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REPUBLIC OF SOUTH AFRICA
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case No: 308/2002
Reportable
In the matter between
THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Appellant
and
SAVVAS IOANNOU KYRIACOU Respondent
BEFORE: Howie P, Brand JA, Nugent JA, Southwood AJA and Mlambo AJA
HEARD: Mon 18 August 2003
DELIVERED: Fri 26 September 2003
SUMMARY: Restraint order in terms of Prevention of Organised Crime act, 121 of 1998 – requirements for
JUDGMENT
MLAMBO AJA
[1] On 25 September 2001 the respondent was convicted by Lombard J in the Orange Free State Provincial Division of the High Court on 102 counts of receiving stolen property knowing that it was stolen and he was sentenced to fifteen years’ imprisonment. The value of the property concerned was approximately R4,5 million. After convicting the respondent the learned judge ordered (in terms of s 34(1)(a) of the Criminal Procedure Act 51 of 1977) that the property be returned to the rightful owners. On the following day the learned judge commenced an enquiry to determine whether a confiscation order should be made as contemplated by s 18(1) of the Prevention of Organised Crime act 121 of 1998 (“the Act”). The learned judge found that the respondent had benefited from the offence of which he was convicted, and postponed further conduct of the enquiry to enable the parties to make submissions relating to the amount of the benefit the respondent had received.
[2] On 11 October 2001, before the enquiry was concluded, the High Court, (Cillié J) made a provisional restraint order as contemplated by Section 26 of the Act, upon the ex parte application of the appellant. In terms of that order a curator bonis was appointed, and he was authorised to take possession of the property of various close corporations of which the respondent was the sole member, the property of various trusts controlled by the respondent, and certain other specified property, including the respondent’s residence and its contents. On the return day that provisional order was set aside by Cillié J.
With leave granted by the court a quo.the appellant now appeals against the setting aside of that order. The judgement of Cillié J setting aside the provisional order is reported: see 2002 (2) SACR 67 (0).
[3] Sections 18 and 26 of the Act form part of an elaborate legislative structure created by Chapter 5 which is designed to enable the State to divest convicted criminals of the proceeds of their criminal activities. The central provision of Chapter 5 is s 18, which authorises a court that has convicted a person of an offence, to make what is referred to as a ‘confiscation order’. The subsection reads as follows:
“(1) Whenever a defendant is convicted of an offence the court convicting the defendant may, on the application of the public prosecutor, enquire into any benefit which the defendant may have derived from -
(a) that offence;
(b) any other offence of which the defendant has been convicted at the same trial; and
(c) any criminal activity which the court finds to be sufficiently related to those offences,
and, if the court finds that the defendant has so benefited, the court may, in addition to any punishment which it may impose in respect of the offence, make an order against the defendant for the payment to the State of any amount it considers appropriate and the court may make any further orders as it may deem fit to ensure the effectiveness and fairness of that order”.
[4] Section 12(3) provides that for purposes of Chapter 5 a person has benefited from unlawful activities ‘if he or she has at any time, whether before or after the commencement of this Act, received or retained any proceeds of unlawful activities.’
(5) Section 25 and 26 (which fall within Part 3 of chapter 5) allow for a ‘restraint order’ to be made in anticipation of the granting of a confiscation order. The purpose of a restraint order is to preserve property so that it may in due course be realised in satisfaction of a confiscation order. Section 26(1) authorises the National Director of Public Prosecutions to apply to a High Court, ex parte, for an order ‘prohibiting any person from dealing in any manner with any property to which the order relates’. The remaining provisions of Part 3 confer wide powers upon the Court as to the terms of a restraint order. In particular, it may appoint a curator bonis to take charge of the property that has been placed under restraint, order any person to surrender the property to the curator, authorise the police to seize the property and place restrictions upon encumbering or transferring immovable property. It may also make a provisional restraint order having immediate effect and simultaneously grant a rule nisi calling upon the defendant to show cause why the order should not be made final. National Director of Public Prosecutions v Rebuzzi 2002(2) SA 1 (SCA)
(6) The circumstances in which a restraint order may be made are provided for in s 25(1) as follows:
“A High Court may exercise the powers conferred on it by s 26(1) [i e the powers to make a restraint order]-
(a) when –
(i) a prosecution for an offence has been instituted against the
defendant concerned;
(ii) either a confiscation order has been made against that defendant or it appears to the Court that there are reasonable grounds for believing that a confiscation order may be made against that defendant; and
the proceedings against that defendant have not been concluded; or
(b) when-
(i) that court is satisfied that a person is to be charged with an offence; and
it appears to the Court that there are reasonable grounds for believing that
a confiscation order may be made against such person.”
