National Director of Public Prosecutions v Camel Rock Social Housing Institution and Others (3696/2013) [2014] ZAECGHC 3; 2015 (1) SACR 546 (ECG) (23 January 2014)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION – GRAHAMSTOWN)

CASE NO: 3696/2013

DATE: 23 JANUARY 2014

In the matter between

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS....................................................APPLICANT

And

CAMEL ROCK SOCIAL HOUSING INSTITUTION..............................................1ST RESPONDENT

THANUXOLO GILBERT ZUKA..............................................................................2ND RESPONDENT

THOMAS MAXWELL MZAMO................................................................................3RD RESPONDENT

CWENGA DELAZOLA JOHAN PAKADE.............................................................4TH RESPONDENT

MBENGO INVESTMENTS CC...............................................................................5TH RESPONDENT

VIVENDREN NAIDOO.............................................................................................6TH RESPONDENT

LULAMA BERNARD GWILIKANA.......................................................................7TH RESPONDENT

NTHABISENG MAKENG-ZUKA..........................................................................8TH RESPONDENT

MELVILLE MVELASE MROLELI........................................................................9TH RESPONDENT

THOZAMA MQALO..............................................................................................10TH RESPONDENT

SIZWE MABANDLA............................................................................................11TH RESPONDENT

SPRING FOREST 248 CC................................................................................12TH RESPONDENT

THE SOCIAL HOUSING REGULATORY

COUNCIL.............................................................................................................13TH RESPONDENT

MEMBER OF THE EXECUTIVE COUNCIL FOR

EASTERN CAPE DEPARTMENT OF HUMAN

SETTLEMENTS.................................................................................................14TH RESPONDENT

DATE HEARD: 05/12/2013

DATE DELIVERED: 23/01/2014

JUDGMENT

ROBERSON J:-

[1] This is an application by the second and fourth respondents (the respondents) for the reconsideration and rescission of a preservation

order granted ex parte by Nomjana-Ndzondo AJ on 5 November 2013 in terms of s 38 of the Prevention of Organised Crime Act 121 of 1998 (POCA).

S 38 of POCA provides:

“Preservation of property orders

(1) The National Director may by way of an ex parte application apply to a High Court for an order prohibiting any person, subject to such conditions and exceptions as may be specified in the order, from dealing in any manner with any property.

(2) The High Court shall make an order referred to in subsection (1) if there are reasonable grounds to believe that the property concerned –

(a) is an instrumentality of an offence referred to in Schedule 1;

(b) is the proceeds of unlawful activities; or

(c) is property associated with terrorist and related activities.

[Sub-s. (2) substituted by s. 27(1) of Act 33 of 2004.]

(3) A High Court making a preservation of property order shall at the same time make an order authorising the seizure of the property

concerned by a police official, and any other ancillary orders that the court considers appropriate for the proper, fair and effective

execution of the order.

[Sub-s. (3) substituted by s. 6 of Act 38 of 1999.]

(4) Property seized under subsection (3) shall be dealt with in accordance with the directions of the High Court which made the

relevant preservation of property order.”

[2] It is not necessary for the purpose of this judgment to go into great detail about the applicant’s case. The first respondent is an incorporated non-profit company registered as a Social Housing Institution, whose principal business is the provision of social housing rental units to low and middle income earning individuals. The second, third and fourth respondents are directors of the first respondent. The thirteenth respondent is a public entity and has the authority, inter alia, to approve social housing projects and disburse funds in respect of such projects, to regulate social housing institutions and monitor their performance, and to intervene in the event of maladministration on the part of such institutions. The thirteenth and fourteenth respondents receive funds from National Treasury which funds are to be used in terms of their respective mandates.

[3] According to the allegations, money was unlawfully transferred from the fourteenth respondent to the thirteenth respondent, and the thirteenth respondent unlawfully transferred R61 373 660.00 into the imprest account of the first respondent at ABSA Bank. R4,75 million of that money was transferred into the account of the fifth respondent, the sole member of which is the second respondent. That money has in turn been transferred into the accounts of other respondents, and the fourth respondent paid cash for a new vehicle worth approximately R500 000.00. The preservation order relates to the various bank accounts and the vehicle purchased by the fourth respondent.

