National Director of Public Prosecutions v Pilane and Others (692/06) [2006] ZANWHC 68 (16 November 2006)

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

CASE NO.: 692/06

In the matter between:

THE NATIONAL DIRECTOR OF

PUBLIC PROSECUTION APPLICANT

and

MOLEFE JOHN PILANE FIRST DEFENDANT

KOBEDI PILANE SECOND DEFENDANT

SHIMANE KOOS MOSHEGOE THIRD DEFENDANT

THE BAKGATLA BA KGAFELA

TRIBAL AUTHORITY FIRST RESPONDENT

WILHELMINA PILANE SECOND RESPONDENT

JUDGMENT

LANDMAN J:

[1] This is the extended return date of an interim restraint order.

[2] The National Director of Public Prosecution (the NDPP) applied ex parte for a restraint order against Molefe John Pilane the first defendant, Kobedi Pilane the second defendant and Shimane Koos Moshegoe the third defendant and the Bakgatla Ba Kgafela Tribal Authority the first respondent and Wilhelmina Pilane the second respondent. Hendricks J granted the order. It is unnecessary to set out the terms of the order. The papers and the Rule were served upon the defendants and the respondents. The application is opposed by all the respondents.

[3] On the extended return date it transpired that the following issues need to be decided:

(a) the fact that the order overreached as regards the property of the first defendant and the third defendant;

(b) whether the Rule Nisi should be discharge on account of a material non-disclosure;

(c) if not whether the requirements for a restraint order in terms of section 25 of Prevention of Organised Crime Act 121 of 1998 (POCA) especially whether there are reasonable grounds for believing that a confiscation order may be made against the defendants; and

(d) what order as regards costs should be made.

The law

[4] An application for a restraint order may be made ex parte to a competent High Court 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. The court 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. See section 26.

[5] The powers conferred on the court by section 26(1) may be exercised

(a) when –

(i) a prosecution for an offence has been instituted against the defendant concerned;

(ii) either a confiscation order has been made against that defendant or it appears to the court that there are reasonable grounds for believing that a confiscation order may be made against that defendant; and

(iii) the proceedings against that defendant have not been concluded; or

(b) when –

(i) that court is satisfied that a person is to be charged with an offence; and

(ii) it appears to the court that there are reasonable grounds for believing that a confiscation order may be made against such person. See section 25(1).

[6] A confiscation order may be made whenever the court convicting the defendant of an offence on the application of the public prosecutor, has enquired into any benefit which the defendant may have derived from –

(a) that offence;

(b) any other offence of which the defendant has been convicted at the same trial; and

(c) any criminal activity which the court finds to be sufficiently related to those offences.

If the court finds that the defendant has benefited, the court may, in addition to any punishment which it may impose in respect of the offence, make an order against the defendant for the payment to the State of any amount it considers appropriate and the court may make any further orders as it may deem fit to ensure the effectiveness and fairness of that order. See section 18(1).

The amount which a court may order the defendant to pay to the State may not exceed the value of the defendant’s proceeds of the offences (or related criminal activities referred to in that subsection) as determined by the court in accordance with POCA. See section 19.

If the court is satisfied that the amount which might realised (as contemplated in section 29(1)) is less than this value the amount may not exceed an amount which in the opinion of the court might be so realised. See section 18(2).

[7] In deciding these matters a court:

(a) Must decide any question of fact in any proceedings in respect of an application for a restraint order on a balance of probabilities. See section 13(5) of POCA.

(b) It should appear to the court itself, not merely to an applicant, that there are reasonable grounds for such a belief, which requires at least that the nature and tenor of the available evidence needs to be disclosed. See National Director of Public Prosecutions v Basson 2002 (1) SA 419 (SCA) 428 at par 19.

