National Director of Public Prosecutions v Moronyane and Others (1351/04) [2005] ZANCHC 91 (27 May 2005)

Reportable: Yes / No

Circulate to Judges: Yes / No

Circulate to Magistrates: Yes / No

IN THE HIGH COURT OF SOUTH AFRICA

(Northern Cape Division)

Case no: 1351/04

Date heard: 2005-05-20

Date delivered: 2005-05-27

In the matter of:

NATIONAL DIRECTOR APPLICANT

OF PUBLIC PROSECUTIONS

versus

KAELO JACOB MORONYANE FIRST RESPONDENT

AND 16 OTHER RESPONDENTS

Coram: MAJIEDT J

JUDGEMENT

MAJIEDT J:

The ninth, tenth, eleventh, twelfth, sixteenth and seventeenth respondents oppose the confirmation of an interim restraint order issued in terms of sections 25 and 26 of the Prevention of Organised Crime, Act 121 of 1998 (hereinafter referred to as “the Act”). In addition, by way of counterapplication the said respondents seek the return of the items seized and also seek the variation or rescission of the said restraint order in terms of the provisions contained in section 26(6) and 26(10) of the Act.

The applicant obtained an interim restraint order against all the respondents ex parte before a Judge in chambers on 2 December 2004. The rule nisi has been confirmed against all the respondents herein, save for those who oppose the confirmation thereof in the present proceedings as set forth in the preceding paragraph.

Section 25 of the Act authorizes a High Court to issue a restraint order when a prosecution for an offence has been instituted and either a confiscation order has been made or it appears to a court that there are reasonable grounds for believing that a confiscation order may be made against a defendant [section 25(1)(a)]. A restraint order may also be issued when a High Court is satisfied that a person is to be charged with an offence and that there are reasonable grounds for believing that a confiscation order may be made against such person. In this part of the Act reference is made to a defendant, since the proceedings are civil in nature. What is envisaged in this chapter of the Act, is criminal forfeiture.

The relevant parts of section 26 of the Act reads as follows:

“(1) The National Director may by way of an ex parte application apply to a competent 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 to which the order relates.

(2) A restraint order may be made-

(a) in respect of such realisable property as may be specified in the restraint order and which is held by the person against whom the restraint order is being made;

(b) in respect of all realisable property held by such person, whether it is specified in the restraint order or not;

(c) in respect of all property which, if it is transferred to such person after the making of the restraint order, would be realisable property.

(3) (a) A court to which an application is made in terms of subsection (1) may make a provisional restraint order having immediate effect and may simultaneously grant a rule nisi calling upon the defendant upon a day mentioned in the rule to appear and to show cause why the restraint order should not be made final.

……………..

(6) Without derogating from the generality of the powers conferred by subsection (1), a restraint order may make such provision as the High Court may think fit-

(a) for the reasonable living expenses of a person against whom the restraint order is being made and his or her family or household; and

(b) for the reasonable legal expenses of such person in connection with any proceedings instituted against him or her in terms of this Chapter or any criminal proceedings to which such proceedings may relate,

if the court is satisfied that the person whose expenses must be provided for has disclosed under oath all his or her interests in property subject to a restraint order and that the person cannot meet the expenses concerned out of his or her unrestrained property.

…………………..

(10) A High Court which made a restraint order-

(a) may on application by a person affected by that order vary or rescind the restraint order or an order authorising the seizure of the property concerned or other ancillary order if it is satisfied-

(i) that the operation of the order concerned will deprive the applicant of the means to provide for his or her reasonable living expenses and cause undue hardship for the applicant; and

(ii) that the hardship that the applicant will suffer as a result of the order outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred; and

(b) shall rescind the restraint order when the proceedings against the defendant concerned are concluded.

The ninth respondent/defendant, Mr. Bowers, is a policeman and he is married in community of property to the tenth respondent. The eleventh respondent/defendant , Mr. Sontlaba, is also a policeman and he is also married in community of property to the twelfth respondent. The sixteenth and seventeenth respondents are also married in community of property to each other.

