National Director of Public Prosecutions v Mthombeni and Others (1188/2024) [2024] ZANWHC 209 (5 August 2024)

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NO: 1188/2024

Reportable: YES/NO

Circulate to Judges: YES/NO

Circulate to Magistrates: YES/NO

Circulate to Regional Magistrates: YES/NO

In the appeal of:

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant and MTHOMBENI, CASWELL First Defendant CASWELL MTHOMBENI CONSULTANTS CC Second Defendant SEKGOTHA, XIKOMBELO EMELY Third Defendant

Delivered: This judgment is handed down electronically by circulation to the parties through their legal representatives’ email addresses. The date for the hand-down is deemed to be 05 august2024.

JUDGEMENT

MAKOTI AJ

INTRODUCTION

[1] The battle against organized crime has resulted in Parliament’s enactment of the Prevention of Organised Crime Act, 1998 (POCA).[1] Part of its legislative aims is to ensure that no one benefits from organized crime. This case was instituted by the National Director of Public Prosecutions (the NDPP) predicated on the provisions of section 26 of POCA to restrain identified properties in the hands of the Respondents. The application served ex parte on 07 March 2024 and a restraint order (rule nisi) was granted in favour of the NDPP.

[2] Once the order was granted, a copy was served on the Respondents together with the application. In customary fashion, the order required the Respondents to, on the return date, show cause why the order should not be made final. The return date was 06 June 2024, on which occasion the parties presented their submissions. I shall revisit the issues which arise in this application after briefly setting out the governing legislative infrastructure.

RELEVANT PROVISIONS OF POCA

[3] The idea here is not to provide a full rendition of the statutory provisions, but to highlight the law upon which the application is predicated. I have already said that the application was brought in terms of section 26 of POCA, the relevant provisions of which read as follows:

“(1) The National Director may by way of an ex parte application apply to a competent 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 restrain order may be made-

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

(b) in respect of all realisable property held by such person, whether it is specified in the restrain 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.” (Emphasis added)

[4] Sub-section (3) authorises that, where appropriate, the order granted in terms of sub-section (1) be made to be effective immediately, with a rule nisi granted calling upon any affected person to show cause why such order should not be made final. The order may be anticipated by

an affected defendant upon 24-hour notice being given to the Applicant, which is the NDPP in this case. As I will demonstrate below, this application does not admit any controversy of a nature that may require me to spend much time on the interpretation and analysis of the statutory provisions.

[5] Leach J, as he was at the time, held, in National Director of Public Prosecutions v Swart,[2] that this legislation is intended as a crime prevention mechanism to thwart organized crime. He said:

“The purpose of POCA is to counteract organised crime and criminal gang activities. It is the culmination of a protracted process of law reform aimed at attempting to ensure that criminals do not benefit from their crimes. Chapter 6 thereof (comprising s 37 to s 62) is focused on property that either has been used to commit an offence or which constitutes the proceeds of crime, rather than on the wrongdoers themselves. It provides for forfeiture of the proceeds of and instrumentalities used in crime, but is not conviction-based and may be invoked even where there is no prosecution.”

[6] The preamble of the legislation notes the rapid rise of organized crime in this country.[3]

THE ISSUES

[7] What stands to be decided is crystalized in the papers exchanged between the parties. For obvious reasons the parties are seeking different outcomes. The NDPP’s preferred outcome is confirmation of the rule nisi and the continued restraint over the listed properties of the defendants. The defendants (also called Respondents), on the other

hand, want the discharge of the restraint order and the restoration of the restrained properties. With that said, it is clear that what lies at the center of this case is the question whether the restrained order ought to be confirmed or discharged. In heads of argument and practice note the Respondents take issue that:

[7.1] the case ought not to have been brought ex parte;

[7.2] the matter does not satisfy the jurisdictional requirements in section 17 of POCA;

[7.3] the NDPP has therefore abused its authority when instituting the application; and

[7.4] the NDPP has violated the Respondents’ rights which are guaranteed in the Bill of Rights in the Constitution.