(c) An applicant “is not required to prove as a fact that a confiscation order will be made, and ……there is no room for determining the existence of reasonable grounds for the application of the principles and onus that apply in ordinary motion proceedings. What is required is no more than evidence that satisfies a court that there are reasonable grounds for believing that the court that convicts the person concerned may make such an order”. See National Director of Public Prosecutions v Kyriacou 2004 (1) SA 379 (SCA).

(d) The available evidence should be approached holistically and not on a piecemeal basis. Even if a part of the evidence, seen in isolation, is not entirely convincing, but fits into a pattern created by the evidence as a whole, the order ought to be granted. See National Director of Public Prosecutions v Kyriacou at par. 52.

(e) It is not required of the court to decide the guilt of the defendants or to decide on the confiscation or otherwise of the defendant’s property. That has to be considered by the trial court. See NNDP v W M Mothopi, an unreported judgment, dated 6 Februrary 2004, of Mojapelo J under case number 5925/03 in the TPD.

The order

[8] Mr Pistor SC, who together with Mr Oosthuizen, appeared for the NDPP, very properly drew my attention to the fact that some of the properties which had been attached should be released. The result is that I made the following order which has the effect of partially discharging the rule:

1. That in respect of the first defendant, the following realisable property shall be forthwith released:

1.1 The movable property referred to in paragraphs 9.1 to 9.4 of the report of the Curator Bonis.

1.2 The movable property referred to in paragraph 9.5 of the report of the Curator Bonis is so far such property was found on the farm Middelburg.

2. That in respect of the third defendant, the following realisable property shall be forthwith released:

2.1 The movable property referred to in paragraph 6.1 and 6.2 of the report of the Curator Bonis.

Non-Disclosure

[9] It is common cause that the applicant failed to disclose:

(a) the fact that the criminal trial had started; and

(b) the evidence was led during the criminal trial.

These are material facts which should have been disclosed.

[10] Mr Pistor SC conceded that the rule requiring the utmost good faith by a party to ex parte applications apply to an ex parte application contemplated in section 26 (1) of POCA. The rule of practice requires that:

(a) all material facts must be disclosed which might influence the court in coming to a decision;

(b) the non-disclosure or suppression of facts need not be wilful or mala fide to incur the penalty of rescission of the order obtained ex parte. see also National Director of Public Prosecutions v Basson 2002 (1) SA 419 (SCA) where Nugent JA said at 489 H-J:

“Where an order is sought ex parte it is well established that the utmost good faith must be observed. All material facts must be disclosed which might influence a court in coming to its decision, and the withholding or suppression of material facts, by itself, entitles a court to set aside an order, even if the non-disclosure or suppression was not wilful or mala fide (Schlesinger v Schlesinger 1979 (4) SA 342 (W) at 348E-349B).”

(c) the court, apprised of the true fact, has discretion to set aside the former order or to preserve it. See De Jager v Heilbron & Others 1947 (2) SA 415 W; Venter v Van Graan 1929 TPD 435; Barclays Bank v Giles 1931 TPD 9; Hillman Bros v van den Heuvel 1937 WLD 41 and Schlesinger v Schlesinger 1979 (4) SA 342 W.

[11] Mr Pistor SC submitted that a court will not discharge a rule nisi where a reasonable explanation for a non-disclosure of information in the founding papers has been given and where it is doubtful if the court would have refused the application if the relevant information had indeed been disclosed.

[12] Margo J in Cometal-Mometal S A R L v Corlana Enterprises (Pty) Ltd 1981 (2) SA 412 (W) at 414E-414H referred to certain factors that could be taken into account by a court in the exercise of its discretion not to rescind the order as follows:

“It seems to me that, among the factors which the court will take into account in the exercise of its discretion to grant or deny relief to a litigant who has breached the uberrima fides rule, are the extent to which the rule has been breached, the reasons for the non-disclosure, the extent to which the court might have been influenced by proper disclosure in the ex parte application, the consequences, from the point of doing justice between the parties, of denying relief to the applicant on the ex parte order, and the interests of innocent third parties, such as minor children, for whom protection was sought in the ex parte application. . .”