In order to properly adjudicate the disputes between the parties herein, it is necessary to also refer to the following provisions in the Act:

6.1 Section 14 thereof defines “realisable property” as follows:

“(1) Subject to the provisions of subsection (2), the following property shall be realisable in terms of this Chapter, namely-

(a) any property held by the defendant concerned; and

(b) any property held by a person to whom that defendant has directly or indirectly made any affected gift.

(2) Property shall not be realisable property if a declaration of forfeiture is in force in respect thereof.”

6.2 “Property” is defined in section 1 (the definitions clause) to mean:

“money or any other movable, immovable, corporeal or incorporeal thing and includes any rights, privileges, claims and securities and any interest therein and all proceeds thereof.”

6.3 Section 18 empowers a Court to issue a confiscation order on conclusion of the criminal proceedings if it finds that a defendant has derived a benefit from the offence/offences or any other related offence/offences of which the defendant has been convicted at that same trial or in respect of any criminal activity which the Court finds to be sufficiently related to those offences.

The respondents/defendants in this matter have opposed the confirmation of the rule nisi primarily on the following grounds:

7.1 They aver firstly that the provisions regarding a restraint order (i.e. sections 25 and 26 of the Act) should be interpreted in the same manner as those dealing with a forfeiture order (i.e. sections 48 and 50 of the Act) and those that deal with a confiscation order (i.e. section 18 of the Act), namely that a nexus must be shown between the proceeds and the offence itself.

7.2 They also aver that since the applicant did not arrest and does not contemplate arresting the tenth, twelfth and seventeenth respondents, their assets cannot be confiscated and can therefore not be subjected to seizure in terms of a restraint order (I reiterate that these respondents are the spouses of the ninth, eleventh and sixteenth respondents herein respectively).

7.3 The respondents also variously aver that the assets seized from them had been acquired by them from legitimate sources and are therefore not susceptible to seizure under the Act.

I shall deal later with the averments of the respondents/defendants with regard to their counterapplication to have the items returned to them, or to have the restraint order varied or rescinded under the provisions contained in section 26(6) and 26(10) supra.

The applicant initially raised a point in limine namely that the curator bonis appointed in respect of the property seized under the restraint order, as provided for in section 28 of the Act, Mr. Derek Foster of Pricewaterhouse-Coopers, had not been joined in the present proceedings. While there can be no doubt that Mr. Foster has a direct and material interest in these proceedings, Ms Henriques for the applicant has, justifiably so, abandoned this point in limine. The curator bonis has filed a detailed interim report as required by the provisional restraint order. The curator bonis has also furnished this Court with a lengthy affidavit with annexures, pointing out that he has not been joined in these proceedings, despite his material and direct interest in the matter and also dealing with the averments of the various respondents/defendants with regard to the assets seized. In the circumstances, I am satisfied that there would be no prejudice in the non-joinder of the curator bonis in these proceedings in respect of the respondents’ counterapplication in terms of section 26(6) and 26(10) of the Act.

It is now well established that the objective of the Act is to ensure that no person convicted of a criminal offence could benefit from his/her crime or any related offence/offences.

See in this regard: National Director of Public Prosecutions v Kyriacou 2004(1) SA 379 (SCA) at 383 (paragraphs 3 and 5);

National Director of Public Prosecutions v Mohamed NO 2003(4) SA 1 (CC) at 9 F-H (paragraph 16).

It is important to bear in mind that the objective of the restraint order procedure embodied in sections 25 and 26 of the Act is to secure realisable property which may be used to obtain satisfaction of a confiscation order later upon finalization of the criminal proceedings.

See in this regard: National Director of Public Prosecutions v Rautenbach 2005[1] All SA 412 (SCA) at 419 g (paragraph 24 thereof);

National Director of Public Prosecutions v Phillips and others [2005] 1 All SA 635 (SCA) at 636 g-h (paragraph 1).