[8] Strangely and most unfortunately, the answering affidavit does not deal with these points in any detail or even at all and, unless they are somewhat foreshadowed in the answering affidavit, I shall not deal with them. By way of example, it ought to have been clearly pointed out how it is alleged that the NDPP has violated the Respondents’ constitutional rights or in what manner it has abused its authority. In any case, I do not understand the context within which reference to section 17 of POCA was made as nothing about this case turns on it.

SUMMARY OF FACTS

[9] The parties are ad idem about the arrest and the pending prosecution of the First Respondent, Mr Caswell Mthombeni (Mr Mthombeni). The criminal case is enrolled before the Mmabatho Specialised Commercial Court under case number B137/2023. In fact, the First Respondent placed it on record that he was released on bail of R50 000-00 on 26 June 2023. He has appeared a number of times in Court and the matter remains pending.

[10] This matter stems from a contractual relationship that was concluded between the Second Respondent, Caswell Mthombeni Consultants CC and the North West Department of Community Safety and Transport Management (the Department). In its dealing with the Department the Second Respondent was duly represented by Mr Mthombeni as its Chief Executive Officer and authorised representative.

[11] The NDPP accuses the defendants of fraud and/or theft by false pretense. Thus, apart from mentioning the fact that the Respondents

were arrested and are still facing prosecution, the NDPP’s case is that they allegedly benefitted from unlawful activities committed to the detriment of the Department. It stated in the papers before this Court inter alia that:

“77. The defendants accepted the payment knowingly (sic) that they did not intend to comply with the service level agreement, in so doing committing theft by false pretence in that the defendants did unlawfully and intentionally steal the amount of R21 318 570-00 in lawful possession of the DCSTM with the intention to permanently deprive the DCSTM ownership thereof.”

[12] To break the allegations of the commission of criminal into smaller details, the NDPP averred that the defendants committed unlawful activities by falsely representing that:

[12.1] they were to train beneficiaries for learner driver’s licenses;

[12.2] they would subcontract 46 driving schools to provide training to the beneficiaries;

[12.3] they would pay the accredited driving schools for their services; and

[12.4] they would comply with the terms of the signed agreement.

[13] The Respondents argue differently. They allege that the Director of Prosecutions for North West Province, Adv JJ Smit SC, had on two previous occasions declined to initiate prosecution of the case. Apparently, his reasons for the decision were that the case was civil and not criminal in nature. Those decisions have prompted the Respondents to contend that there are no prospects for successful prosecution of the criminal case against them. Perhaps, also, this fact is the reason why the Respondents are accusing the NDPP of abuse of authority. I do not have to decide this issue, and I make no ruling on it.

[14] On a different note, the Respondents contend that the provisional order should be discharged because the Department has taken steps to recover the monies allegedly lost to it due to their non-compliance with the terms of the service level agreement. The case was instituted under case numbers 1743/17.

APPLICABLE LAW

Whether it was appropriate for NDPP to obtain the rule nisi order ex parte

[15] The Respondents have decried the fact that the NDPP obtained orders against them ex parte. The answer is simple, and is readily found in section 26(1) of POCA which reads:

“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.” (Emphasis added)

[16] By legislative expression, the NDPP may apply ex parte for a restraint order against assets that POCA defines as realisable property, and pending the finalisation of the criminal prosecution

and the granting of those orders.[4] Criminal prosecution is the first jurisdictional requirement in terms of section 26 of POCA. The Court may grant a provisional restraint order coupled with a rule nisi, to allow the defendant to answer the NDPP's application for restraint, while the realisable property is secured.

Did the application satisfy section 17 of POCA?

[17] The contention which places section 17[5] of POCA in a section 26 restraint application is unfathomable. This is because that provision deals with the conclusion of criminal

proceedings against a defendant. I do not understand the provision to be stipulating requirements which have to be satisfied before an application for restraint or an order to that effect may be granted.

