National Director of Public Prosecutions v Van derWalt and Another (2241/2006) [2008] ZAECHC 6 (23 January 2008)

Not reportable

In the High Court of South Africa

(Eastern Cape Division)

(Grahamstown High Court) Case No 2241/2006

Delivered:

In the matter between

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant

and

T.S.P VAN DER WALT 1st Respondent

A.J. VAN DER WALT 2nd Respondent

SUMMARY: Application on notice of motion for a forfeiture order in terms of section 48 of the Prevention of Organized Crime Act No 121 of 1998 – whether the assets to be forfeited were the proceeds of unlawful activity – onus not discharged – forfeiture refused.

JUDGMENT

JONES J:

[1] The respondents are husband and wife. They have been charged with two counts of fraud. The prosecution is still pending in the regional court, East London. On 25 July 2006 this court granted an ex parte application under section 38 of the Prevention of Organized Crime Act, Act No 121 of 1998 (‘the Act’) for a preservation order for the sum of R110 000-00 which was found in the respondents’ banking account and which was alleged to be the proceeds of unlawful activity, i.e. the two counts of fraud with which they were charged. It is common cause that the complainant on one of the counts of fraud paid an amount of R80 000-00 into their account, and the complainant on the other, R30 000-00. On 23 November 2006 the court granted a forfeiture order under section 50 of the Act by default. On 29 March 2007 the forfeiture order was rescinded on the application of the respondents. The applicant has reapplied for a forfeiture order. The matter is now before me as an opposed application on notice of motion.

[2] The Act makes provision for both criminal and civil orders for the forfeiture of assets. This case is exclusively concerned with a civil order for forfeiture under chapter 6. The proceedings are governed by the rules of procedure and evidence applicable to civil proceedings. The respondents raised two arguments before me which, they say, preclude the relief sought by the applicant. The first was that the use of the procedure under the Act does not pass constitutional muster in the circumstances of this case. Some of the arguments put up in support of this contention, which are based on fairness, proportionality and the primary purpose of the legislation, are in my opinion not without merit. But I believe that it will suffice, for the purposes of this judgment and in view of the conclusion to which I have come on the second argument, to deal only with the second argument.

[3] The second argument concerns the sufficiency of the evidence to prove that the sum of R110 000-00 was indeed the proceeds of unlawful activities within the meaning of the definition section of the Act. For a forfeiture order, the evidence must establish on a balance of probabilities that the money was derived, received or retained, directly or indirectly, in connection with or as a result of any unlawful activity carried on by any person. Unlawful activity means conduct which constitutes a crime or which contravenes any law. To decide whether the applicant has discharged the onus of proving this, it is necessary to determine what facts were established in the affidavits with reference to the rules of evidence and procedure applicable to opposed applications on notice of motion.

[4] The applicant’s case was that the money in question was derived from fraud. The respondents were alleged to have acted fraudulently by selling exclusive patent rights to two different purchasers at the same time for the same area, and to have received a deposit of R80 000-00 from one of them and R30 000-00 from the other. The applicant also alleged that the respondents had no right to sell the patent rights in question because were not the holders of those rights. But this allegation turned out to be unfounded and has not been persisted with. At issue, then, is whether, the fact of the alleged double sale – something which is to be found in the law reports from time to time, not necessarily in the context of fraud – was in the circumstances of this case a crime. The respondents have given a full and detailed explanation which contradicted many of the factual allegations upon which the applicant relies, and which denied that they were guilty of fraud. They explained, inter alia, that negotiations were conducted openly and in good faith with more than one potential purchaser, that the purchasers appear to have confused the purchase of the patent with the purchase of the right to exploit it, that one of the sales had been cancelled, and that the respondents were and are entitled to regard the other sale as still of full force and effect. These allegations

are irreconcilable with the applicant’s case. I do not wish to go into greater detail in respect of the areas of conflict for fear of intruding upon or pre-empting credibility and probability issues which are bound to arise in the pending criminal trial. I believe that I should say nothing at all which might possibly have a bearing on those issues. But the fact of the matter is that I am faced with an application on notice of motion in which there are material conflicts of fact in the affidavits.

