National Director of Public Prosecutions v Zhong (A5050/04) [2005] ZAGPHC 47; 2005 (2) SACR 544 (W) (20 April 2005)

IN THE HIGH COURT OF SOUTH AFRICA

(Witwatersrand Local Division)

REPORTABLE

Case No: A5050/2004

DATE:20/04/2005

In the matter between:

THE NATIONAL DIRECTOR

OF PUBLIC PROSECUTIONS..............................Appellant ….................................................. …....................................(Applicant in the Court a quo)

and

ZHONG, YONG ROBERT..................................Respondent

___________________________________________________________

JUDGMENT

WILLIS J:

[1] The appellant is the National Director of Public Prosecutions. He appeals to the Full Bench of this Division against the whole of the judgment given by the Court a quo (per Gildenhuys J) on 24 June, 2004. It seems to have become common practice to refer to him in judgments of the Superior Courts simply

as “the NDPP”.1 I shall for, the sake of convenience, do the same. The NDPP brought an application in terms of section 48 (1) of the Prevention of Organised Crime Act, No 121 of 1998, as amended (“the Act”), for what is commonly known as a “forfeiture order” in respect of US$17 000 and R5 000 which had been found in a motor vehicle which may have belonged to the respondent. The money had, at the time of the hearing before the Court a quo, been the subject of a so-called “preservation order” in terms of section 382 of the Act. Gildenhuys J dismissed, with costs, the application for a forfeiture order, discharged the preservation order and directed that the money be returned to the respondent with interest. The NDPP appeals with the leave of the Court a quo.

[2] Inspector Jaco Erasmus of the South African Police Services, who is attached to the Endangered Species Unit, headed the team which conducted a search of a warehouse at Sunbeam Industrial Park, Klipriver Road, Eikenhof on 14th February, 2003. The police discovered 259 boxes of frozen shucked abalone, weighing 5614,78 kilograms, in the warehouse. It had a value in excess of R2 million. The possession of the abalone was unauthorized and illegal.

[3] Parked outside the warehouse was a gold-coloured Daewoo Laguna motor vehicle. It was searched by Inspector Simon Riekert who found business cards, an air-ticket to Maputo, a passport and some other, inconsequential items, all of which belonged to the respondent. In the side-pocket of a black carrier bag found in the boot of the vehicle were found US$7 000 and R5 000. In between the clothes in the bag found a further US$10 000 was found. There is no dispute that the money had been possessed and indeed owned by the respondent at the time. On the contrary, he has demanded the return of the money.

[4] It would seem from various of the documents which form part of the record that the respondent is a national of the People’s

Republic of China, although this is not expressly alleged in any of the affidavits. It is common cause – indeed, in my opinion, a notorious fact - that there is a highly lucrative illegal trade in abalone destined mainly for the Far East It is also a notorious fact that this illegal trade in abalone is a large-scale menace.

[4] The NDPP sought and obtained by way of an ex parte application brought in terms of section 38 of the Act, the preservation order to which reference has previously been made. The order was granted by Bashall AJ on 21st October, 2003 and, in terms of this order, a notice was served personally on the respondent on 2nd December, 2003. The respondent gave notice of his intention to oppose the order and filed an affidavit on or about 15th December, 2003 in which he set out his defence.

[5] In the application for the forfeiture order the NDPP says as follows in the founding affidavit:

“In the circumstances in which the property was uncovered, together with the discovery of such a large consignment of illegal abalone, the Applicant submits that the property was intricate (sic) to the illegal abalone smuggling operation conducted at the warehouse. Applicant also submits that the property is either the proceeds of the sale of illegal abalone or was to be used to facilitate the sale and possible exportation of abalone.”

This, essentially, was the case which the respondent had to meet. The uncertainty as to whether or not the money consituted “proceeds”

or was to be used to facilitate the crime of illegally dealing in abalone also appears in the affidavit of Inspector Erasmus in support of the application for the preservation order. In the notice of application for leave to appeal, the NDPP persisted in this uncertainty but submitted that the Court a quo ought to have found that it was either one or both of these. In the grounds of appeal, filed after leave to appeal had been granted, the NDPP confined himself to criticising the Court a quo for failing to find that the property was “proceeds”.