It is also important in my view to bear in mind that a Court considering whether to issue a restraint order or not (or, as in casu, to confirm the provisional order of restraint or not) is not required to satisfy itself whether a defendant is probably guilty of an offence and whether he/she has probably benefited from the offence or from other unlawful activity. All that is required is that it must appear to the Court on reasonable grounds that there might be a conviction and a confiscation order.

See the Rautenbach-case supra at 420 c-d (paragraph 27).

It also has to be borne in mind in my view that Chapter 5 is specifically designed to safeguard and preserve realisable property from dissipation so as to yield the greatest possible amount in the event of a confiscation order being issued later.

I now deal seriatim with the various grounds advanced by the respondents/defendants as to why the provisional order should be discharged.

13.1 It is convenient to deal with two of these grounds together, namely the averment that there should be a nexus proved between the proceeds and the offence itself as well as the averment that the assets which form the subject of the restraint having been seized by the curator bonis, had been derived from legitimate sources. In support of these contentions that there should be a nexus between the proceeds of crime and the crime itself, Mr. Schreuder for the respondents/defendants has made reference to the following two cases:

National Director of Public Prosecutions v Rebuzzi 2000(2) SA 1 (SCA) at 7 G;

National Director of Public Prosecutions v Carolus and others 2000(1) SA 1127 (SCA) at 1134 B-I.

The Rebuzzi-case, supra, does not support this contention at all. The Carolus-case, supra, dealt in the main with the question whether Chapter 6 of the Act had retrospective operation or not. The passage referred to by Mr. Schreuder must consequently be read in that context. All that Farlam AJA (as he then was) had done in the said passage, was to compare the Chapter 5-provisions with those contained in Chapter 6 in order to come to his finding that Chapter 6 does not have retrospective operation. Again it should be borne in mind that the inquiry at this stage is merely:

a) Whether there are assets owned or possessed by the respondents/defendants or under their control; and

b) Whether there is a reasonable likelihood of a conviction following and of a confiscation order being made.

There is furthermore cogent authority that it is not required of the applicant to show that the assets which are subject to the restraint order had been derived from illegitimate sources in order to obtain a confiscation order.

See in this regard: National Director of Public Prosecutions v Mcasa and another 2000(1) SACR 263 (TkH) at 268 g-h whereat Madlanga AJP and Kruger AJ said the following:

“In our view, for purposes of the point made here, it matters not that Chapter 5 authorizes the application of a restraint order even to a respondent’s own property which is not the proceedings of crime because the idea is to reverse whatever benefit was derived from criminal activity to which no legal entitlement can appropriately be claimed.”

See also: National Director of Public Prosecutions v Rautenbach 2005[1] All SA 412 (SCA) at 425 i – 426 a whereat Nugent JA said the following:

“Once it is shown that a material benefit accrued the offender may be order to pay to the State the monetary equivalent of that benefit even if that means that it must it be paid from assets that were legitimately acquired. Thus the fact that some of Rautenbach’s assets were acquired before the offences were committed, and were not themselves acquired from the proceeds of unlawful activity, is immaterial when determining whether a confiscation order might be granted.”

Consequently, I am of the view that there is no merit advanced in either of these two points supra.

13.2 Where parties are married in community of property, a joint estate is formed – that much is trite in our law. It consequently does not assist any of the respondents/defendants in my view to aver that the assets seized belong to one or the other personally. In the present case the averments are made that the wives, i.e. the tenth, twelfth and seventeenth respondents, had acquired certain assets in their own name and that therefore same cannot be the subject of a restraint order. This argument is fallacious. When regard is had to the definition of realisable property in section 14 of the Act, read with the definition of property in section 1 thereof, it is clear that these respondents who are married in community of property to the ninth, eleventh and sixteenth respondents/defendants respectively, can lay no claim to a separate estate in law. Their aforementioned spouses have a substantial and material interest in the assets which they allege to be their own, by virtue of the marriage in community of property and the consequent joint estate.

