National Director of Public Prosecutions v Botha NO and Another

CONSTITUTIONAL COURT OF SOUTH AFRICA Case CCT 280/18 In the matter between: NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant and GESIENA MARIA BOTHA N.O. ANGELIQUE BOTHA N.O. First Respondent Second Respondent Neutral citation: National Director of Public Prosecutions v Botha N.O. and Another [2020] ZACC 6 Coram: Mogoeng CJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Theron J and Victor AJ Judgments: Victor AJ: (minority) [1] to [99] Jafta J (majority): [100] to [131] Heard on: 5 September 2019 Decided on: 26 March 2020 Summary: Section 50(1) of the Prevention of Organised Crime Act 121 of 1998 — forfeiture of unlawful proceeds — proportionality analysis ORDER On appeal from the Supreme Court of Appeal (hearing an appeal from the High Court of South Africa, Northern Cape Division, Kimberley): 1. Leave to appeal is granted. 2. The appeal is upheld. 3. Paragraphs 1(a) and 1(d) of the Supreme Court of Appeal order are set aside. 4. The first respondent must pay an amount of R1 169 068.49 to the state within a period of six months from the date of this order into the criminal assets recovery account number 8030 3056, held at the South African Reserve Bank. 5. Proof of payment must be furnished in writing to the appointed curator bonis. 6. Failing payment, the appointed curator bonis is authorised to sell the property, Erf 3432, Kimberley, also known as 12 Jawno Street, Kimberley, by public auction or private treaty, at a reasonable price to the highest bidder and, subject to the rights of secured creditors, to pay the sum of R1 169 068.49 into the account mentioned in paragraph 4 above and to disburse the net proceeds, after incidental expenses, to the estate of the late Yolanda Rachel Botha, number 394/2015. JUDGMENT VICTOR AJ (Froneman J and Khampepe J concurring): Introduction Bribery and corruption in public procurement have become systemic in South African society. Corruption affects us all. It intersects at points of social, political, economic and ethical discourse with no end in sight and thus remains an elusive 2 VICTOR AJ malignancy slowly eroding our hard-won democracy. Whilst stories of the high-profile looters reach the media, the more low-key public officials who sit behind their desks committing acts of public procurement corruption with disturbing frequency may ultimately have an even greater catastrophic effect on our economy and society. In this case a bureaucrat who was a senior official in charge of public procurement was involved in bribery and corruption resulting in the loss of billions of rands for the Northern Cape Province and the Country.1 The enactment of various statutes including the Prevention of Organised Crime Act 2(POCA) and the Prevention and Combating of Corrupt Activities Act3 (PCCA) casts a wide net to address many categories of this rampant crime and others in our country. The preamble to the PCCA addresses this by stating that— “corruption and related corrupt activities undermine the rights [enshrined in the Bill of Rights], endanger the stability and security of societies, undermine the institutions and values of democracy and ethical values and morality, jeopardise sustainable development, the rule of law and the credibility of governments, and provide a breeding ground for organised crime.” Public resources are largely beneficial to poor people, it is they who suffer the harmful effects of corruption most grievously.4 Corruption has become “an albatross” around the neck of economic growth and a major hurdle to economic development.5 1 National Director of Public Prosecutions v Botha [2016] ZANCHC 89 (High Court judgment) at para 17. 2 121 of 1998. 3 12 of 2004. 4 Glenister v President of the Republic of South Africa [2011] ZACC 6; 2011 (3) SA 347 (CC); 2011 (7) BCLR 651 (CC) (Glenister II) at para 167 referred to what Kofi Annan observed: that “This evil phenomenon is found in all countries big and small, rich and poor but it is in the its effects are most destructive. Corruption hurts the poor developing world disproportionately by diverting funds intended for development, undermining a government's ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid. Corruption is a key element in economic under-performance, and a major obstacle to poverty alleviation and development.” 5 Angelo Dalli “Corruption is the Scourge of the Earth” Malta Unrepentant (26 May 2017) available at https://www.maltaunrepentant.com/2017/05/corruption-is-the-scourge-of-the-earth.html. 3 VICTOR AJ The narrow factual issue in this case – which it is helpful to set out now – concerns the following fact pattern. Ms Yolanda Rachel Botha, (Ms Botha) now deceased,6 received a corrupt benefit of R1 169 068.49 in renovations to her residential property. She then “paid back” R411 054.66 to the company that carried out those renovations. She not contest that she must forfeit something: but how much? Should she forfeit the full R1 169 068.49, or should account be taken of the amount “paid back”, so she forfeits R758 013.83? There are, broadly speaking, two legal issues to be decided in this case. The first is whether a court is required to apply a form of proportionality assessment to a forfeiture order under section 50(1)(b) of POCA in respect of proceeds of crime. This requires us to consider the scope of section 25(1) of the Constitution and the correct interpretation of POCA. The second, is how any proportionality assessment is to be carried out. Background Ms Botha, was the Head of Department (HOD) of the Northern Cape Department of Social Services and Population Development from January 2001 until April 2009. As the HOD, she held the rank of Deputy Director General and was the most senior functionary of the Department. In the course of her position as HOD, she embarked on an unprecedented scale of corruption by awarding tenders to a company known as Trifecta Investment Holdings (Pty) Ltd (Trifecta) for the lease of government premises. Trifecta would acquire well-constructed but rundown buildings within the Northern Cape Province. Trifecta would then renovate these buildings to lease to government departments at lucrative and exorbitant rates. For example, one property was rented at R74.40 per square metre when its fair market value was R40 per square metre thereby resulting in the state paying almost double the value of the leased property. Ultimately the loss to the state was in 6 On 28 December 2014, Ms Botha passed away during the course of her criminal proceedings. 4 VICTOR AJ the order of R26 billion and if the leases were carried to term would mean a loss of R57 billion. Trifecta received billions of rands as a result of these corrupt business opportunities. In exchange, in September 2009, Trifecta started renovation works on Ms Botha’s family home.7 These renovations cost R1 169 068.49.8 On 28 February 2010, Ms Botha issued a certificate of indebtedness to Trifecta in the amount of R500 000. On 10 March 2010, a “loan agreement” was concluded between Trifecta and Ms Botha for the value of R500 000.9 It will be appreciated that both the certificate of indebtedness and the “loan agreement” were for far less than the cost of the renovations. In 2010, Ms Botha left her employment as HOD and was elected to Parliament. Unsurprisingly, she did not declare the gratifications she had received from Trifecta as she was required to under the relevant Code of Ethical Conduct for Members of Parliament.10 On 11 February 2011, after a press report in the Mail & Guardian newspaper, a parliamentary inquiry was launched into these alleged breaches (the parliamentary inquiry). Ms Botha’s defence in her affidavit to the parliamentary inquiry was, in essence, that she had received no benefit from Trifecta because she was required to repay the sums that Trifecta had spent on renovating her home: “as is evidence (sic) from the acknowledgement of debt agreement, I have to repay the amount that I had borrowed from Trifecta and as a result of this there can be no benefit for me.” 7 High Court judgment above n 1 at para 23. Ms Botha received other benefits, but these are not in issue in the present case. 8 Id at para 49. 9 Id at para 24. 10 The Report of the Joint Committee on Ethics and Members’ Interests on the Complaint Against Ms Botha, dated 16 November 2011, in para 3 stated that, “Members of Parliament are required to declare all ‘registrable interest’ and ‘benefits in case or in kind’. This includes in terms of paragraph 7(g) the nature and source of any other benefit of a material nature; and the value of that benefit”. 5 VICTOR AJ The parliamentary committee (the committee), in a report published in November 2011, concluded that Ms Botha had breached the Code of Ethics on two broad fronts. First, she was guilty of receiving a benefit from an improper or generally corrupt relationship with Trifecta. In so doing, it rejected as untrue her defence in which she claimed “that the cost of the renovations were covered by a loan for R500 000”. Second, and importantly, she was found guilty of having misled the parliamentary committee. I quote the relevant portion of the report: “(i) The invoices submitted [by Trifecta] reflected that the last costs relating to the renovations were in October 2010 and the amount at that time exceeded R1.2 million. Despite this Ms Botha submitted the loan agreement with a value of R500 000 to try to prove that the cost of the renovations were in fact a loan. (ii) When it became evident that Ms Botha could not refute the total costs of the renovations she made a further submission under oath that the error was due to the fact that she had no legal background. The Panel rejects her assertion on the basis that a former [HOD] responsible for managing a department with a large budget cannot claim to be unable to understand a letter requesting the full costs of renovations to her home.” In other words, Ms Botha was found to have received an improper benefit, and to have attempted to cover this up by reference to what was, in effect, a sham loan agreement. I interpose to add that Ms Botha, while the inquiry was ongoing, paid certain sums to Trifecta. Namely, on 9 April 2011, she purported to repay the loan in an amount of R371 054.66 from her Government Employees Pension Fund and a further R40 000 on 28 April 2011, amounting to a total of R411 054.66.11 Thereafter, she together with others, was charged by the National Director of Public Prosecutions (NDPP) with offences of tender corruption and other offences of 11 High Court judgment above n 1 at para 25. 