[4] In an affidavit annexed to a notice to abide, the Chairperson of the Council of the thirteenth respondent stated that there is no agreement between the thirteenth respondent and the first respondent. The agreement in terms of which the award of R61 373 660.00 was made contained suspensive conditions which were not fulfilled and no agreement came into being. Accordingly, so it was stated, the first respondent has no legal title to the funds which were transferred into its account.

[5] It is common cause that a previous preservation order, granted by Revelas J ex parte on the same papers on 20 June 2013, expired. S 40 of POCA provides:

“Duration of preservation of property orders

A preservation of property order shall expire 90 days after the date on which notice of the making of the order is published in the Gazette unless-

(a) there is an application for a forfeiture order pending before the High Court in respect of the property, subject to the preservation of property order;

(b) there is an unsatisfied forfeiture order in force in relation to the property subject to the preservation of property order; or

(c) the order is rescinded before the expiry of that period.”

The first order was published in the Government Gazette on 26 July 2013. None of the exceptions contained in s 40 (a), (b) or (c) applied and the order therefore expired on 24 October 2013.

[6] The reason for the expiry was that the applicant, despite repeated enquiries to the Government Printer, was unaware that the order had been published on 26 July 2013. The applicant was aware only of the second publication of the order, which was on 27 September 2013. Relying on that publication, it brought an application for a forfeiture order on 31 October 2013, for hearing on 28 November 2013. The prior publication was thereafter discovered, necessitating the application for a second preservation order, which is presently in place.

[7] The respondents alleged that the granting and expiry of the first order were not brought to the attention of Nomjana-Ndzondo AJ when she granted the second order and that if she had been aware of the history she would not have granted the order ex parte. The affidavits of Attorney Wolmarans, who moved the application, and the High Court Registrar Matthews Adam, make it clear that the court file relating to the first order and the fact that the first order had expired, were brought to her attention. Mr. Cole, who appeared for the respondents, acknowledged that I had to accept that is what happened. That ground for complaint therefore could not be sustained.

[8] The application was argued on a fairly narrow basis. Reliance on a defence of res judicata was correctly not pursued. It was submitted on behalf of the respondents that POCA did not provide for repeated applications in respect of the same property unlike s 58 of POCA which provides: “Offence may form the basis of multiple orders

The fact that a preservation of property order or a forfeiture order has been made on the basis of an offence referred to in Schedule 1 in which a specific person has been involved does not prevent the making of another or other preservation of property orders or forfeiture orders on the basis of the same offence.”

[9] As I understood the argument, by authorising multiple orders in respect of one offence, implicitly s 58 does not authorise multiple

orders in respect of the same property. I do not think that s 58 can be interpreted as authority preventing multiple orders in respect of the same property. It contemplates a set of circumstances completely different from the present case, does not bear comparison, and cannot be applied.

[10] There is no express provision in POCA which prevents the granting of further preservation orders where an earlier one has expired. Mr. Cole submitted that s 40 of POCA was enacted to protect respondents in preservation applications, and that the word “expire”

should be interpreted leniently, in other words once the order expires, no further order can be granted.

[11] I do not agree. Such an interpretation would negate the important social purpose of POCA and in theory render those entrusted with its implementation powerless to prevent, for example, the dissipation of proceeds of unlawful activities. The present case concerns vast public funds provided for the benefit of low and middle income groups. The applicant has made out a case for the present order and the reason for the expiry of the first order was fully and satisfactorily explained.

[12] The founding affidavits in this application did not canvass the merits of the preservation order, other than to say that little

investigation had taken place since the first order was granted. They merely dealt with the alleged improper procedure in obtaining

the second order, the contention that a second order could not be granted, and the inconvenience of the operation of the order. The respondents still have the right to be heard and to oppose an application for a forfeiture order, which must be brought within 90 days of publication of the present order.

[13] It follows that I am of the view that s 40 of POCA does not prohibit a further application for a preservation order where a previous order in respect of the same property has expired.

[14] The application is dismissed with costs.

J M ROBERSON

JUDGE OF THE HIGH COURT

Appearances;

For the Applicant: Adv W Kingsley, instructed by NN Dullabh & Co, Grahamstown

For the 1st & 4th Respondents: Adv S Cole, instructed by Mili Attorneys, Grahamstown