[6] The respondent filed an answering affidavit opposing the application for the forfeiture order. The salient features of his defence, to be gleaned from these two affidavits to which the respondent has deposed, are as follows:

(i) He was the manager of the warehouse;

(ii) He never dealt, in any way, with the abalone;

(iii) He became aware of the fact that abalone was being stored in refrigerators at the warehouse but, having been threatened by his employer, was too afraid to report the matter;

(iv) From time to time, he also traded in various goods such as clothing and shoes which activities he sets out in some detail with supporting documentation;

(v) Apart from a few hundred dollars which had been obtained from a previous trip abroad, the US dollars had been purchased lawfully from an authorised dealer (as shown by an attached invoice) with a view to a business trip to Mozambique;

(vi) The money to purchase the US dollars and the R5 000 had been obtained from his lawful trading activities.

[7] The NDPP has averred that the respondent’s version is simply not believable for the following reasons:

(i) The respondent fails to take the Court into its confidence as to who his employer was;

(ii) Certain of the documents used to support his claim of trading in goods such as clothing and shoes would not appear to be genuine;

(iii) The respondent had made reservations to be in Mozambique for one day only;

(iv) Maputo in Mozambique is a favoured port for the illegal export of abalone;

(v) The general system of operations for dealing in abalone destined to the Far East;

(vi) The overall “smell” of the case.

The Court a quo said “I agree with Mr Pillay that the respondent’s explanation for his possession of the money found in his car is in all likelihood not true.” It would appear that there was no application before the Court a quo to refer the disputes of fact to oral evidence.

[8] Section 48(1) of the Act provides as follows:

“If a preservation of property order is in force the National Director may apply to a High court for an order forfeiting to the State all or any of the property that is subject to the preservation of property order.”

[9] Section 50(1)of the same Act provides that:

“The High court shall, subject to section 52, make an order applied for under section 48(1) if the Court finds on a balance of probabilities that the property concerned-

is an instrumentality referred to in Schedule 1; or

is the proceeds of unlawful activities.”

Section 52 is irrelevant to these proceedings3. “Instrumentality of an offence” is defined as “any property which is concerned in the commission or suspected commission of an offence at any time before or after the commencement of this Act, whether committed within the Republic or elsewhere.” It is common cause that dealing in or being in possession of endangered, scarce and protected game, such as abalone, is an offence provided for in Schedule 1 of the Act.

[10] The relevant portions of section 37 of the Act read as follows:

“(1) For the purposes of this Chapter (which include sections 38,48 and 50) all proceedings in this Chapter are civil proceedings and are not criminal proceedings.

(2) The rules of evidence applicable in civil proceedings apply to proceedings under this chapter.”

It seems to me, therefore, that insofar as the disputes of fact are concerned, the time-honoured rules set out in Stellenbosch Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E-G and as qualified in Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634H-635C, should apply. These are that where an applicant in motion proceedings seeks final relief, and there is no referral to oral evidence, it is the facts as stated by the respondent together with the admitted or undenied facts in the applicant’s founding affidavit which provide the factual basis for the determination, unless the dispute is not real or genuine or the denials are so far-fetched or clearly untenable that they obviously stand to be rejected. These rules have been re-affirmed in innumerable cases and at the highest level. Mr Sikhakhane, who appears for the NDPP, conceded that the Plascon-Evans principles should apply in cases such as these, but submitted that the respondent’s version is so far-fetched or clearly untenable that it should be rejected. There is a dispute of fact concerning the respondent’s explanation as to why he was in possession of the money. Although one may have one’s suspicions, I do not think it can be said that the respondent’s version is so far-fetched or clearly untenable that it can be rejected. This version therefore must prevail and, caedit quaestio, the NDPP cannot succeed.