6 VICTOR AJ corruption. The factual bases of these offences largely overlap with the ethical breaches considered by the committee.12 All that need be noted is that Ms Botha – while not technically found guilty as she passed away before the High Court handed down – was judgment, was the subject of adverse findings by the High Court.13 The NDPP then sought a civil forfeiture order, in respect of the proceeds of Ms Botha’s offences under Chapter 6 of POCA.14 It is this forfeiture order which is civil in nature that is now before this Court. Litigation history High Court The High Court had to determine an application brought in terms of section 48(1)15 and section 5016 of POCA for the forfeiture of inter alia (amongst other 12 Botha N.O. v National Director of Public Prosecutions [2018] ZASCA 146; 2018 JDR 2093 (SCA) (Supreme Court of Appeal judgment) at para 7. 13 Id at para 8. 14 Id at para 2. 15 Section 48(1) of POCA is titled “application for forfeiture order” and provides as follows: “If a preservation of property order is in force the National Director may apply to a High Court for an order forfeiting to the state all or any of the property that is subject to the preservation of property order.” 16 Section 50 of POCA reads as follows: “(1) The High Court shall, subject to section 52, make an order applied for under section 48(1) if the Court finds on a balance of probabilities that the property concerned— (a) (b) (c) is an instrumentality of an offence referred to in schedule 1; is the proceeds of unlawful activities; or is property associated with terrorist and related activities (2) (3) (4) The High Court may, when it makes a forfeiture order or at any time thereafter, make any ancillary orders that it considers appropriate, including orders for and with respect to facilitating the transfer to the state of property forfeited to the state under such an order. The absence of a person whose interest in property may be affected by a forfeiture order does not prevent the High Court from making the order. The validity of an order under subsection (1) is not affected by the outcome of criminal proceedings, or of an investigation with a view to institute such proceedings, in respect of an offence with which the property concerned is in some way associated. 7 things) the renovations to the property.17 The High Court concluded that the renovations were indeed, on the balance of probabilities, “the proceeds of unlawful activities” under section 50(1)(b) of POCA, and ordered forfeiture of the entire VICTOR AJ property.18 Supreme Court of Appeal The Supreme Court of Appeal agreed with the High Court that the renovations were indeed, on the balance of probabilities, proceeds of corruption and money laundering and hence fell within the scope of section 50(1)(b) of POCA.19 It then turned to a proportionality analysis whose purpose, the Court reasoned, was “to determine whether the grant of a forfeiture order would amount to an arbitrary deprivation of property in contravention of section 25(1) of the Constitution”.20 The Supreme Court of Appeal held that it was wrong to have forfeited the entire property which, first, was acquired by means of a legitimate bank loan in 2004 long before the events giving rise to the POCA application, and second, the NDPP had applied only for the forfeiture of the value of the renovations and not for the forfeiture of the entire property.21 Instead, the Supreme Court of Appeal ordered R758 014.83 to be forfeited.22 Although its reasoning was terse, it effectively reasoned along the lines that Ms Botha (5) The Registrar of the Court making a forfeiture order must publish a notice thereof in the Gazette as soon as practicable after the order is made. (6) A forfeiture order shall not take effect – (a) before the period allowed for an application under section 54 or an appeal under section 55 has expired; or (b) before such an application or appeal has been disposed of.” 17 High Court judgment above n 1 at para 1. 18 Id at para 59. 19 Supreme Court of Appeal judgment above n 12 at para 39. 20 Id at para 40. 21 Id at paras 42-5. 22 Id at para 46. 8 had repaid funds to Trifecta and that those funds had to be taken into account in the amount to be forfeited: VICTOR AJ “[I]t is not disputed that the deceased paid an amount of R411 054.66 to Trifecta as part of the costs expended on the renovations. Mr Malan calculated the renovation costs at R1 169 068.49. Therefore the amount paid by the deceased has to be deducted from the renovation costs.”23 In this Court The NDPP approaches this Court seeking to set aside the part of the Supreme Court of Appeal order that ordered the first respondent to pay R758 014.83 instead of R1 169 068.49. The Chief Justice issued directions on 27 February 2019 calling for written submissions on, inter alia, whether unlawful proceeds constitute property and whether a proportionality enquiry would apply to the forfeiture of proceeds of unlawful activities under section 50 of POCA.24 Issues The issues for determination are: 1. Does section 25(1) of the Constitution protect the unlawful proceeds of crime from arbitrary deprivation? 2. Does the doctrine of proportionality apply to both instrumentality and proceeds of unlawful activity in terms of section 50 of POCA? 23 Id at para 44. 24 The directions requested written submissions on the following questions: “(a) (b) (c) whether a proportionality enquiry applies to forfeiture of proceeds of unlawful activities under section 50 of the Prevention of Organised Crime Act 121 of 2008 (POCA); the proper approach to whether property subject to a preservation order should be forfeited under section 50(1)(b) of POCA; and whether any payments made by the late Ms Botha under the ostensible loan agreement should be considered in determining the proceeds of unlawful activities to be forfeited under section 50 of POCA, and if so, on what basis.” 9 3. If so, how does the doctrine of proportionality apply here? VICTOR AJ Jurisdiction and leave to appeal The issue before this Court raises a novel constitutional question on whether unlawful proceeds amount to property and whether the forfeiture of unlawful proceeds amounts to an arbitrary deprivation of property in terms of section 25(1) of the Constitution.25 A further question which must be determined in tandem is whether the principle of proportionality applies to both instrumentality and proceeds from unlawful activities. In this Court, it was common cause that the renovation was the result of unlawful proceeds of crime. Clarity on the extension of the proportionality doctrine to forfeiture of unlawful proceeds is necessary and raises the question whether our law should accommodate this extension. Much of the current case law on forfeiture of property and proportionality relates to the forfeiture of the instrumentality of a crime and not to unlawful proceeds.26 This matter relates to the interpretation of section 25(1) of the Constitution. This matter involves a constitutional issue and therefore engages this Court’s jurisdiction. The decisions of the courts below are divergent and therefore it requires this Court to make a definitive pronouncement on the issue. It is against this background that I grant leave to appeal. 25 Section 25(1) of the Constitution, provides that— “[n]o one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.” 26 Mohunram v National Director of Public Prosecutions (Law Review Project as Amicus Curiae) [2007] ZACC 4; 2007 (4) SA 222 (CC); 2007 (6) BCLR 575 (CC); Prophet v National Director of Public Prosecutions [2006] ZACC 17; 2006 (2) SACR 525 (CC); 2007 (2) BCLR 140 (CC); and National Director of Public Prosecutions v R O Cook Properties (Pty) Ltd; National Director of Public Prosecutions v 37 Gillespie Street Durban (Pty) Ltd; National Director of Public Prosecutions v Seevnaravan [2004] ZASCA 36; 2004 (2) SACR 208 (SCA) (Cook Properties). 10 VICTOR AJ Merits I propose a four-fold approach to the analysis: 1. An overview of the legislative framework; 2. An examination of why a proportionality analysis is required by section 25(1) of the Constitution when a court orders forfeiture of proceeds under section 50(1)(b) of POCA; 3. How a proportionality analysis is to be carried out in respect of such orders; and 4. Why, on the facts of this case, it is not disproportionate for the full R1 169 068.49 to be forfeited. Overview of the legislative framework POCA seeks to establish a civil mechanism to forfeit wrongfully gained property.27 The rationale is, in essence, that no one should profit from their own wrong.28 The civil mechanism is two-fold. The first step, with which we are not concerned with in this case, is for the NDPP to make an application to the High Court for a preservation order under section 48 of POCA. The effect of that order is that persons are prohibited from dealing in any manner with the property. Second, the NDPP may apply for a forfeiture order in respect of the property which is subject to the preservation 27 The preamble to POCA states that “[i]t is necessary to provide for a civil remedy for the preservation and seizure, and forfeiture of property which is derived from unlawful activities or is concerned in the commission or suspected commission of an offence.” 28 The preamble to POCA further states that “[n]o person should benefit from the fruits of unlawful activities, nor is any person entitled to use property for the commission of an offence.” There are other aims, noted by Van Heerden J in Mohunram above n 26 at para 57— “the broader societal purposes served by civil forfeiture under Chapter 6 of POCA have been held to include: removing incentives for crime; deterring persons from using or allowing their properties to be used in crime; eliminating or incapacitating some of the means by which crime may be committed; and advancing the ends of justice by depriving those involved in crime of the property concerned.” 11 VICTOR AJ order and this is the step we are concerned with. If a forfeiture order is granted, the property is forfeited to the state.29 The grant of a forfeiture order is civil in nature and is not dependent on there being a prior conviction for a criminal offence. So much is borne out by a contrast between Chapter 5 of POCA, which provides for confiscation orders that bite only upon conviction of a criminal offence30 and Chapter 6 of POCA, which provides for forfeiture orders. The test for granting a forfeiture order is laid down in section 50 of POCA: “(1) The High Court shall, subject to section 52, make an order applied for under section 48(1) if the Court finds on the balance of probabilities that the property concerned— (a) (b) is an instrumentality of an offence referred to in Schedule 1; is the proceeds of unlawful activities.” The purposes of section 50 in the context of Chapter 6 of POCA were helpfully explained by this Court in Mohamed as follows: “Chapter 6 [POCA]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, Chapter 6 needs to be understood in contradistinction to Chapter 5 of [POCA]. 