[18] In National Director of Public Prosecutions v Kyriacu[6] (Kyriacu) the Court explained the principle that, to succeed in an application for confirmation of the provisional restraint order, the NDPP must show that there are ‘reasonable grounds for believing that a confiscation order may be made against the defendant'. It is clear that the NDPP is not required to prove as a fact that a confiscation order will be made.

[19] The above principle was confirmed by Nugent JA in National Director of Public Prosecutions v Rautenbach and Others[7] where he held that:

“It is plain from the language of the Act that the Court is not required to satisfy itself that the defendant is probably guilty of an offence, and that he or she has probably benefited from the offence or from other unlawful activity. What is required is only that it must appear to the Court on reasonable grounds that there might be a conviction and a confiscation order. While the Court, in order to make that assessment, must be apprised of at least the nature and tenor of the available evidence, and cannot rely merely upon the appellant's opinion ..., it is nevertheless not called upon to decide upon the veracity of the

evidence. It need ask only whether there is evidence that might reasonably support a conviction and a consequent confiscation order

(even if all that evidence has not been placed before it) and whether that evidence might reasonably be believed. Clearly that will not be so where the evidence that is sought to be relied upon is manifestly false or unreliable and to that extent it requires evaluation, but it could not have been intended that a Court in such proceedings is required to determine whether the evidence is probably true.” (Emphasis added)

[20] The Respondents’ contentions that the provisions of section 17 have not been satisfied and that, as a result, the application should be dismissed is not persuasive. It further does not avail the Respondents to argue that the Department has taken steps to recover the monies allegedly stolen from it. The NDPP is seeking a criminal prosecution of the Respondents, and the repayment of stolen monies does not and cannot vitiate this process. In my view section 17 provisions simply do not avail the Respondents in the circumstances of this application.

Whether the NDPP has abused its authority

[21] The contention here is that the NDPP has abused its authority by applying for the restraint orders. This is predicated on the fact that the NDPP has not disclosed the fact that it has previously taken, through is Deputy Director of Public Prosecutions - JJ Smit SC, and on two occasions, declined to criminally prosecute the matter.

[22] A full exposition of the facts and the issues raised by the parties is important when the Court is faced with an application of this nature. This is because the Court is required to make a determination whether there exists reasonable grounds for a successful conviction, or whether the restraint is but a means to harass the defendant. A Court will have regard to such facts to decide whether a confiscation order may be granted. A decision whether to grant a restraint order falls undeniably within the judicious discretion of the Court having taken the peculiar circumstances of the case into account.[8]

[23] Further, an obligation which rests upon a party that is seeking relief through a restraint order ex parte is well established in our law. The law imposes a duty on such applicant to disclose all material facts which might influence a court in coming to its decision. The withholding or suppression of material facts, even if not wilful or mala fide, entitles a court to set aside an order granted ex parte. It is equally trite that the applicant must disclose all relevant facts which are within his or her knowledge or he or she expects that the absent party would want to be placed before the Court.

[24] Additionally, it is a requirement that an applicant in such a position must exercise due care and make such enquiries and conduct

such investigations that are reasonable in the circumstances before approaching Court to ask for ex parte relief.[9] Should the Court find that there has been a failure to disclose such material facts, it has a discretion to discharge the provisional

restraint order for that reason.

[25] In Thint (Pty) Ltd v NDPP and Others, Zuma v NDPP and Others[10] the Court had occasion to explain the importance of material disclosure which an applicant going into court ex parte must make. It said the following:

“It is our law that an applicant in an ex parte application bears a duty of utmost good faith in placing all the relevant material facts before the court. The duty of good faith requires a disclosure of all material facts within the applicant's knowledge. The Supreme Court of Appeal reiterated in Powell that an applicant for a search warrant is “under a duty to be ultra-scrupulous in disclosing any material facts that might influence the Court in coming to its decision”. However, an investigator cannot be expected to disclose facts of which he or she is not aware. The duty is also limited to the disclosure of facts that are material. In a complex and vast case such as the present, there can be no crystal-clear distinction between facts which are material and those which are not. There will always be room for debate. It follows that, in cases such as the present, an applicant for a search and seizure warrant will inevitably have to make a judgment as to which facts might influence the judicial officer in reaching its decision and which, although connected to the application, are not sufficiently relevant to justify inclusion. The test of materiality should not be set at a level that renders it practically impossible for the State to comply with its duty of disclosure, or that will result in applications so large that they might swamp ex parte judges.” (Emphasis added)

[26] Knowledge and materiality of the non-disclosure are important considerations. I will revisit this in the next section of this

judgement as it requires a consideration of the facts disclosed by the NDPP, upon which the Court granted the restraint order, and how the facts not disclosed are material and ought to have been presented as part of the ex parte application.

Did the NDPP violate the Respondents’ constitutional rights?

[27] The contention here is closely connected to the abuse of authority issue which I have briefly dealt with above. What I say in dealing with the question in this section also addresses how I view the points raised in the preceding section. There are no specific facts in the answering affidavit dealing with how the NDPP has violated the Respondents’ constitutional rights. During argument it emerged that they were aggrieved by the restraint over their properties, and that such amounts to deprivation of their rights as enshrined in section 25 of the Constitution.

[28] It is undeniable that section 25(1) of the Constitution prohibits arbitrary deprivations of property. The Constitutional Court has held that for a deprivation of property not to be arbitrary for the purposes of section 25(1) of the Constitution, it must satisfy two requirements. It must take place for sufficient reason and it must be procedurally fair. In Prophet v National Director of Public Prosecutions[11] the Court held inter alia that:

“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 s 25(1) of the Constitution, which requires that “no law may permit arbitrary deprivation of property.” In First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance (FNB) this Court held that “arbitrary” in section 25(1) means that the law allowing for the deprivation does not provide sufficient reason for the deprivation or allows deprivation that is procedurally

unfair.” (Emphasis added)

[29] It is the case of the NDPP that the Respondents have committed criminal offences and are facing prosecution; and that the properties

enlisted in the order are benefits of crime. That is the basis upon which it sought an order to have their properties preserved. A preservation when granted lasts until the end of the prosecution, at which time one of two possibilities will arise. The first is that the criminal court may order confiscation of the properties and the second is that the properties may be released from preservation.

[30] As I understand it, logically, a preservation is a measure taken to keep properties belonging to a person accused of crimes specified in POCA under curatorship so that they are not dissipated, encumbered or hidden from the authorities. Loss of free control or use of the properties is not permanent, and is not arbitrary as it arises out of the implementation of a law of general application – as it where and as set out in section 36 of the Constitution – which POCA is.

[31] I have pointed out that the NDPP relied on the fact that the defendants are facing criminal prosecution in asking for the restraint order. Section 26 of POCA authorises this, read with section 25(1)(a) of the same statute. The legislation goes as far as providing that the NDPP may go ex parte before the Court to ask for a restraint order. It did so in this case and it was granted the order with a rule nisi issued returnable on 06 June 2024.

[32] On the facts, there is no dispute as to the contractual origins of the case. There is also no dispute over the fact that the

Respondnets, as service providers to the Department, were paid a large sum of, money in the amount of R21 318 570-00, to render specified services to the Department. The NDPPS’ allegation is that, instead of deploying the money for the intended purposes, the Respondents transacted with the money for things other than as agreed with the Department. To the NDPP, this amounts to either fraud or theft by false pretence in that the Respondents accepted the money even though they knew that they did not intend to carry out or indeed perform the obligations that they were contractually required to do.

[33] Again, the Respondents contend otherwise. They say that the actions of the NDPP amount to abuse of power. They base this contention on historical facts, which I mentioned earlier, whereby on two occasions the DPP had declined to prosecute the case against them. Since then, however, someone else with authority saw the matter differently and decided to institute prosecution, hence the Respondents have been facing criminal charges before the Specialised Commercial Court. The fact that there were previous decisions declining to prosecute is not to be equated to an autrefios acquit which would have meant that the person affected may not be tried a second time for the same offense.