[11] The applicability of the Plascon-Evans principles in cases of this nature was touched upon by me in the case of Director of Public Prosecutions v R O Cook Properties [2002] 4 All SA 692 (W) (see paras. [8] and [9]). In that case, it was not necessary to determine their applicability. Even if the Plascon-Evans principles do not apply in applications such as this and a Court is somehow to determine the balance of probabilities without a referral to oral evidence and merely by reading the papers, I do not think this will assist the NDPP. Mr Sikhakhane submitted that, having found that the respondent’s explanation for possession of the property was “in all likelihood not true”, the Court a quo made an “obvious leap of logic” in not finding that the property “is intricate (sic) to the illegal abalone smuggling operation that was being conducted in the warehouse”. I disagree. On the contrary, in my

respectful opinion, it seems that the Court a quo manifested a coolly detached rationality. A false statement (even if we were to find the respondent’s version to be false) does not justify an inference that a person in the position of the respondent is guilty of the alleged wrongdoing, even in civil matters. (See Botha v Van Niekerk 1947 (1) SA 699 (A) at 703.) Of course, lies will tend to strengthen the case against a party. (See Smit v Arthur 1976 (3) SA 378 (A) at 386A.) As was noted, however, in Goodrich v Goodrich 1946 290 AD at 396, to which the Court a quo also referred, “one should be careful to guard against the intrusion of any idea that a party should lose his case as a penalty for his perjury.”

[12] Even if we were to apply Govan v Skidmore 1952 (1) SA 732 (N) at 734D, which has been followed in Ocean Accident and Guarantee Corporation Ltd v Koch 1963 (4) SA 147 at 159C and South British Insurance Co Ltd v Unicorn Shipping Ltd 1976 (1) SA 708 (A) at 713E-G and Smit v Arthur (supra) at 386D and look for the most natural or plausible conclusion, among several probable one’s, I cannot fault the Court a quo’s despair as to “of what does it (the NDPP’s case) consist?” The Court a quo, in my opinion, correctly summarised the evidence against the respondent thus: “The respondent is found in control of a

warehouse containing a large quantity of illegally found abalone. The respondent is also found in possession of a large sum of money (US$17 000 and R5 000), stacked away in his car.” It is trite that “It is not a mere conjecture or slight probability that will suffice.” (See, for example, West Rand Estates Ltd v New Zealand Insurance Co. Ltd 1925 AD 245 at 263; Ley v Ley’s Executor’s and Others 1951 (3) SA 186 (A) at 192; Joosab v Ensor N.O. 1966 (1) SA 319 (A) at 324E-F). Mr Sikhakhane conceded that there were any number of different possibilities or even probabilities as to why the respondent had possession of the property but submitted that the version contended for by the NDPP was the most probable or plausible. It seems to me that it is equally probable that the respondent obtained his money other than as proceeds of the activities contended for by the NDPP. It is certainly not any more probable that the money was an “instrumentality” of any such offence than that it was not. A smelly rat does not necessarily betray the cat.

[13] As has been noted above, the NDPP and Inspector Erasmus were uncertain as to whether or not the property was either an “instrumentality”

or “proceeds”. Mr Sikhakhane submitted that nothing turns on this. I disagree. The uncertainty would only be irrelevant if these two probabilities were collectively exhaustive of all probabilities. It is common cause, however, that there are other probabilities. Let it be supposed that there were a scenario in which the same consequence would happen regardless of whether a particular colour was black or white. Let it be supposed further that it is common cause that there could only be these two colours. The fact that it is uncertain whether the colour was black or white would not affect the outcome. Suppose, on the other hand, that there are five different colours and certain consequences would happen if the colour were either black or white but not if it were any of the other colours. Without something more, the fact that there is uncertainty about whether the colour was black or white raises the question and the uncertainty as to whether the colour could not have been one of those which would have a very different consequence. It is this lack or insufficiency of “something more” which affects this case.

[14] Although the sum of money was large, it was not so large as, in itself, to give rise to an inference that the property was “proceeds”.