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.”31 29 Section 56(2) of POCA. 30 Section 18(1) of POCA reads: “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”. 31 National Director of Public Prosecutions v Mohamed N.O. [2002] ZACC 9; 2002 (4) SA 843 (CC); 2002 (9) BCLR 970 (CC) (Mohamed) at para 17. 12 VICTOR AJ A forfeiture order can therefore be granted in respect of two different types of property. The first, is property which is used to commit an offence that is the “instrumentality forfeiture orders”.32 The second, is property which is the proceeds of unlawful activities or “proceeds forfeiture orders”.33 The language of section 50 of POCA leaves no discretion to a court. If property has been shown, on the balance of probabilities, to fall within either section 50(1)(a) or section 50(1)(b), then the court must order its forfeiture unless section 52 can be relied upon. This, as has been noted, is an invasive order. Moseneke DCJ, noting that such orders are “draconian”, put the point as follows: “Civil asset forfeiture constitutes a serious incursion into well-entrenched civil protections particularly those against arbitrary and excessive punishment and against arbitrary confiscation of property. Courts in this country and elsewhere have generally been astute to the fact that forfeiture of the instrumentalities of crime can produce arbitrary and unjust consequences.”34 There is an established line of authority, in respect of section 50(1)(a) of POCA that once the “threshold of establishing that the property is an instrumentality of an offence has been met”,35 this requires a court to carry out a proportionality analysis to determine whether the forfeiture would be disproportionate and is mandated by section 25(1) of the Constitution, which precludes arbitrary deprivation of property. The two leading authorities are Prophet and Mohunram, which are worth considering now. At issue in Prophet, was an order for the forfeiture of the applicant’s house.36 He used this house to manufacture methamphetamine, and there was evidence to the 32 Section 50(1)(a) of POCA. 33 Section 50(1)(b) of POCA. 34 Mohunram above n 26 at para 120. 35 Prophet above n 26 at para 58. 36 Id at para 14. 13 VICTOR AJ effect that “all the five rooms of the house and the garage on the property were used for illegal drug manufacturing activities.”37 The Court concluded that it was, on the balance of probabilities, a house used as the instrumentality of a drug offence.38 The judgment then went on to consider the question whether it would be proportionate to forfeit the house. Nkabinde J, writing in the unanimous judgment of the Court, reasoned: “Civil forfeiture provides a unique remedy used as a measure to combat organised crime. It rests on the legal fiction that the property and not the owner has contravened the law. It does not require a conviction or even a criminal charge against the owner. This kind of forfeiture is in theory seen as remedial and not punitive. The general approach to forfeiture once the threshold of establishing that the property is an instrumentality of an offence has been met is to embark upon a proportionality enquiry – weighing the severity of the interference with individual rights to property against the extent to which the property was used for the purposes of the commission of the offence, bearing in mind the nature of the offence. . . . While the purpose and object of Chapter 6 must be considered when a forfeiture order is sought, one should be mindful of the fact that unrestrained application of Chapter 6 may violate constitutional rights, in particular the protection against arbitrary deprivation of property particularly within the meaning of section 25(1) of the Constitution, which requires that “‘no law may permit arbitrary deprivation of property’.”39 In Mohunram at issue was an order for the forfeiture of property belonging to the applicant on which an unlicensed casino was operated.40 It was held, unanimously, that the property was indeed an instrumentality of the offence; that, in the words of Van Heerden AJ in a minority judgment that “it was not possible to commit the offence 37 Id at para 57. 38 Id at paras 57-8 and 61. 39 Id at paras 58 and 61. 40 Mohunram above n 26 at para 49. More precisely, the property belonged to Shelgate Investments CC, over which the applicant held a 100% member’s interest. 14 VICTOR AJ without using the property”.41 The Court was unanimous that there should be a proportionality enquiry. To that end, Van Heerden AJ explained the nature of the proportionality analysis required in terms of section 25(1) of the Constitution as follows: “Turning now to the question of proportionality, the purpose of the proportionality enquiry is to determine whether the grant of a forfeiture order would amount to an arbitrary deprivation of property in contravention of section 25(1) of the Constitution. The proper application of a proportionality analysis weighs the forfeiture and, in particular, its effect on the owner concerned, on the one hand, against the purposes the forfeiture serves, on the other.”42 Moseneke DCJ explained the approach that courts should take in pursuance of section 50(1) of POCA in this way. I emphasise in italics the relevant segments of this passage: “[S]ection 50(1) of [POCA] is couched in peremptory terms. It provides that a court “shall” make a forfeiture order if it finds on the civil standard of balance of probabilities that the property sought to be forfeited is an instrumentality of an offence. Textually, once the instrumentality threshold has been met, courts must authorise forfeiture. However, courts have consistently interpreted ‘shall’ to mean ‘may’. They have correctly held all requests by state prosecutors for civil forfeiture to the standard of proportionality which amounts to no more than that the forfeiture should not constitute arbitrary deprivation of property or the kind of punishment not permitted by section 12(1)(e) of the Constitution. . . . I have intimated earlier that proportionality is not a statutory requirement but an equitable requirement that has been developed by the courts to curb excesses of civil forfeiture. Put otherwise, the requirement of proportionality is a constitutional 41 Id. 42 Id at paras 56-7. 15 imperative. It is imposed not by the relevant statute but by constitutional disdain for arbitrary dispossession of property and unwarranted or excessive punishment.”43 VICTOR AJ Finally, Sachs J wrote that: “Although the concept of proportionality is not expressly mentioned in POCA, this Court and the Supreme Court of Appeal have accepted that proportionality is a governing principle imposing limits on how the powers granted under POCA may be exercised. . . . In approaching the question of proportionality in relation to the forfeiture of an instrumentality of an offence, it is necessary to weigh the purpose of the legislation against the effect of the forfeiture on the affected person.”44 The net effect of Prophet and Mohunram, therefore, is that the draconian effect of a forfeiture order is mitigated by the application of a proportionality analysis. Where section 50(1) says “shall”, the court reads “may, if proportionate.” So much is required by section 25(1) of the Constitution. However, both Prophet and Mohunram deal with the forfeiture of property used as the instrumentality of an offence under section 50(1)(a) of POCA. The question that one must ask in this case is whether the reasoning extends to the forfeiture of proceeds under section 50(1)(b) of POCA. Does forfeiture of proceeds under section 50(1)(b) require a proportionality analysis? The NDPP argued that the word “property” in section 25(1) of the Constitution, does not include unlawful proceeds. It submitted that once a court finds on a balance of probabilities, that there are proceeds of unlawful activities, these proceeds remain such until forfeited or confiscated. The respondents, on the other hand, submit that property obtained from unlawful activities should enjoy protection under section 25(1) of the Constitution. As their 43 Id at paras 121 and 130. 44 Id at paras 142-3. 16 VICTOR AJ argument goes, this Court, in Prophet45 and Mohunram46, held that property used as the instrumentality of an offence, and which falls within the scope of section 50(1)(a) of POCA is indeed covered by section 25(1) of the Constitution. That same reasoning should apply, they claim, to the forfeiture of unlawful proceeds under section 50(1)(b). As adverted to earlier, the parties agree that the conditions for a forfeiture order have been met; the question is the quantum. The parties agree that forfeiture of property used as the instrumentality of an offence under section 50(1)(a) of POCA does attract the protection of section 25(1) of the Constitution and does indeed require the court to conduct a proportionality analysis. This means that the issue before this Court, is a narrow one. The question is, should the proportionality analysis as applicable to forfeiture of instruments of crime under section 50(1)(a) of POCA, apply to the forfeiture of proceeds of crime under section 50(1)(b) of POCA? Section 25(1) of the Constitution provides that “no one may be deprived of property except in terms of a law of general application and no law may permit arbitrary deprivation of property.” I must immediately express keen appreciation for concerns that may be raised in relation to protecting something unlawful as in this case, the unlawful proceeds of crime. Bluntly, why would the Constitution protect the fruits of unlawfulness? I remain unconvinced, however, that the Constitution does not protect unlawfully acquired property against arbitrary deprivation. First, to protect only lawfully acquired property goes against the textual grain of section 25. That section refers to the fact that “no one may be deprived of property”. There is no a priori (from the former) requirement of lawfulness for determining whether the property in question is protected. The section does not state that “no one 45 Prophet above n 26 at para 46. 46 Mohunram above n 26 at para 9. 