[7] In support of his application for a restraint order in the present case the appellant relied upon an affidavit by Captain Van Wyk, the investigating officer in the case in which the respondent was convicted. Van Wyk pointed out that the goods that were found in the possession of the respondent had been stolen, in some cases by operators of so-called fly-by-night businesses who obtained goods on credit and then disappeared. He said that he was investigating another matter in which goods to the value of approximately R300,000 had in similar fashion been obtained on credit and had been found on the premises of a business that was controlled by the respondent.
[8] The learned judge in the court a quo was of the view that no proper grounds had been established for making a restraint order for two reasons. In relation to the property that had been the subject of the conviction the learned judge pointed out that the benefit that the respondent had received in that regard had already been forfeited in consequence of the order made by Lombard J for the return of the property to the rightful owners and thus, said the learned judge, it was ‘highly unlikely that a confiscation order will be made’
[9] Furthermore, approaching Van Wyk’s disputed evidence relating to the further alleged criminal activity of the respondent in accordance with the principles set out in Stellenbosch Farmers Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234(C) and Plascon –Evans Paints v Van Riebeek Paints 1984 (3) SA 623 (A), the learned judge concluded that the order sought by the appellant could not be granted ‘if the truth cannot be established from the papers’. He went on to say that the “discretion to grant a restraint order is to be sparingly exercised and then only in the clearest of cases and where the considerations in favour substantially outweigh the considerations against,”relying in this regard on what was said in National Director of Public Prosecutions v Mcasa and Another 2000(1) SACR 263 (TK) at 275 E-F.
[10] In my view the learned judge’s approach to the matter was incorrect as was the court’s approach in Mcasa’s case. Section 25(1)(a) confers a discretion upon a court to make a restraint order if, inter alia, ‘there are reasonable grounds for believing that a confiscation order may be made…’ While a mere assertion to that effect by the appellant will not suffice (National Director of Public Prosecutions v Basson 2002(1) SA 419 (SCA) at 428 B-C) on the other hand the appellant is not required to prove as a fact that a confiscation order will be made, and in those circumstances there is no room in determining the existence of reasonable grounds for the application of the principles and onus that apply in ordinary motion proceedings. What is required is no more than evidence that satisfies a court that there are reasonable grounds for believing that the court that convicts the person concerned may make such an order.
[11] A court that convicts an offender is not restricted to making a confiscation order in relation only to the offences of which the offender has been convicted. Section 18(1) of the Act authorises a court to make a confiscation order once it has found that the offender has benefited either from the offence of which he has been convicted, or from any other offence of which he has been convicted at the same trial, or from any criminal activity which the court finds to be sufficiently related to those offences. A finding that the offender has benefited in any of those respects constitutes the jurisdictional fact that is necessary for a court to exercise its discretion to make a confiscation order. Whether the court exercises that discretion, and the extent to which it does so, will depend upon the extent to which the offender is found to have benefited from either the crime concerned, or from other offences of which he was convicted, or from related criminal activity.
[12] In the present case there is no dispute that the necessary jurisdictional fact already existed at the time the provisional restraint order was sought for Lombard J had already commenced the enquiry contemplated by s 18(1) and had found that the respondent had benefited within the meaning of the section. Indeed, such a finding was inevitable, bearing in mind that the respondent was found to have been in possession of stolen property to the value of approximately R4,5 million. The fact that he was relieved of that property by the order made by the trial court has no bearing on the existence of the jurisdictional fact that is necessary for the court to exercise its discretion to make a confiscation order. Although the respondent has already been deprived of the benefit that he received from the commission of the crimes of which he was convicted (and in my view it would be an improper exercise of the court’s discretion to order the confiscation of further property in relation to those crimes alone) that is not the end of the enquiry. Having found that respondent received a benefit from those crimes the court has a discretion to order the confiscation of benefits he received not only from that criminal activity but also from related criminal activity.
[13] In the course of the enquiry that is to follow as to the extent to which he has benefited from his crimes or from related criminal activity, the respondent is faced with the presumptions created by s22, in particular ss22(1) and 22(3) which provide as follows:
“22(1) For the purposes of determining whether a defendant has derived a benefit in an enquiry under section 18(1), if it is found that the defendant did not at the fixed date, or since the beginning of a period of seven years before the fixed date, have legitimate sources of income sufficient to justify the interests in any property that the defendant holds, the court shall accept this fact as prima facie, evidence that such interests form part of such a benefit.