[15] In any event, in NDPP v R.O. Cook Properties (Pty) Ltd & Others [2004] 2 All SA 491 (SCA) it was said, at para [31], that “the property must play a reasonably direct role in the commission of the offence” in order for it to fall within the definition of an “instrumentality” and went on to say: “As the term ‘instrumentality’ itself suggests (albeit that it is defined to extend beyond its ordinary meaning), the property must be instrumental in, and not merely incidental to, the commission of the offence. For otherwise there is no rational connection between the deprivation of the property and the objective of the Act: the deprivation will constitute merely an additional penalty in relation to the crime, but without the constitutional safeguards that are a prerequisite for the imposition of criminal penalties.” At para [32], the Court found practical assistance in S v Bissessue 1980 (1) SA 228 (N) in which that Court had held that “to qualify for forfeiture the thing must play a part, in a reasonably direct sense, in those acts which constitute the actual commission of the offence.” I do not think it can be found, in casu, that, on a balance of probabilities, the property concerned was, in a reasonably direct sense -

“(a) an instrumentality referred to in Schedule 1; or

(b) the proceeds of unlawful activities.”

or that the property had played a reasonably direct role in the commission of any offence upon which the NDPP relies.

[16] In Kunz v Swart and Others 1924 AD 618 at 655, Solomon JA said: “The learned judge in the Court below found against the plaintiff, and indeed held that the defendant had proved that the will was valid and had been duly signed. Are we now justified in reversing his decision? Now our duty on an appeal is, as has often been pointed out, to rehear the case and to form our conclusions on the facts as well as the law. And if we are satisfied that the judge in the Court below came to a wrong conclusion on the facts we should not shrink from overruling him. But before doing so, we must be quite satisfied that he was wrong; if we merely have reasonable doubt as to whether he was right, then I do not think that we should be justified in reversing his decision.” This has been followed in Taljaard v Sentrale Raad vir Koöp Assuransie Bpk 1974 (2) SA 450 (A) at 451H. In Rex v Dhlumayo and Another 1948 (2) SA 677 (A), it was said at 706: “Where there has been no misdirection on fact by the trial Judge, the presumption is that his conclusion is correct; the appellate Court will only reverse it where it is convinced that it is wrong.” This approach has been followed in innumerable cases in the Supreme Court of Appeal and has been confirmed by the Constitutional Court in President of the RSA v South African Rugby Football Union 2000 (1) SA 1 (CC) at para [78]. It seems clear that, as matter of policy, there a should be an inclination by an appellate Court to treat the

decision of a lower Court with a degree of deference. I do not think that we can be quite satisfied that the Court a quo was wrong.

[17] The appeal is dismissed with costs.

DATED AT JOHANNESBURG THIS 20th DAY of APRIL, 2005.

N.P. WILLIS

JUDGE OF THE HIGH COURT

I agree.

M. JAJBHAY

I agree.

M. W. MSIMEKI

ACTING JUDGE OF THE HIGH COURT

Counsel for the Appellant: M. Sikhakhane

Attorneys for the Appellant: The State Attorney

Counsel for the Respondent: M.D Silver

Attorney for the Respondent: Sun Attorney

Date of Hearing: 7th April, 2005

Date of Judgment: 20th April, 2005

11 See, for example, NDPP v R O Cook Properties (Pty) Ltd & Others [2004] 2 All SA 491 (SCA) and various other cases referred to therein.

2 This reads as follows: “(1)The National Director may by way of an ex parte application apply to a High Court for an order prohibiting any person, subject to such conditions and expectations as may be specified in the order, from dealing in any manner with any property. (2) The High Court shall make an order referred to in subsection (1) if there are reasonable grounds to believe that the property concerned – is an instrumentality of an offence referred to in Schedule 1: or is the proceeds of unlawful activities. (3) A High Court making a preservation of property order shall at the same time make an order authorizing the seizure of the property concerned by a police official, and any other ancillary order that the court considers appropriate for the proper, fair and effective execution of the order. (iv) Property seized under subsection (iii) shall be dealt with in accordance with the directions of the High Court which made the relevant preservation of property order.”

2 This reads as follows:

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

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

is an instrumentality of an offence referred to in Schedule 1: or is the proceeds of unlawful activities.

(3) A High Court making a preservation of property order shall at the same time make an order authorizing the seizure of the property concerned by a police official, and any other ancillary order that the court considers appropriate for the proper, fair and effective execution of the order.

(iv) Property seized under subsection (iii) shall be dealt with in accordance with the directions of the High Court which made the relevant preservation of property order.”

3 This section provides for the exclusion of certain interests from the operation of a forfeiture order, where the interest was acquired legally and the person concerned neither knew nor had reasonable grounds to suspect that the property in which the interest was held was the proceeds of unlawful activities.