17 VICTOR AJ may be deprived of their lawful property” or of “property rights”. Thus, the provenance of the enjoyment of the property is not a prerequisite for the enjoyment of the legal protection of non-arbitrariness which section 25(1) confers. A textual analysis of section 25(1) of the Constitution does not suggest a requirement of lawfulness, as being fundamental to considering whether property requires protection. The fact that the money or car or thing may be stolen or otherwise unlawfully acquired cannot change the fact that it is property. If it was not lawfully acquired, the deprivation of the property from the holder will not, after assessment, be arbitrary under section 25(1) of the Constitution. Lawfulness need not be a requirement for a thing to classify as “property” because lawfulness may be a requirement for ownership.47 In a case such as this where the property is acquired as proceeds of a crime, the deprivation is obviously not arbitrary. This is because although such proceeds are “property”, the negative right in section 25(1) only extends protection against the arbitrary deprivation of such property. On this basis, one can therefore recognise unlawful proceeds as property for purposes of section 25(1) but still hold that section 25(1) is not infringed through the forfeiture of unlawful proceeds. This Court has accepted that where the requisite threshold for instrumentality has been reached and that property is put to unlawful use, it is property that falls within the category of section 50(1)(a) of POCA.48 It is indeed protected by section 25(1) of the Constitution. Thus, to claim that the Constitution does not protect unlawful proceeds against arbitrary deprivation, one would have to accept that there is a difference between, on the one hand, unlawfully acquired property (which does not benefit from the protection of section 25(1) of the Constitution) and, on the other, property which was lawfully acquired but put to an unlawful use. 47 Given our history of landownership and dispossession, there are good reasons why lawful ownership is not a requirement for classifying something as “property”. 48 Prophet above n 26 at para 58. 18 VICTOR AJ On the one hand, neither Prophet nor Mohunram distinguish between forfeiture orders under section 50(1)(a) and section 50(1)(b) of POCA. Prophet requires a proportionality analysis to temper the “unrestrained application of Chapter 6 [which] may [otherwise] violate constitutional rights”, without differentiating between section 50(1)(a) and section 50(1)(b).49 Indeed, Mohunram in the minority judgment tells us to “always be sensitive to and on . . . guard against” disproportionate forfeiture orders regardless of whether such orders forfeit proceeds or the instruments of crime.50 These are not isolated quotations. None of the judgments distinguish between the different subjects of forfeiture orders. On the other hand, such a technical approach is inconsistent with a broad and fact-sensitive approach the Court has taken to property rights under section 25(1) of the Constitution.51 This Court has repeatedly affirmed that in light of our history, property in section 25(1) of the Constitution should be given a wide meaning which may incorporate various forms of interests in various categories of property.52 In FNB53 Ackerman J writing for this Court stated: “At this stage of our constitutional jurisprudence it is, for the reasons given above, practically impossible to furnish – and judicially unwise to attempt – a comprehensive definition of property for purposes of section 25. Such difficulties do not, however, arise in the present case. Here it is sufficient to hold that ownership of a corporeal movable must – as must ownership of land – lie at the heart of our constitutional 49 Id at para 61. 50 Mohunram above n 26 at para 56. 51 National Credit Regulator v Opperman [2012] ZACC 29; 2013 (2) SA 1 (CC); 2013 (2) BCLR 170 (CC) at paras 61 and 63-4. See also Law Society of South Africa v Minister of Transport [2010] ZACC 25; 2011 (1) SA 400 (CC); 2011 (2) BCLR 150 (CC) (Law Society) at para 83. 52 Law Society id. 53 First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services; First National Bank of SA Limited t/a Wesbank v Minister of Finance [2002] ZACC 5; 2002 (4) SA 768 (CC); 2002 (7) BCLR 702 (CC) (FNB). 19 concept of property, both as regards the nature of the right involved as well as the object of the right and must therefore, in principle, enjoy the protection of section 25.”54 VICTOR AJ Further, Froneman J in Shoprite Checkers55 held that the interpretation of property must be read in line with the constitutional values pursuant to section 39(2) of the Constitution and stated: “[T]o determine what kind of property deserves protection under the property clause cannot be restricted to private law notions of property. To do so would exclude other potential constitutional entitlements that may deserve protection from the ambit of protection under the property clause. It could also inadvertently lead to a failure to subject private law notions of property to constitutional scrutiny in order to ensure that they accord with constitutional norms.”56 It is difficult to accept that section 25(1) of the Constitution does not extend to unlawful property. I cannot find that the “constitutional imperative”57 of proportionality is limited to forfeiture orders under section 50(1)(a) of POCA alone. In this regard, I think it beneficial to address head on the contention that the Constitution does not protect unlawfulness, and that to do so would be contrary to the rule of law. This is simply incorrect. This is because although such proceeds are “property”, the negative right in section 25(1) of the Constitution only extends protection against the arbitrary deprivation of such property. This is why one can recognise unlawful proceeds as “property” for purposes of section 25(1) but still hold that section 25(1) is not infringed through the forfeiture of unlawful proceeds. Could a policeman, for example, consistently with section 25(1), 54 Id at para 51. 55 Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs and Tourism, Eastern Cape [2015] ZACC 23; 2015 (6) SA 125 (CC); 2015 (9) BCLR 1052 (CC) (Shoprite Checkers). 56 Id at para 46. 57 I reference the term used by Moseneke DCJ in Mohunram above n 26 at para 130. 20 VICTOR AJ vexatiously remove his neighbour’s car (which is in fact stolen) where the policeman had failed to follow procedures? There very well may be scenarios where section 25(1) would not find application to proceeds of crime. The upshot of this is that it should be case specific depending on the particular and peculiar facts before a court and that, generally, the unlawfulness of the interest goes to the arbitrariness of the deprivation as opposed to whether there is constitutional protection at all. Moving beyond the case of section 25(1), it is also clear that the Constitution does not turn its back on situations that arise out of unlawful activity. The family life of those who sojourn here illegally is protected, in certain circumstances, by the Constitution.58 The notion that section 25(1) extends to unlawful property is consistent with the nature of the right in section 25(1). Critically, section 25(1) does not confer the right to property in and of itself as a positive right. It does not say, for example, that X person is entitled to property Y. It does not grant an allegedly corrupt official the right to their proceeds. Rather it is a negative right that protects from arbitrary state interference. It says that X person is protected from interference in property Y. It grants – even an allegedly corrupt official – a right against arbitrary state interference in those proceeds after an enquiry. Hence, when Ms Botha avails herself of her rights under section 25(1) of the Constitution she does not do so to found a right to unlawful proceeds; rather, she seeks to assert a right against the state, and to ensure that the actions of the state, the NDPP and the courts in granting the forfeiture order, are not arbitrary. Putting the point differently, the issue here is not how Ms Botha acquired the property; the question is 58 Dawood v Minister of Home Affairs; Shalabi v Minister of Home Affairs; Thomas v Minister of Home Affairs [2000] ZACC 8; 2000 (3) SA 936 (CC); 2000 (8) BCLR 837 (CC) at paras 38-9 and 58. 21 VICTOR AJ whether the forfeiture order is arbitrary in requiring Ms Botha to forfeit the entire value of the renovations when – at least ostensibly – she has repaid some of that value. In short, the focus is on the state’s action, not on Ms Botha’s. In order to be constitutionally compliant, section 25(1) tells us that a forfeiture order must not be arbitrary. It requires the same regardless of whether the underlying property was lawfully acquired or not. However, this should not be understood to mean that unlawfully acquired property will enjoy the same degree of protection under the prism of section 25(1) as lawfully acquired property. Indeed, as will be demonstrated subsequently, such property, by virtue of its provenance, enjoys a limited degree of protection in respect of arbitrary deprivation. I therefore conclude that unlawful proceeds, within the meaning of section 50(1)(a) of POCA, do indeed fall within the scope of section 25(1) of the Constitution. I turn, now, to POCA. This legislation, in my analysis, also supports the respondent’s contention, namely that unlawful proceeds cannot arbitrarily be forfeited under section 50(1)(b) of POCA.59 The key argument is a textual one. Section 50(1) of POCA provides that if the court finds on a balance of probabilities that the property concerned “(a) is an instrumentality of an offence referred to in schedule 1; (b) is the proceeds of unlawful 59 As a preliminary point, there can be no doubt that the value of the renovations, as a textual matter, falls within the purview of POCA, and, hence, can, in principle, lawfully be forfeited under section 50(1)(a) of POCA which defines proceeds as “any property or any service, advantage, benefit or reward”. In turn, the definition of “property” contained in section 1 of POCA is defined as “money or other movable, immovable, corporeal or incorporeal thing and includes any rights, privileges, claims and securities and any interest therein and all proceeds thereof.” This is, clearly, a broad definition of property which extends to “any interest therein” such as the value of the renovations to the property. 