Van Reenen J in M v Rizcun Trader (4); MV Rizcun Trader v Manley Appledore Shipping Ltd 2000 (3) SA 776 (C) at 799 E-F referred to this approach with approval.

[13] The deponent to the founding affidavit provides an explanation for the non-disclosure. He says that the NDPP was bona fide in making the application for a restraint order. He denies that the evidence led was in favour of the defendants. He says the non-disclosure was “the result of concurrent and separate events”.

[14] He explains that the National Director of Public Prosecution is in terms of the National Prosecuting Authority Act of 1998 (“the NPAA”) amongst other duties, is also responsible and accountable for criminal prosecution in terms of the Criminal Procedure Act no 51 of 1977. The deponent says he is functionary within the Asset Forfeiture Unit, which falls within the scope of the NPAA. The AFU is responsible and accountable for civil applications of asset forfeiture in terms of POCA. The AFU source possible cases mostly directly from investigation agencies such as the South African Police Service (SAPS) and only when there is a breakdown in that process, from the National Prosecuting Service. The SAPS however falls under a different Department.

The present application is the result of a case sourced from the SAPS and in the following circumstances. Capt Phale, of the Organised Crime Unit at Mafeking obtained the details of the criminal case from the criminal investigation officer after a member of the Bakgatla Ba Kgafela Tribe notified him during the beginning of February 2006 of the pending criminal case against the first defendant.

The deponent obtained the details of the criminal case during the end of March 2006. At that stage, an investigation in respect of the realisable property of the defendants had to be conducted. This investigation was completed and drafting of this application started at 8 May 2006 and was finalised on 19 May 2006 when he signed the founding affidavit.

He was informed during the drafting of this application that the criminal trial against the defendants was postponed until 30 July 2006 for trial and believed that the information was correct. Normally, criminal trials take months to get started and so that he did not even remotely foresee a possibility that the trial could have started by then.

However, unknown to him the criminal trial started on 8 May 2006. Had he at the time of the filing of the founding affidavit been aware of the fact that the criminal trial had already started, he say he would have revealed such fact to this court in the founding affidavit as well as all the relevant information relating to the evidence already lead. He apologises to this court and the defendants or respondents for any inconvenience that might have been caused by the non-disclosure of the correct trial date.

He states emphatically that the non-disclosure was caused by a bona fide error on his side and he denies any allegation or insinuation that it was done intentionally and/or for a purpose to mislead this court or to obtain relief in circumstances where the applicant would not otherwise have been entitled to relief.

I find the explanation acceptable.

[15] Although it is strictly speaking unnecessary to deal with it I record that Mr Pistor SC submitted that even if the “non-disclosed facts” had been disclosed, it would have made no difference at all to the outcome of the ex parte application and that the order would still have been granted. He went on to submit that there are a variety of reasons why this Court should exercise its discretion in favour of the applicant and not rescind the order. They include the following:

(a) the applicant, in accordance with the requirements laid down in reported cases, stated the relevant facts on which the respective criminal charges are based and attached affidavits from the persons who conducted the respective investigations. From these facts it is prima facie clear that the defendants and more specifically the first defendant will on probabilities be found guilty and that a confiscation order will follow.

(b) the “non-disclosed facts” relate to evidence led at the initial stages of the criminal trial.

(c) the criminal case appears to be complex and an early evaluation of the merits of that case cannot justify a finding contrary to the contents of the founding papers.

(d) even if it were to be found that part of the evidence at the very early stages of the trial might be less favourable to the State’s case, it is too soon to conclude that a conviction will not follow. This is manifested by a careful consideration of the evidence contained in the founding papers read with the “non-disclosed” evidence in respect of the various charges with the facts put before the court.

The Merits

[16] The State intended charging and has charged the first defendant with 2 counts of fraud, 43 counts of theft and 1 count of corruption, the second defendant with 1 count of theft and 1 of fraud (counts 8 and 10) and the third defendant with 1 count of theft (count 9). I proceed to consider the merits of these charges in the light of all the material currently before me.

