘Adv Stander het die
skuldigbevinding van beskuldigdes 1, 2 en 6 aan ʼn oortreding van
die Bankwet bepleit. Aanvaar kan
word dat elk van hulle daarvan bewus
was dat Usapho nie ʼn publieke maatskappye was nie, nóg
dat hy as ʼn bank geregistreer
is. Die werklike vraag wat
beantwoord moet word is of hulle van die bepalings van die Bankwet
bewus was, alternatiewelik of, by
onstentenis van bewys daarvan, die
vereiste mens rea tog hulle toegereken moet word.’
[64] We are not convinced that on a
proper reading of the Clifford case it can be regarded as conclusive
authority for the proposition
that offences under the Banks Act
require proof of fault in the form of intent (subjective foresight).
It appears that Kroon J
tested the conduct of the accused against the
fault standard of culpa. The court in fact appeared to find that the
accused, while
mistaken as to the application of the law, acted
reasonably in the circumstances given that its representatives acted
upon advice
from its attorney and a manager of a major bank retailer
(ABSA) that its business did not fall foul of the Banks Act and was
legitimate.
Conclusion
[65] It is for these reasons that we do
not intend interfering with the appellant’s convictions.
Furthermore, in any event
in respect of sentence, we cannot find any
misdirection on the part of the trial court, nor are the sentences
imposed shocking,
startling or disturbingly inappropriate.
[66] In the result the following order
is made:
‘1. The appeal is dismissed.
2. The appellant’s convictions
and sentences are confirmed.’
A LE GRANGE
J I CLOETE