22 VICTOR AJ activities it may order a forfeiture of the property as envisaged in section 48(1) of POCA.” In analysing the structure and scheme of Chapter 6 of POCA, it is clear that sections 50(1)(a) and (b) define in precise terms the manner in which forfeiture must apply both to the instrumentality of an offence and to unlawful proceeds. The construction of sections 50(1)(a) and 50(1)(b) of POCA does not suggest that the two must be treated differently when it comes to forfeiture. It follows that on a purely textual analysis, the linguistic interpretation to the subsections means the principle pertaining to forfeiture must apply equally to instrumentality and unlawful proceeds. The core purpose of this section demonstrates that the legal effect of the entire statute is to cast the net wide for corrupt activities. That, in my view, is a proper construction as to why the principles pertaining to forfeiture should be applied equally to unlawful proceeds and instrumentality. Second, this approach coheres with principle. It is not always easy to practically separate and distinguish the “unlawful proceeds” from the “instruments” of an offence. This is particularly so in cases where property is retained by proceeds – where, for example, the rent in a lease is paid using proceeds of crime.60 Salie, for example, dealt with prostitution offences.61 One of the properties over which the NDPP sought a forfeiture order, Broad Road property, was alleged to have been used for the purposes of prostitution. The rent for the property was paid from proceeds from prostitution.62 Thus, on the one hand, Broad Road property could be seen as an instrument of the offence (in allowing the offences of prostitution to be committed), yet, on the other, it could be considered a proceed of the offence (because it was retained as a result of the offences of prostitution). Indeed, the NDPP’s case was pleaded on the basis that Broad 60 One ought to recall that proceeds of unlawful activities is defined in POCA broadly, and includes “any property or any service advantage, benefit or reward which was derived, received or retained.” Hence, property for which rent is paid from proceeds of crime is, itself, a proceed because it is “retained” through such proceeds. 61 National Director of Public Prosecutions v Salie 2015 (1) SACR 121 (WCC). 62 Id at para 106. 23 VICTOR AJ Road property was an instrument of the offence and, in the alternative, a proceed thereof.63 It is, however, difficult to accept that a court would have to conduct a proportionality analysis in respect of one, but not the other, depending on how the NDPP characterised the property in question. It would be artificial and technical to have a separate approach to the forfeiture of property characterised as proceeds and property characterised as the instrument of an offence. This proportionality analysis will naturally yield different results when considering unlawful proceeds as opposed to instrumentality. As a final point, it is worth considering the position if, contrary to my view, a court is not required to conduct a proportionality analysis in respect of the forfeiture of proceeds of unlawful activities. The answer is that a court would be duty-bound to order the forfeiture of the property unless the narrow exception in section 52 of POCA could be relied upon.64 In other words, where the state had simply shown that the property in question was more likely than not the proceeds of crime, a court would be required to order its forfeiture. The defence in section 52 is of limited assistance. First, one has to apply for relief from forfeiture. It is not a defence which the court is required to consider mero motu (of its own accord). Many may not have the privilege of funds, time and knowledge at their disposal to launch such applications. Second, it is a condition of the defence (when applied for in the context of a forfeiture order dealing with proceeds) that the applicant has “acquired the interest concerned legally and for a consideration”.65 It would not, therefore, extend to the entirely realistic situation where 63 Id at para 6, the Court held that “[t]he NDPP contends that, on the probabilities, all of the property is the proceeds of contraventions of the Sexual Offences Act 23 of 1957” and at para 7 the Court further held that “[t]he NDPP further contends that, on the probabilities, the Broad Road property is an instrumentality of those offences.” 64 So much was recognised by Moseneke DCJ in Mohunram above n 26 at para 121 where he said: “Textually, once the instrumentality threshold has been met, courts must authorise forfeiture. However, courts have consistently interpreted ‘shall’ to mean ‘may’. They have correctly held all requests by state prosecutors for civil forfeiture to the standard of proportionality which amounts to no more than that the forfeiture should not constitute arbitrary deprivation of property or the kind of punishment not permitted by section 12(1)(e) of the Constitution.” 65 Section 52(2)(a) of POCA. 24 VICTOR AJ a house had been purchased by A, using proceeds of crime, but their spouse, B, had not contributed to the purchase price or rent of that house. Nor would a court be able to consider a variety of factors that may be relevant in determining whether a forfeiture order was proportionate on the facts of a case. I recall, in this regard, that this Court has already stressed that a forfeiture order is draconian, as this Court explains because it “constitutes a serious incursion into well- entrenched civil protections particularly those against arbitrary and excessive punishment and against arbitrary confiscation of property”.66 Elaborating on the point this Court stated: “Statutory civil forfeiture of assets is meant to pursue worthy and noble objectives aimed at curbing serious crime. And there is no gainsaying that, in effect, it is draconian. . . . [T]he prosecution or the state has to show only on a balance of probabilities that the property may be seized and forfeited to the state. The criminal standard of proof does not come into it. When the state seeks civil forfeiture of assets that were used in the commission of a crime, it is not required to show that the owner has been convicted of the offence or that the owner performed an unlawful act with a criminal intent. The initial and central enquiry in asset forfeiture is whether the property is an instrumentality of an offence. If it is, the property is liable to be declared forfeit to the state.”67 In short, in failing to adopt a form of proportionality assessment in relation to forfeiture orders that deal with proceeds, a court would fall prey to the very thing that we were warned against in Prophet. A court would fail to “be mindful of the fact that unrestrained application of Chapter 6 may violate constitutional rights”, or, as I would 66 Mohunram above n 26 at para 120. 67 Id at para 118. See also, Mohamed above n 31 at para 17 where it was explained that— “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, Chapter 6 needs to be understood in contradistinction to Chapter 5. Chapter 6 is therefore focussed, 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.” 25 VICTOR AJ put it, the court would fail to guard against overreaching and arbitrary orders that do not rationally further the aims of POCA.68 It is for these reasons that I find it difficult to accept the NDPP’s argument which enjoins the courts to apply different approaches to, on the one hand, forfeiture orders under section 50(1)(a) of POCA which do not require a proportionality analysis, and, on the other hand, forfeiture orders under section 50(1)(b) of POCA which do require a proportionality analysis. I therefore conclude that the use of the words “shall order forfeiture” in section 50(1) of POCA requires a court to conduct a proportionality analysis regardless of whether forfeiture is sought of proceeds of an offence, or the instrumentality of an offence. Proportionality Having established that some form of proportionality assessment is required when a court orders forfeiture in respect of proceeds, the question then turns to what form of proportionality is appropriate. The principle of proportionality has been firmly established in our law. Chaskalson P in Makwanyane69 held: “The limitation of constitutional rights for a purpose that is reasonable and necessary in a democratic society involves the weighing up of competing values, and ultimately an assessment based on proportionality. . . . Principles can be established, but the application of those principles to particular circumstances can only be done on a case-by-case basis. This is inherent in the requirement of proportionality, which calls for the balancing of different interests.”70 68 Prophet above n 26 at para 61. 69 S v Makwanyane [1995] ZACC 3; 1995 (3) SA 391 (CC); 1995 (6) BCLR 665 (CC). 70 Id at para 104. 26 VICTOR AJ Two points must be made at this juncture. The first is to note that section 25(1) of the Constitution prohibits an arbitrary deprivation of property. Yet the preceding discussion was couched in terms of proportionality. Does this mean that there are two differing standards at play here? A constitutional standard of arbitrariness, and a POCA one of proportionality? Must a forfeiture order jump both hurdles of arbitrariness and proportionality? The answer is no. A proportionality analysis ensures that the ordering of forfeiture does not amount to an arbitrary deprivation of property. Clearly, arbitrariness is broader than just disproportionality.71 This Court stated in FNB, and affirmed in Shoprite Checkers, that a deprivation of property is arbitrary when the law does not provide sufficient reason for the deprivation or when it is procedurally unfair.72 A forfeiture order that is disproportionate will, in short, be arbitrary. The point was well put, in this context, by the Supreme Court of Appeal in the following terms: “It is indeed the purpose of the proportionality enquiry to avoid arbitrary deprivation of property and to ameliorate the potentially unjust consequences that could follow if the forfeiture is grossly disproportional to the offence.”73 71 Basedeo “The Law and Practice of Criminal Asset Forfeiture in South African Criminal Procedure: A Constitutional Dilemma” (2014) 17 PELJ 1048 at 1059, notes, referring to this Courts decisions in Prophet and Mohunram the importance of proportionality in the assessment of the constitutional validity of asset forfeiture in terms of POCA. A proportionality analysis requires a weighing of the severity of the interference with an individual’s property rights against the extent to which the property was used for purposes of the commission of the offence, taking cognisance of the nature of the offence committed. This Court has further confirmed that proportionality is not a statutory requirement under POCA but is rather an equitable requirement that has been formulated by our courts to curb the excesses of forfeiture. 72 FNB above n 53 at para 100 and Shoprite Checkers above n 55 at paras 77 and 80. 