…
22(3) For the purposes of determining the value of a defendant’s proceeds of unlawful activities in an enquiry under section 18(1)-
(a) if the court finds that he or she has benefited from an offence and that-
(i) he or she held property at any time at, or since, his or her conviction; or
(ii) property was transferred to him or her at any time since the beginning of a period of seven years before the fixed date,
the court shall accept these facts as prima facie evidence that the property was received by him or her at the earliest time at which he or she held it, as an advantage, payment, service or reward in connection with the offences or related criminal activities referred to in section 18(1);
(b) if the court finds that he or she has benefited from the offence and that expenditure had been incurred by him or her since the beginning of the period contemplated in paragraph (a), the court shall accept these facts as prima facie evidence that any such expenditure was met out of the advantages, payments, services or rewards, including any property received by him or her in connection with the offences or related criminal activities referred to in section 18(1) committed by him or her.”
[14] Quite apart from the evidence of Van Wyk relating to the additional goods that were found, the appellant expressly put the respondent on notice that he intended to rely upon these presumptions when the following was said in his representative’s founding affidavit:
“I submit that in view of the fact that the purpose of the restraint order is to preserve sufficient property to satisfy the confiscation order against the Respondent, the Honourable Court should not only have regard to the amount of R4,5 million for which he had been convicted but also take into account the likelihood that Respondent derived much of his income from criminal activities rather than from legitimate sources. In this regard I wish to bring the Honourable Court’s attention that the Applicant intends to rely on the presumptions created by section 22 of the act and in particular section 22(3) of the Act with regard to the amount of the confiscation order.”
[15] The question in the present case is thus whether there are reasonable grounds for believing that the trial court, taking into account these presumptions, may order the confiscation of the property that was placed under restraint. In my view there are indeed reasonable grounds for believing that that might occur, for the respondent has gone no way at all towards rebutting the presumptions that are created by s 22. (I should add that in his answering affidavit the respondent alleged that these presumptions offend the constitution but that was not pursued in argument before us.)
[16] The respondent said, rather cursorily, that over the years he has earned profit from trading in shares and from property transactions but he provided little or no detail of the source of the assets used in these transactions, or of the profits that he made. In relation to the trade in shares, he provides no details of any profit or assets he acquired in this manner other that this was between 1967 and 1970. In relation to his property dealing, his explanation covers assets valued at approximately R6 million but leaves the sources of a substantial part of his estate unexplained. I hasten to add that I do not suggest that the respondent will not in due course be able to rebut the presumptions. All we are called upon to determine at this stage is whether there are reasonable grounds for believing that he may not do so, with the result that a confiscation order may be made. In my view the cursory and vague response of the respondent to the challenge presented to him by s22 does indeed provide grounds for such a belief. I can see no other grounds upon which the discretion to grant a restraint order ought to be exercised against the appellant.
[17] Counsel for the respondent submitted that the appellant should be non-suited for failing to disclose in the ex parte application that the trial court had granted a forfeiture order in terms of s34(1) of the Criminal Procedure Act and the amount thereof. It was submitted that such disclosure was called for as it is likely to have influenced the court whether to grant the provisional order or refuse it. It is common cause that the s 34 order was not referred to in the papers
[18] It is correct that utmost good faith must be observed when initiating an ex parte application, and failure to disclose and present fully and fairly all known material facts may constitute a ground to dismiss an application. The duty to disclose extends to all facts which might influence a court in coming to its decision. (National Director of Public Prosecutions v Basson, supra at 428(21) I-J.)
[19] The learned judge in the court a quo had a discretion, on being apprised of all the facts, to either set aside the provisional order or confirm it. An important consideration in the court a quo was the question whether the court that granted the provisional order might properly have been influenced by non-disclosure of the s34 order to refuse relief The learned judge in the court a quo heard full argument on this issue but elected to discharge the rule on another ground. He did not deem it necessary to deal with this one. I can see no reason to have discharged the order by reason of the non-disclosure in question. Had disclosure been made the s 34 order would not have been the answer to a confiscation order. There was, in addition, as already said, the matter of related criminal activity and the force of the presumptions.
[20] Accordingly the appeal is upheld with costs, including the costs occasioned by the employment of two counsel. The order made by the court a quo is set aside and substituted for it is the following order:
“The provisional restraint order is confirmed. The respondent is ordered to pay the costs of the application.”
D MLAMBO
ACTING JUDGE OF APPEAL
CONCURRING:
HOWIE P
BRAND JA
NUGENT JA
SAFLII:
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.RTF of original document