See in this regard the unreported judgement in the Transvaal Provincial Division of National Director of Public Prosecutions v Smit and others case nr. 21014/01 delivered on 25 September 2001, per Coetzee J. An argument along the lines advanced by these respondents had in fact been rejected by the learned Judge.

It is noteworthy that in the Mcasa-case, supra, no relief was granted to the applicant as against the first respondent’s spouse, because she had not been joined as a party. In the present case the three spouses have in fact been joined as parties to the proceedings. Consequently I am of the view that there is no substance in the submission that the property of the wives cannot be subjected to a restraint order.

I am therefore satisfied that the applicant has made out a proper case for the confirmation of the rule nisi. It is of some considerable significance that not a single one of the respondents/defendants who oppose this confirmation of the rule nisi, namely the ninth, eleventh and sixteenth defendants, have placed in issue at all any of the averments which implicate them in the commission of various drug offences. They simply make a bare denial of having been involved in any criminal activities. Lengthy and detailed affidavits have been placed before me which show a very strong prima facie case against these defendants. I reiterate that the test at this stage is not whether I believe them to be guilty and whether I believe that a confiscation order will ensue, but rather whether there is a reasonable prospect of such conviction and of a

confiscation order being issued later.

The applicant presented evidence of the alleged commission of drug offences by the various defendants (ninth, eleventh and sixteenth) through the affidavits of Captain Christiaan Hendrik Swanepoel of the Kimberley Organized Crime Unit of the SAPS as well as two undercover agents who acted as traps in numerous drug transactions with the defendants, namely inspector Shane Hartzenberg and one Thabiso Kenneth Nkomombini. Their evidence can be summarized as follows:

15.1 The SAPS had set up ongoing investigations through the use of undercover agents, which investigations were known as Project Junior and Project Tonfa. Captain Swanepoel was the project leader of these particular operations.

15.2 The abovementioned undercover operations, Junior and Tonfa were launched in April 2002 and terminated during December 2004 when all the defendants (i.e. excluding respondents ten, twelve and seventeen) had been arrested.

15.3 The abovementioned projects entailed the use of undercover agents, as referred to above, concluding numerous drug transactions with the defendants. These transactions were secretly recorded mechanically, unbeknown to the various defendants through the use of audio and video recordings.

15.4 It is clear that the undercover agents’ testimony as well as that of their handlers together with the audio and video recordings will be used as evidence against the various defendants.

15.5 Turning specifically to the evidence against the ninth, eleventh and sixteenth defendants, it is clear that they are directly implicated by the strong prima facie evidence emanating from the affidavits of the undercover agents, particularly that of Hartzenberg. These defendants were arrested during December 2004 arising from the aforementioned Operation Junior and Tonfa. In the case of all three these defendants the evidence against them is that they acted inter alia as intermediaries to set up the various drug deals between some of the other defendants and the police agent. The evidence further discloses that they also acted as drug couriers and in the case of the sixteenth defendant there is prima facie evidence that he had in fact supplied drugs to the agent.

15.6 In addition to the aforegoing, the evidence against the ninth defendant also indicates that monies were paid into his bank account in order to facilitate the drug transactions and he was given a fee for his trouble in doing so.

15.7 The evidence further show that the ninth and eleventh defendants would procure the drugs as couriers and would pay over the purchase price thereof and would also be paid a fee for their efforts in this regard.

15.8 As regards the sixteenth defendant, some of the drugs was supplied by him according to the evidence emanating from the affidavits and some of the transactions had in fact taken place at his residence.

As I have already indicated hereinbefore, not a single one of the defendants implicated by this strong prima facie evidence, have placed in issue any of the specific averments regarding their alleged involvement in the commissions of the various offences. It is also necessary to emphasize at this juncture that the evidence emanating from the applicant’s affidavits show a consistent pattern of numerous drug transactions entailing the purchase and sale of drugs such as dagga (cannabis), mandrax and ecstasy. What is of course a prima facie aggravating feature in the case of the ninth and the eleventh defendants is the fact that they are policemen.