73 Van der Burg v NDPP [2012] ZACC 12; 2012 (2) SACR 331 (CC); 2012 (8) BCLR 881 (CC) at para 48. This echoes the minority judgment of Van Heerden AJ in Mohunram above n 26, which stated the following at para 56: “[t]urning now to the question of proportionality, the purpose of the proportionality enquiry is to determine whether the grant of a forfeiture order would amount to an arbitrary deprivation of property in contravention of section 25(1) of the Constitution.” 27 VICTOR AJ That the proportionality enquiry ensures that deprivation of property is not arbitrary is confirmed by the more general case-law on section 25(1). In FNB, for example, which dealt, in essence, with the power to sell property to levy taxes without a court order, this Court held that— “for the validity of such deprivation [i.e. for such deprivation to not fall foul of section 25], there must be an appropriate relationship between means and ends, between the sacrifice the individual is asked to make and the public purpose this is intended to serve.”74 Hence, determining what is arbitrary within the meaning of section 25(1) inexorably leads to a balancing act which compares ends – the statutory goal of preventing an individual from benefitting from corruption and means – the forfeiture of property. In other words, a proportionality assessment. This leads on to the second point, which deals with the standard of the proportionality assessment. It is, in the context of forfeiture orders in respect of proceeds under section 50(1)(b) of POCA, a strict proportionality assessment. It requires, overall, the court to consider whether the aims of POCA would rationally be furthered by the forfeiture of the proceeds in question. The aims of POCA, which, as explained above, seek to ensure that individuals do not benefit from corruption, will usually be furthered by forfeiting the profits. Taking away profits derived from corrupt activities removes the incentive for corruption. This Court in FNB listed a number of factors that must be considered when assessing arbitrariness and proportionality, these range from evaluating the relationship between the means employed and the ends sought to be achieved. Other factors include the relationship between the purpose for deprivation and the purpose of the person’s property in question.75 74 FNB above n 53 at para 98. 75 Id at para 100. This Court held as follows: “Having regard to what has gone before, it is concluded that a deprivation of property is ‘arbitrary’ as meant by section 25 when the ‘law’ referred to in section 25(1) does not provide sufficient reason for the particular deprivation in question or is procedurally unfair. Sufficient reason is to be established as follows: 28 VICTOR AJ Hence, the default position will be that unlawful proceeds are to be forfeited and that the discretion be a narrow one which focuses on whether the purpose of POCA (that no one should receive the fruits of their offence) is legitimately advanced by the forfeiture of proceeds. Salie explained the correct approach to forfeiture orders in lucid terms: “It also follows from the primary purpose and the secondary purposes of confiscating proceeds of crime that full confiscation or forfeiture [Chapter 6] will be the norm and an order refusing confiscation or forfeiture or an order granting only partial confiscation or forfeiture will be exceptions to the norm. The discretionary [proportionality] enquiry under sections 18(1) and 50(1)(b), is not an open-ended one. Rather it is aimed at determining whether, having regard to all the relevant (a) (b) (c) (d) (e) (f) (g) (h) It is to be determined by evaluating the relationship between means employed, namely the deprivation in question, and ends sought to be achieved, namely the purpose of the law in question. A complexity of relationships has to be considered. In evaluating the deprivation in question, regard must be had to the relationship between the purpose for the deprivation and the person whose property is affected. In addition, regard must be had to the relationship between the purpose of the deprivation and the nature of the property as well as the extent of the deprivation in respect of such property. Generally speaking, where the property in question is ownership of land or a corporeal moveable, a more compelling purpose will have to be established in order for the depriving law to constitute sufficient reason for the deprivation, than in the case when the property is something different, and the property right something less extensive. This judgment is not concerned at all with incorporeal property. Generally speaking, when the deprivation in question embraces all the incidents of ownership, the purpose for the deprivation will have to be more compelling than when the deprivation embraces only some incidents of ownership and those incidents only partially. Depending on such interplay between variable means and ends, the nature of the property in question and the extent of its deprivation, there may be circumstances when sufficient reason is established by, in effect, no more than a mere rational relationship between means and ends; in others this might only be established by a proportionality evaluation closer to that required by section 36(1) of the Constitution. Whether there is sufficient reason to warrant the deprivation is a matter to be decided on all the relevant facts of each particular case, always bearing in mind that the enquiry is concerned with ‘arbitrary’ in relation to the deprivation of property under section 25.” 29 considerations, the case at hand is an exceptional one in which there should be no or only partial confiscation or forfeiture.”76 VICTOR AJ This approach is well founded in authority. In Shaik, a case on Chapter 5 confiscation orders which reasoning can logically be extended to Chapter 6, O’Regan J held that— “[i]n most circumstances it will be entirely appropriate that all direct profits of crimes of which the defendant has been convicted be confiscated. . . . In these circumstances, the primary purpose of the Act – to ensure that a criminal does not enjoy the fruits of his or her crime – will be directly served.”77 In Cook Properties, it was stated that “the risk of unconstitutional application [of the definition of ‘proceeds of unlawful activities’] is smaller than it is with the definition of ‘instrumentality of an offence’ ”.78 By extension, the proportionality hurdle will be more difficult for a person to overcome in relation to forfeiture orders that deal with proceeds. I am careful to stress that there is no legal presumption in favour of forfeiture. Rather, it is the nature of what is being forfeited that means it will usually be difficult for an individual to show that forfeiture would be disproportionate. It is necessary, therefore, to apply a proportionality analysis in respect of forfeiture, in light of all relevant factors, to ensure that the aims of POCA are achieved. 76 Salie above n 61 at para 138. 77 S v Shaik [2008] ZACC 7; 2008 (5) SA 354 (CC); 2008 (8) BCLR 834 (CC) at para 69. See also Cook Properties above n 26 at para 67, where it was stated— “the forfeiture of a good deal of property that could literally be said to be ‘concerned in’ [i.e. property used as an instrumentality of an offence] an offence would run unconstitutionally counter to the Act’s objectives of removing incentives, deterring the use of property in crime, eliminating or incapacitating the means by which crime may be committed and at the same time advancing the ends of justice. In our view it is less likely that forfeiture of benefits [i.e. the property which is the proceeds of an offence] derived, received or retained ‘in connection with or as a result of any unlawful activity’ would fail rationally to advance those objectives.” 78 Cook Properties id at para 66. 30 VICTOR AJ The question is whether the forfeiture at hand is proportionate to the goal of ensuring that criminals do not benefit from the fruits of their unlawful activities. This approach is consistent with the purpose of POCA which provides that “no person convicted of an offence should benefit from the fruits of that or any related offence”. Application to the facts The NDPP seeks forfeiture of the entire value of the renovations to the property, even though Ms Botha purportedly repaid some of that value.79 Is such a forfeiture disproportionate, applying the approach sketched out above? I am of the view that it is not. The central flaw in Ms Botha’s argument is that it is a fallacy to consider Ms Botha as having “repaid” Trifecta. She was not repaying Trifecta. She was, rather, attempting to obfuscate the unlawful origin of the proceeds. Let us examine the loan agreement of March 2010. It is for R500 000 which is far less than the ultimate value of the renovations. Ms Botha argues that this was because the cost of renovations was not known at the time. I find it unconvincing that Trifecta, a company which specialises in construction, would have commenced a construction project without making provision for increased costs down the line. The agreement is also vague. It makes no mention of any instalments, only that the debt is due within five years. And, finally, the agreement was concluded only after the renovations commenced in September 2009. Again, it is unlikely that a company like Trifecta would have commenced renovation works without any legally binding guarantee that it would be repaid for them. These considerations clearly demonstrate, to my mind, that there was no intention for Ms Botha to pay back the so-called loan.80 79 I note that the NDPP does not, in this Court, argue for the forfeiture of the entire property as was ordered by the High Court. It is therefore not necessary to consider that point. 