[17] Count one is one of the major charges the defendant faces. The gist of the charge is that the first defendant, who is a trustee of the tribe, informed the Land Bank that the tribe would receive royalties from mining whereas he knew that the trust would not receive an annual income from royalties.

The evidence presented at the trial by Mr Johnson is that the royalties had been conditional pledged and consequently the trust (or the tribe) would not actually received royalties. The first defendant as the trustee knew that the royalty income could therefore not be paid to the Land Bank.

The Land Bank approved the first and second loans on certain conditions, inter alia, relating to the payment of the mining royalties directly to the Bank.

Annexure to Bank form 213 reads as follows:

“This loan has been granted in terms of the provisions of the Land Bank Act no 13 of 1944 against FIRST Mortgage over the property offered as securities on the following conditions:-

(a) No change in the shareholding and the Board of Directors of the companies will take place without prior written consent of the Bank.

(b) Royalties should be paid directly to the Bank in repayment of commitments. . . .

Your attention is drawn to the condition (b) above. It is recommended that payment from royalties be made to the Bank in repayment of your commitments.”

[18] On 17 July 1998 the first defendant, on behalf of the tribe and certain companies, accepted the offer of a loan of R3 852 00 and a loan of R1 553 000 on the conditions stipulated. These conditions refer to the above mentioned obligation to pay the royalties to the Land Bank.

The evidence at the trial is that the misrepresentation as to the amount of the royalties to be paid annually was not made by first defendant. He presented the yearly amount of royalties due for 1996, 1997, 1998 and 1999. Mr Leon Stenfert, a sales and account manager of the Bank, add them all up and presented the total as an annual income of R6 206 367.

There appears to be no misrepresentation as regards the third loan in so far as the error made by Mr Stenfert was simply incorporated in the application for this loan by a bank employee, Ms Straus. No condition regarding the payment if the royalties to the bank was imposed as regard this loan.

In the absence of an explanation I must find that the first defendant will probably be convicted on count 1.

Counts 2-7

[19] These counts relate to theft of tribal funds. The gist of these averments is that payments were made from tribal funds to Van Den Berg and from the latter’s account to the personal bank accounts of the first defendant. In the answering affidavit the first defendant did not dispute the said payments. In fact the first defendant did not react directly and specifically to the said averments at all. Under the heading “other charges” the first defendant merely said that Mr Strydom (of Price Waterhouse Cooper) testified that he could not find any evidence during his investigations to suggest that any money reflected in the charge sheet had not been utilized for any purpose other than the farming operations of the tribe.

The first defendant also maintains that Mr Van Den Berg has testified that a vehicle bought by the first defendant was “used for official purposes of the tribe”.

[20] Mr Pistor SC submitted that Mr Van Den Berg’s said evidence cannot be of assistance to the first defendant because inter alia:

(a) his said evidence was not given in respect of all of the aforesaid counts;

(b) he had a close relationship with the first defendant but was clearly not a member of the Tribal Counsel or of the Tribe; and

(c) his evidence that the vehicle that was bought by the first defendant was used for official purposes is, at best for the first defendant, an opinion since Van Den Berg clearly did not have personal knowledge of Tribal resolutions authorising such purchase. This is an aspect of criminal case that the trial court will have to decide after all the evidence has been led.

[22] Mr Strydom’s evidence (that he could not find any evidence during his investigations to suggest that any money reflected in the charge sheet had not been utilized for any purpose other than the farming operations of the tribe) doe not weaken the State’s case either. The fact that he could not find evidence that the monies was not used for any purpose other that the farming operations of the tribe does not by any stretch of imagination mean that the monies paid into the personal bank account of the first defendant were used for farming activities of the Tribe. The trial court will have to make a finding on this issue at the end of all the evidence.