In summary, therefore, I have no doubt whatsoever that the applicant has made out a strong case on which I can find that there are indeed reasonable grounds to believe that a conviction would follow against the ninth, eleventh and sixteenth defendants and that a confiscation order would also ensue. As I have already indicated, by virtue of the joint estates created by the community of property marriages between these defendants and the tenth, twelfth and seventeenth respondents respectively, there are reasonable grounds to believe that a confiscation order would follow against such joint estates.

In the premises I am satisfied that the applicant has made out a case for the confirmation of the rule nisi. I now turn to the second leg to be adjudicated herein, namely the counterapplication in terms of sections 26(6) and 26(10) of the Act.

The respondents/defendants have asked for the return of all the assets seized from them in terms of the restraint order. Given my finding on the fact that confirmation of the rule nisi is in order, the respondents/defendants are not entitled at all to the relief sought.

I have already set out the provisions of sections 26(6) above. I deem it necessary, however, to emphasize the important proviso contained therein as follows:

“…..if the court is satisfied that the person whose expenses must be provided for has disclosed under oath all his or her interests in property subject to a restraint order and that the person cannot meet the expenses concerned out of his or her unrestrained property.”

I have already alluded to the fact that the curator bonis has filed a full affidavit herein. In that affidavit he deals with the fact that there has not been proper disclosure by any of the defendants/respondents as is required in section 26(6). Initially the attorneys acting for the respondents/defendants had simply forwarded to the curator bonis by telefax transmission their affidavits in this present counter application. The curator bonis correctly did not regard this as proper compliance with the requirements set forth in section 26(6). Thereafter the respondents/defendants’ attorneys furnished further affidavits of the respondents/defendants in purported compliance with the requirements of the subsection. In reply thereto the curator bonis has pointed out numerous discrepancies and/or contradictions between those affidavits and the ones filed in support of the counterapplication in the present matter.

I do not deem it necessary to repeat herein the discrepancies and/or contradictions which the curator bonis have highlighted as aforementioned. Suffice to say that such discrepancies and/or contradictions appear clearly from the papers before me.

In addition to the fact that there have not been proper disclosure as required by section 26(6) the respondents/defendants have in my view failed to discharge their onus to show that they cannot meet their reasonable living expenses and reasonable legal expenses from their unrestrained property. In this regard there can be no doubt that a respondent/defendant bears an onus of proof to show on a preponderance of probabilities that he/she has to meet living and legal expenses and is unable to do so from unrestrained assets.

See in this regard: National Director of Public Prosecutions v Mcasa and another, supra, at 288 E (paragraph 85). I am ad idem with the learned Judges in that matter that a respondent/defendant must go further than a mere say-so that he/she cannot meet living and legal expenses. In order to discharge the onus, there “must be clear evidence which sufficiently demonstrates that there are no other assets available out of which such expenses may be met.” (per Madlanga AJP and Kruger AJ at 288 E of the aforementioned judgement).

With regard to reasonable living expenses it is quite clear on the papers that in the instances of all the present respondents/defendants who seek relief in terms of section 26(6), the curator bonis and his staff had left behind in the course of seizing the assets, those household items which these defendants would require for their reasonable living purposes. So, for example, in the case of the ninth and tenth respondents, beds, chairs, a sewing machine, a fridge, a stove, crockery and mattresses had been left behind. It is clear from the inventory filed by the curator bonis that only luxury goods (i.e. in the sense that same is not required for reasonable living purposes) have been removed by the curator bonis.

In the case of the eleventh and twelfth respondents what had been left behind are the following: a fridge, a bedroom suite, a stove, a dressing table, a washing machine, a vacuum cleaner and a child’s bicycle.

In the case of the sixteenth and seventeenth respondents, a fridge, a stove and ornaments had been left behind. A strange feature of the inventory relating to the sixteenth and seventeenth respondents’ assets is the fact that no beds and/or mattresses appear therefrom, i.e. it does not appear as if these respondents own beds and/or mattresses.