80 This point is amply backed-up by the evidence of the forensic accountant led before the High Court in this case. The report of forensic accountant concluded, generally, that “Ms Botha’s relationship with Trifecta extended beyond a normal client or supplier relationship”. More specifically, at the time the agreement was concluded “there was no intention to treat this as a loan to Ms Botha”, and “the loan agreement . . . was created after the fact”. He therefore concluded that “the amount paid by Trifecta for the renovations to Ms Botha’s residence was 31 VICTOR AJ The context of the so-called “loan” also supports the conclusion that it was a sham designed to disguise the real relationship between Ms Botha and Trifecta. Initially, there was no loan between Ms Botha and Trifecta. Rather, Trifecta disguised the renovations costs as expenses (not a loan to an individual) for another, unrelated project. It is clear that there was no intention for such expenses to have been repaid by Ms Botha.81 When the parliamentary committee requested a copy of the loan agreement between Trifecta and Ms Botha, Ms Pretorius, an employee of Trifecta in the accounts department indicated that she had no knowledge of any such agreement and that there was no record of the same on Trifecta’s books. The first time she saw such an agreement was in April 2011 (after the commencement of the parliamentary inquiry), nearly a year after it was signed in March 2010. Finally, the payments to Trifecta were made in April 2011 after the commencement of the parliamentary inquiry. In other words, it was only once suspicions arose, that Ms Botha attempted to effect repayment. Prior to that point, not a rand had been repaid. As the parliamentary inquiry concluded, I am of the view that the “loan” was in fact a sham designed to hide the unlawful origin of the proceeds. The money was not repaid in a moment of repentance but as a carefully designed scheme which was awash with criminal motive. There was no real loan between Ms Botha and Trifecta, and there was no real debt between them. The repayments were designed to hide the improper relationship between Ms Botha and Trifecta. It is important to impose a deterrent on this type of conduct and ensure that no one benefits from camouflaging such nefarious activities, as this would defeat the very purpose of Chapter 6 of POCA. for her personal benefit”, and, despite her undertaking to repay the sum once the final amount of the renovations had been determined, a further agreement would be entered into, “there is no evidence in the records provided by Trifecta or their auditors that such an agreement has been entered into”. 81 Again, the report concludes that “this [i.e. the entering of the sums as expenses for a separate project] would indicate that at the time these expenses were paid for the benefit of Ms Botha there was no intention to treat this as a loan to Ms Botha.” 32 VICTOR AJ On the present facts, this is not an exceptional case in which full forfeiture would be disproportionate because the forfeiture of the full amount of R1 169 068.49 is proportionate to the aim of ensuring that crime does not pay. I am fortified in this conclusion by the following argument. If Ms Botha were only to forfeit R758 085, the courts would, in effect, give her “credit” for the fact that she tried to cover up the original wrongdoing. It will have the perverse effect of rewarding attempts to obfuscate corruption, directly contrary to the avowed aims of POCA. On an analysis of the entire conspectus of facts, I find that the forfeiture of the entire R1 169 068.49 is proportionate. The appeal must therefore succeed. Costs The applicant has succeeded in its appeal against the Supreme Court of Appeal decision and costs must follow the result. Order The following order is made: 1. Leave to appeal is granted. 2. The appeal is upheld. 3. Paragraphs 1(a) and 1(d) of the Supreme Court of Appeal order are set aside. 4. The first respondent must pay an amount of R1 169 068.49 to the state within a period of six months from the date of this order into the criminal assets recovery account number 8030 3056, held at the South African Reserve Bank. 5. Proof of payment must be furnished in writing to the appointed curator bonis. 6. Failing payment, the appointed curator bonis is authorised to sell the property, Erf 3432, Kimberley, also known as 12 Jawno Street, Kimberley, 33 VICTOR AJ / JAFTA J by public auction or private treaty, at a reasonable price to the highest bidder and, subject to the rights of secured creditors, to pay the sum of R 1 169 068.49 into the account mentioned in paragraph 4 above and to disburse the net proceeds, after incidental expenses, to the estate of the late Yolanda Rachel Botha, number 394/2015. JAFTA J (Madlanga, Mhlantla J, Mogoeng CJ and Theron J concurring): I have had the pleasure of reading the judgment prepared by my colleague Victor AJ (first judgment). I am indebted to her for the meticulous narration of the facts which I wholeheartedly embrace. I also agree with the order proposed and much of the reasoning. However, I differ with the first judgment on two major conclusions. These are whether the proceeds of unlawful activities we are concerned with here constitute property envisaged in section 25(1) of the Constitution,82 and whether the proportionality analysis that applies to determine the lawfulness of forfeiture of property used as an instrumentality of an offence, applies to the forfeiture of the present proceeds of unlawful activities. Otherwise I agree with the first judgment that this matter in the main concerns the question whether the forfeiture order should cover the entire value of the renovations effected on Ms Botha’s house and paid for by Trifecta. The reason for this being that the payment of the sum of R1 169 068 by Trifecta constituted proceeds of unlawful activities. I also agree that the amount of R411 000 that was paid to Trifecta by Ms Botha has no bearing in determining the extent of the proceeds which must be forfeited to the state. The Supreme Court of Appeal erred in deducting that amount from the R1 169 068. 82See section 25(1) of the Constitution above n 25. 34 JAFTA J But the Supreme Court of Appeal rightly reversed the forfeiture order granted by the High Court. The latter Court had ordered that the entire house of Ms Botha be forfeited to the state. This was not warranted because not the whole house was proceeds of unlawful activities. The order should have been limited to the value of those proceeds. Otherwise the forfeiture of the entire house constituted an arbitrary deprivation of property to the extent that the order went beyond the value of the proceeds of unlawful activities. Is it necessary to determine whether proceeds of crime constitute property? The first judgment holds that the proceeds of crime paid by Trifecta for the renovations of Ms Botha’s house constitute property protected by section 25(1) of the Constitution. This conclusion is reached despite accepting the fact that Ms Botha held no legal right or interest in those proceeds.83 But it is said that notwithstanding the absence of rights in the proceeds, section 25(1) of the Constitution confers upon her a right which she may assert against the state to ensure that the forfeiture order is not arbitrary. Strictly on this approach it is unnecessary to determine whether the proceeds of crime we are concerned with here amount to property envisaged in section 25(1). All that needs to be done is to enquire into the forfeiture order granted so as to determine whether it was arbitrary. For this determination recourse must be had to the relevant provisions of POCA. The forfeiture was made in terms of section 50(1) of POCA, which mandates the High Court to order forfeiture of property to the state. In its terms POCA defines what is meant by “property” for purposes of that Act. The money that was paid by Trifecta for renovations, which constitutes proceeds of a crime, is property as defined by POCA. 83 First judgment at [61]. 35 JAFTA J POCA prescribes an elaborate procedure which must be followed before an order of forfeiture is made. In order to safeguard the rights in the property concerned, section 48 obliges the NDPP to give notice of the application for forfeiture to every person who has recorded in terms of section 39 that they have interest in the property in question. Once served with the papers, such person may appear at the hearing of the application and oppose the order of forfeiture or request that the operation of the order should exclude her interest in the property. She is entitled to adduce evidence at the hearing of the application.84 If the person opposing forfeiture persuades the High Court that forfeiture should not be granted, it should not grant the order. Where that person establishes that she has legally acquired interest for consideration in the proceeds of unlawful activities, the Court may exclude such interest in the operation of the forfeiture order.85 84 Section 48 of POCA provides: “(1) (2) (3) (4) If a preservation of property order is in force the National Director, may apply to a High Court for an order forfeiting to the State all or any of the property that is subject to the preservation of property order. The National Director shall give 14 days notice of an application under subsection (1) to every person who entered an appearance in terms of section 39(3). A notice under subsection (2) shall be served in the manner in which a summons whereby civil proceedings in the High Court are commenced, is served. Any person who entered an appearance in terms of section 39(3) may appear at the application under subsection (1)- (a) (b) to oppose the making of the order; or to apply for an order- excluding his or her interest in that property from the operation of the order; or varying the operation of the order in respect of that property, and may adduce evidence at the hearing of the application.” 85 Section 52 of POCA provides: “(1) The High Court may, on application— (a) (b) under section 48(3); or by a person referred to in section 49(1), and when it makes a forfeiture order, make an order excluding certain interests in property which is subject to the order, from the operation thereof. (2) 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 36 JAFTA J It is evident from the scheme emerging from sections 48-52 of POCA that proceeds of unlawful activities may be forfeited to the state unless a party opposing forfeiture has legally acquired them for consideration. If the acquisition occurred after January 1999, she must also show that she did not know or had no reasonable grounds to suspect that the property in which she acquired interest was the proceeds of unlawful activities. The purpose of forfeiture, namely combating serious crimes and removing an incentive to commit such crimes, coupled with the fair procedure prescribed by POCA refute the assertion that forfeiture made in compliance with POCA is arbitrary. In this matter Ms Botha knew that the money paid by Trifecta for renovations constituted proceeds of unlawful activities and she did not acquire those proceeds legally. In other words, she had no right or legally recognised interest in them hence the attempt to disguise them as a loan. In fact the acquisition by her and her possession of the proceeds in question constituted a criminal offence under POCA.86 The absence of any legal right in those proceeds and the fact that she committed an offence in acquiring and keeping them (b) the applicant had acquired the where 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. interest concerned after (4) A High Court making an order for the exclusion of an interest in property under subsection (1) may, in the interest of the administration of justice or in the public interest, make that order upon the conditions that the Court deems appropriate including a condition requiring the person who applied for the exclusion to take all reasonable steps, within a period that the Court may determine, to prevent the future use of the property as an instrumentality of an offence referred to in Schedule 1 or property associated with terrorist and related activities.” 