The payment into a person’s bank account of money entrusted to that person where the money belongs to another constitutes in the absence of a satisfactory explanation the unlawful appropriation of such money and therefore theft. See Cape Law Society v Parker 2000 (1) SA 582 (c) at 587.

[23] There is no explanation by the first defendant, whether at the plea stadium in the criminal case, or in cross-examination in that case or in the papers filed by him in this court that all these monies were:

(i) paid to him in order to be used for tribal purposes; and

(ii) were indeed used for purposes.

There appears to be no reason, if these monies were to be used for the farming activities of the tribe, why such monies could not be paid by the tribe directly to whomsoever the monies were due.

Furthermore there appears to be no reason why, if the first defendant were to spend the monies for the farming activities of the tribe, the monies could not be paid directly into his account instead of the payment to Van Den Bergh’s account and from there to the first defendant. It is on probabilities the only reasonable inference to be drawn on the available evidence that the monies which form the subject of the present discussion were part of the first loan of R5 405000.00 that was obtained from the Land Bank and which was paid to the tribe shortly before these monies were pad into Van Den Bergh’s account.

The Land Bank loan was approved on the express condition that it should be used to pay outstanding debts (and not for farming activities).

Count 8

[24] According to the affidavit of Van Den Berg the amount of R50 000.00 was paid into the bank account of the second defendant from tribal funds on the instructions of the first defendant.

Count 9

[25] Again there is no explanation for the reason why money (to which the tribe was entitled) was paid to a company (Savanna Lime) to pay a debt of the first defendant.

Count 10

[26] I need not deal with this count as Mr Pistor SC has conceded that the State’s case is weak.

Count 14-44

[27] Payments due to the tribe were made to the first defendant. He does not dispute them. There is also no explanation for the payments to the first defendant. In the premises the first defendant prima facie stole the money and there appears to be no reason why he should not be convicted as charged.

Count 45

[28] The factual averments, substantiating this count of theft (of R31230.00) that monies due to the tribe for the lease of tribal land to Coetzee were paid into the account of the first defendant. The factual averments were not disputed. Accordingly the probabilities point to a conviction.

Count 46

[29] The NDPP does not appear to be confident of a conviction on this count and I do not propose to deal with it.

Benefit from criminal conduct

[30] The last question is whether die defendants have benefited from the criminal conduct with which they are charged.

Mr Cilliers submitted, in so far as is relevant, that:

(a) The forensic auditor, Mr Johan van der Walt testified that he could not say, after a full investigation and report, that any money obtained, was not utilized properly and for the intended purpose. He submitted that the confession by the forensic auditor completely destroys any argument or submission that the court can conclude from the evidential material that there is reason to believe that the defendants benefited from the alleged criminal conduct.

(b) The evidence of Van Den Berg is that the amount of R163 351.00 (count 3) had been utilized for the purchase of a vehicle for the official use of the tribe.

[31] The evidence referred to above is relevant but not conclusive. It is more than probable that a person who commit, a crime, involving money stand to benefit from his actions. According to the charge sheet relating count 10 the amount of money received by the first defendant exceeds 13 million rand. In the case of the second defendant it is R50 000 and in the case of the third defendant R10 000. To the extent that the rule nisi was too wide this has been cured by the partial discharge of the order when the matter was argued.

[32] In the premises, I am satisfied that there are reasonable grounds for believing that a confiscation order may be made against the defendants.

[33] The order as modified by its partial discharge is confirmed with costs. Costs to include the costs of two counsel. The attention of the Taxing Master is drawn to the fact that Mr Oosthuizen is an employee of the State.

________________

A A LANDMAN

JUDGE OF THE HIGH COURT

Appearances:

For the Applicant : Adv Pistor (SC) with Adv Oosthuizen

For the Respondent : Adv J Cilliers

Attorneys:

For the Applicant : State Attorney

For the Respondent : Hlahla Motlhamme

Date of Hearing : 28 September 2006

Date of Judgment : 16 November 2006