[5] A dispute of fact does not necessarily preclude the court from granting relief on notice of motion. If the real issue is capable of resolution on an acceptance of facts which are common cause or indisputable, relief may be ordered without reference to the facts in dispute. This is done by applying the well known rule in Plascon-Evans Paints Limited v Van Riebeeck Paints (Proprietary) Limited [1984] ZASCA 51; 1984 (3) SA 623 (AD). This rule lays down the method by which facts should either be accepted or omitted from consideration in the adjudication of applications on notice of motion where there are material disputes of fact in the affidavits. Corbett AJ, as he then was, stated the rule at 634E-635C:

‘In such a case the general rule was stated by VAN WYK J (with whom DE VILLIERS JP and ROSENOW J concurred) in Stellenbosch Farmers' Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E - G, to be:

"... where there is a dispute as to the facts a final interdict should only be granted in notice of motion proceedings if the facts as stated by the respondents together with the admitted facts in the applicant's affidavits justify such an order... Where it is clear that facts, though not formally admitted, cannot be denied, they must be regarded as admitted."

This rule has been referred to several times by this Court (see Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point (Pty) Ltd 1976 (2) SA 930 (A) at 938A - B; Tamarillo (Pty) Ltd v B N Aitkin (Pty) Ltd 1982 (1) SA 398 (A) at 430 - 1; Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty) Ltd en Andere 1982 (3) SA 893 (A) at 923G - 924D). It seems to me, however, that this formulation of the general rule, and particularly the second sentence thereof, requires some clarification and, perhaps, qualification. It is correct that, where in proceedings on notice of motion disputes of fact have arisen on the affidavits, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred in the applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain instances the denial by respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact (see in this regard Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163 - 5; Da Mata v Otto NO 1972 (3) SA 858 (A) at 882D - H). If in such a case the respondent has not

availed himself of his right to apply for the deponents concerned to be called for cross-examination under Rule 6 (5) (g) of the Uniform Rules of Court (cf Petersen v Cuthbert & Co Ltd 1945 AD 420 at 428; Room Hire case supra at 1164) and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks (see eg Rikhoto v East Rand Administration Board and Another 1983 (4) SA 278 (W) at 283E - H). Moreover, there may be exceptions to this general rule, as, for example, where the allegations or denials of the respondent are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers (see the remarks of BOTHA AJA in the Associated South African Bakeries case, supra at 924A)’.

[6] The general rule, then, is that where in proceedings on notice of motion bona fide disputes of fact have arisen on the affidavits, a final order may be granted if those facts averred in the applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order.

[7] There is no basis for concluding that the disputes of fact which have arisen in these affidavits are not genuine and bona fide disputes of fact within the meaning of the judgments in such cases as Peterson v Cuthbert & Co, Ltd 1945 AD 420 at 428/9 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163-1165, and Soffiantini v Mould 1956 (4) SA 150 (E) at 154H. The applicant’s argument before me did not involve a detailed analysis of the various disputes in an attempt to show that they were not genuine or material. He contented himself with the broad argument that the respondents’ version of the facts was not supported by the documentation prepared by the parties at the time, and for that reason it did not constitute a bona fide dispute of fact. His submission was that documents used by the respondents to support their version weigh in the applicant’s favour, and that even though, at first glance, the respondent’s version seems plausible, it is contradicted by the supporting documents. This argument is unsound. On the facts of this case the documentation referred to, read in context and properly understood, is not inconsistent with the respondent’s version and does not provide overwhelming support for the applicant’s version. This is not one of those cases where the documents make it possible to come to firm credibility and

probability findings merely on the papers. Furthermore, the applicant has been obliged to concede a material mistake of fact in the presentation of one of the cornerstones of its case – that the respondents had attempted to sell patent rights belonging to somebody else. There are other material allegations in the 1st respondent’s affidavit which cast serious doubt on the applicant’s case that the money was the proceeds of criminally fraudulent conduct, or, for that matter, the proceeds of fraudulent misrepresentation in the delictual sense. As I have already explained, it is undesirable to go into further detail in view of the criminal proceedings pending in the regional court. For present purposes it is sufficient for me to express the conclusion that for the purpose of adjudicating upon an opposed application on notice of motion, the dispute of fact is material and bona fide.

[8] This conclusion means that I may grant a final order in terms of the notice of motion only if the facts averred in the applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. It is not possible, in the light of the allegations in the respondents’ affidavits, to conclude on a balance of probabilities that the amount of R110 000-00 seized under the preservation order is indeed the proceeds of unlawful activity within the meaning of the Act. The applicant is the onus bearing party. He has not seen fit to call for a resolution of the various disputes by applying for cross-examination of the deponents to the affidavits under rule 6(5)(g) of the uniform rules. I have no alternative, therefore, but to hold that the onus is not discharged and the application must be dismissed.

[9] The application is dismissed with costs. It follows that the preservation order must be set aside and the amount seized in terms thereof must be repaid to the respondents.

RJW JONES

Judge of the High Court

23 January 2008