86Section 6 of POCA provides: “Any person who— (a) (b) (c) acquires; uses; or has possession of, property and who knows or ought reasonably to have known that it is or forms part of the proceeds of unlawful activities of another person, shall be guilty of an offence.” 37 JAFTA J removes the legal foundation of any claim to the effect that she had a right to hold onto them, until a forfeiture order was made. The scheme outlined above illustrates that here it is not necessary to first determine whether the proceeds of crime constitute property as envisaged in section 25 of the Constitution. The arbitrariness of the forfeiture order may be established with reference to POCA as the law of general application and the relevant standard for determining arbitrary deprivation. In FNB this Court declared: “[I]t is concluded that a deprivation of property is ‘arbitrary’ as meant by section 25 when the ‘law’ referred to in section 25(1) does not provide sufficient reason for the particular deprivation in question or is procedurally unfair.”87 POCA prescribes a fair procedure which must be followed before a forfeiture order is made and it also provides sufficient reasons for deprivation. However, if the issue whether the proceeds amount to property contemplated in section 25 were to be decided, what is said above provides proper context in which the issue must be addressed. Whether proceeds of crime are property in terms of section 25(1) of the Constitution Without addressing the contradiction flowing from section 6 of POCA, the first judgment suggests that the proceeds we are dealing with here amount to property protected by section 25 of the Constitution and that— “[W]hen Ms Botha avails herself of her rights under section 25 of the Constitution she does not do so to found a right to unlawful proceeds; rather, she seeks to assert a right against the State, and to ensure that the actions of the state (the NDPP, and the courts in granting the forfeiture order) are not arbitrary.”88 87 FNB above n 53 at para 100. 88 First judgment at [61]. 38 JAFTA J The first difficulty with this proposition is that it suggests that Ms Botha’s criminal conduct in acquiring and keeping the proceeds of unlawful activities triggered the protection of property rights in section 25(1) of the Constitution. She had a right against the state “to ensure that the actions of the state are not arbitrary.” There is a logical difficulty in this proposition. Once it is accepted, as the first judgment does, that Ms Botha had no right in the proceeds in issue and that section 25 did not give her any rights in those proceeds, it is illogical to conclude that she had property that was protected against arbitrary deprivation. The protection against deprivation relates to an individual’s right to property. Here on all accounts Ms Botha had no claim in and to the proceeds to be forfeited. Section 25 does not itself regulate process in terms of which deprivation of property may occur. What the section requires is that deprivation of property must be effected only in terms of law of general application.89 But it does not end there, it goes further to declare that the law in question must not authorise arbitrary deprivation. The section states that no law may permit arbitrary deprivation of property. This means that a law that allows arbitrary deprivation would be inconsistent with the section. Here Ms Botha did not contend that POCA, in terms of which the proceeds concerned are to be forfeited to the state, permits arbitrary deprivation. Therefore, there is no legal basis for concluding that she had a right against the state “to ensure that the actions of the state are not arbitrary.” Forfeiture of the proceeds of crime in the present circumstances cannot constitute arbitrary deprivation of property. This is because Ms Botha had no right in the proceeds, let alone a right that is protected against arbitrary deprivation. In addition, the law in terms of which forfeiture was granted does not authorise arbitrary deprivation. It is apparent from the text of section 25(1) that deprivation of property rights, regardless of whether it is arbitrary or not, is not permitted under the Constitution unless 89 See section 25(1) of the Constitution above n 25. 39 JAFTA J it is authorised by a law of general application. Even so, the empowering law may not mandate arbitrary deprivation. This is so because the law in question would be invalid for violating the prohibition in section 25(1) and any deprivation that took place under that law would also be invalid. It is now settled that section 25(1) does not create property rights but protects existing ones. Indeed in FNB this Court stated: “The purpose of section 25 has to be seen both as protecting existing private property rights as well as serving the public interest, mainly in the sphere of land reform but not limited thereto, and also as striking a proportionate balance between these two functions.”90 In its jurisprudence, this Court has recognised one or the other right in property, before reaching the conclusion that it was dealing with property as contemplated in section 25 of the Constitution.91 On the contrary, here Ms Botha had no such existing right in the proceeds of unlawful activities. Consequently, there was no right in property that could be protected by section 25(1) against arbitrary deprivation. Therefore, in present circumstances I hold that proceeds of unlawful activities did not and could not constitute property as envisaged in section 25(1) of the Constitution. Proportionality The first judgment concludes that a proportionality exercise applicable to forfeiture of property that was used as an instrumentality of an offence equally applies to forfeiture of proceeds of an unlawful activity. I see the issue differently. 90 FNB above n 53 at para 50. 91 Shoprite Checkers above n 55 at paras 68 and 87 and Opperman above n 51 at paras 61-3. 40 JAFTA J The premise from which the first judgment proceeds is mistaken. It overlooks the genesis of the proportionality analysis, which is the need to interpret and apply the provisions of POCA in a manner that avoids a breach of the right not to be arbitrarily deprived of property. In Prophet this Court observed: “While the purpose and object of [chapter] 6 must be considered when a forfeiture order is sought, one should be mindful of the fact that unrestrained application of [chapter] 6 may violate constitutional rights, in particular the protection against arbitrary deprivation of property particularly within the meaning of section 25(1) of the Constitution”.92 This approach in the interpretation and implementation of POCA was affirmed in Van der Burg where this Court stated: “The proportionality requirement is aimed, on the one hand, at balancing the constitutional imperative of law enforcement and combating crime and the seriousness of the offence against, on the other, the right not to be deprived arbitrarily of property.”93 This demonstrates that the proportionality analysis is required in cases where property rights would be affected by the forfeiture order. In Mohunram this Court emphasised – “the purpose of the proportionality enquiry is to determine whether the grant of a forfeiture order would amount to an arbitrary deprivation of property in contravention of section 25(1) of the Constitution.”94 For a number of reasons here the grant of forfeiture will not lead to arbitrary deprivation of property. In the first place, Ms Botha had no right in the money paid by 92 Prophet above n 26 at para 61. 93 Van der Burg above n 73 at para 58. 94 Mohunram above n 26 at para 56. 41 JAFTA J Trifecta for the renovations effected on her house. That money constituted proceeds of an unlawful activity. Therefore, in her case there can be no talk of deprivation of a right in property. Moreover, while it is true that deprivation as contemplated in section 25(1) does not require a total loss of a right in property, there must be substantial interference with the right in question. In Mkontwana this Court held — “[w]hether there has been a deprivation depends on the extent of the interference with or limitation of use, enjoyment or exploitation. It is not necessary in this case to determine precisely what constitutes deprivation. No more need be said than that at the very least, substantial interference or limitation that goes beyond the normal restrictions on property use or enjoyment found in an open and democratic society would amount to deprivation.”95 The interference or limitation in question must relate to a legal use or enjoyment of property. If the acquisition of a property is illegal and the person who holds it does not have any legal right in the property concerned, it is inconceivable that in those circumstances it may be said that deprivation as envisaged in section 25(1) of the Constitution has occurred. But the presence of deprivation alone is not enough for section 25(1) to be contravened. The deprivation must also be arbitrary. In FNB this Court concluded that in the context of section 25, a deprivation of property is arbitrary if the law authorising it fails to provide sufficient reasons for the deprivation or it is procedurally unfair. POCA satisfies these requirements. It furnishes good reasons for deprivation of proceeds of crime while affording those who forfeit such proceeds procedural fairness. All of the aforegoing reasons illustrate the inappropriateness of applying the proportionality analysis in the case of a forfeiture of proceeds of a crime in 95 Mkontwana v Nelson Mandela Metropolitan Municipality [2004] ZACC 9; 2005 (1) SA 530 (CC); 2005 (2) BCLR 150 (CC) at para 32. 42 JAFTA J circumstances where the person from whom the proceeds are taken does not have any interest which is lawfully recognised. As mentioned, I concur in the other reasons contained in the first judgment and those reasons sufficiently support the proposed order. 43 For the Applicant: H J van Der Linde SC instructed by State Attorney, Johannesburg For the Respondents: M A Albertus SC instructed by Towell and Groenewaldt Attorneys