The respondents/defendants furthermore fail dismally in discharging the onus inasmuchas all of them derive some sort of income at present. I have alluded to the fact that the ninth and the eleventh defendants are employed by the SAPS and earn salaries. In addition, the tenth respondent has an income which she derives from sewing activities – that much is clear from her own affidavit. The twelfth respondent is employed by the Department of Social Welfare and also earns a salary. The sixteenth respondent runs a tuck-shop and earns between one thousand five hundred rand and three thousand five hundred rand per month therefrom – that appears from his own affidavit. The seventeenth respondent avers in her affidavit that she runs a business from home.

Although all these respondents/defendants derive an income from some or other source as shown above, not a single one of them has provided any information as to the extent of their expenses in order to show that their incomes, be it salary, wages or from business, is wholly insufficient to meet their reasonable living or reasonable legal expenses. Consequently in my view, the respondents/defendants have not met the jurisdictional requirements set forth in section 26(6) of the Act.

I now turn to a consideration of the provisions contained in section 26(10) of the Act. It will be recalled from the said provisions which I have set forth, supra, that a court which has made a restraint order may on application by a person affected by that order vary or rescind a restraint order or an order which authorizes the seizure of the property concerned or may make any other ancillary order provided it is satisfied:

“(i) that the operation of the order concerned will deprive the applicant of the means to provide for his or her reasonable living expenses and cause undue hardship for the applicant; and

(ii) that the hardship that the applicant will suffer as a result of the order outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred.”

It is clear from the aforementioned provisions that the respondents/ defendants had to satisfy this Court that

a) the operation of the order would deprive them of the means to provide for their reasonable living expenses; and

b) the operation of the order would cause undue hardship for them; and

c) that the hardship that they will suffer as a result of the order remaining in place outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred.

The wording of section 26(10) clearly confers a discretion on a Court to vary of rescind the restraint order granted, provided of course that the respondents/defendants who seek such variation or rescinding meet the jurisdictional requirements set forth in the subsection. A High Court which grants a restraint order in terms of section 26(1) of the Act has no inherent jurisdiction to rescind such order. Its power of rescission is circumscribed by the Act [section 25(2) and section 26(10)], save of course in those instances where one or other of the recognised common-law grounds for rescission are in existence at the time when a restraint order is granted, then rescission can occur on such common law ground/s.

See in this regard: National Director of Public Prosecutions v Phillips and others, supra, at 644 h-i (paragraph 25).

In their affidavits the respondents/defendants merely aver that the items which they require for their reasonable living expenses had been derived from legitimate income. None of the respondents/ defendants however indicate in what respects they are unable to meet their living expenses from unrestrained property. All of them indicate that “life is unpleasant” without the assets which they require to be returned. That is most certainly not the test – they must show what undue hardship will ensue if there is no variation or rescission of the present restraint order. Moreover, these respondents/defendants do not indicate at all in what respects the hardship that they are suffering at present outweighs the risk of the property being destroyed, lost, damaged, concealed or transferred.

In addition there are also discrepancies between the eleventh and twelfth respondents as to who owns certain of the assets seized.

This has been pointed out by the curator bonis and is borne out by the affidavits filed by the eleventh and twelfth respondents.

Bearing in mind the aforegoing, it is clear that not a single one of the present respondents/defendants have made out any case for the relief which they seek, namely the variation or rescission of the present restraint order. Consequently, there is in my view no reason to interfere with the present order.

In the premises I issue the following order:

1. The Rule Nisi issued on 2 December 2004 is confirmed with costs against the ninth, tenth, eleventh, twelfth, sixteenth and seventeenth respondents.

2. The counterapplications in terms of sections 26(6) and 26(10) of Act 121 of 1998 are dismissed with costs.

___________

SA MAJIEDT

JUDGE

FOR THE APLICANT : ADV. J. HENRIQUES

INSTRUCTED BY : TOWELL & GROENEWALDT

FOR THE 9th, 10th, 11th, 12th, 16th

and 17th RESPONDENTS : ADV. J.J. SCHREUDER

INSTRUCTED BY : HUGO MATHEWSON & OOSTHUIZEN