[34] I accordingly find no reason to, at this juncture, disturb the preservation order that was granted against the defendants’

properties. The provisional order has to be confirmed and the properties shall remain under preservation.

COSTS

[35] The provisional court order determined that at the conclusion of this matter the respondents who may oppose the application may not be ordered to pay the costs jointly and severally. This does not mean that costs may not be ordered against them, but only that, if a cost order is made that should not be jointly and severally against such respondents who have opposed the case. The Respondents have opposed this application, and I see no reason why costs should not follow the result.

ORDER

[36] The following order is made:

[a] The provisional order and rule nisi issued on 07 March 2024 are hereby confirmed with costs on scale (a).

M. Z. MAKOTI

ACTING JUDGE OF THE HIGH COURT

NORTH WEST DIVISION

REPRESENTATIVES: FOR THE NDPP: ADV MR MAHLAFORE STATE ATTORNEYS 1ST FLOOR, EAST GALLERY MEGA CITY COMPLEX MMABATHO DEFEDANTS: ADV PW MAKHAMBENI C/O SETSHEDI, MAKGALE & MATLAPENG INC MMABATHO

[1] Act No. 121 of 1998.

[2] 2005 (2) SACR 186 (SECLD) at 188f – g.

[3] The preamble should be read to reflect POCA’s long title, which provides that it is enacted “To introduce measures to combat organised crime, money laundering and criminal gang activities; to prohibit certain activities relating to racketeering activities; to provide for the prohibition of money laundering and for an obligation to report certain information; to criminalise certain activities associated with gangs; to provide for the recovery of the proceeds of unlawful activity; for the civil forfeiture of criminal property that has been used to commit an offence, property that is the proceeds of unlawful activity or property that is owned or controlled by, or on behalf of, an entity involved in terrorist and related activities; to provide for the establishment of a Criminal Assets Recovery Account; to amend the Drugs and Drug Trafficking Act, 1992; to amend the International Co-operation in Criminal Matters Act, 1996; to repeal the Proceeds of Crime Act, 1996; to incorporate the provisions contained in the Proceeds of Crime Act, 1996; and to provide for matters connected therewith.”

[4] National Director of Public Prosection v Kyriacou 2004 (1) SA 379 (SCA).

[5] Section 17 of POCA reads: “For purposes of this Chapter, the proceedings contemplated in terms of this Chapter against a defendant shall be concluded when- (a) the defendant is acquitted or found not guilty of an offence; (b) subject to section 18(2), the court convicting the defendant of an offence, sentences the defendant without making a confiscation order against him or her; (c) the conviction in respect of an offence is set aside on review or appeal; or (d) the defendant satisfies the confiscation order made against him or her.”

[5] Section 17 of POCA reads: “For purposes of this Chapter, the proceedings contemplated in terms of this Chapter against a defendant shall be concluded when-

(a) the defendant is acquitted or found not guilty of an offence;

(b) subject to section 18(2), the court convicting the defendant of an offence, sentences the defendant without making a confiscation order against him or her;

(c) the conviction in respect of an offence is set aside on review or appeal; or

(d) the defendant satisfies the confiscation order made against him or her.”

[6] Ibid.

[7] National Director of Public Prosecutions v Rautenbach and Others 2005 (4) SA 603 (SCA) para 27.

[8] Rautenbach, supra, at para 56.

[9] National Director of Public Prosecutions v Basson 2002 (1) SA 419 (SCA) at para 21.

[10] Thint (Pty) Ltd v NDPP and Others, Zuma v NDPP and Others 2009 (1) SA 1 (CC) at para 103.

[11] Prophet v National Director of Public Prosecutions 2007 (2) BCLR 140 (CC); 2006 (2) SACR 525 (CC); 2007 (6) SA 169 (CC).