South Africa: High Courts - Gauteng

You are here: SAFLII >> Databases >> South Africa: High Courts - Gauteng >> 2006 >> [2006] ZAGPHC 16

National Director of Public Prosecutions v Hlongwa, National Director of Public Prosecutions v Nkosi and Others (7968/04 , 7970/04) [2006] ZAGPHC 16; [2006] 2 All SA 486 (T) (17 February 2006)

SG

IN THE HIGH COURT OF SOUTH AFRICA
(TRANSVAAL PROVINCIAL DIVISION)
                                    DATE: 17/2/2006
                           CASE NO: 7968/2004 and 7970/2004
REPORTABLE

In the matter between:

THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS                                                  APPLICANT

And

BONGINKOSI FERINGTON HLONGWA              DEFENDANT

And in the matter between:

THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS                                                  APPLICANT

And

AUBREY BAFANA NKOSI                                 DEFENDANT
THEPISO MAUREEN NKOSI                               1^ST RESPONDENT
A B NKOSI CONTRACTORS (PTY) LTD          2^ND RESPONDENT

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
JUDGMENT

PATEL, J

Introduction

[1]      The applicant, the National Director of Public Prosecutions applied ex parte for two provisional orders, one against Bonginkosi Ferington Hlongwa, the defendant who is a radiographer, and the other against Aubrey Bafana Nkosi, the defendant who is a medical practitioner and his wife Thepiso Maureen Nkosi, she is also a medical practitioner and cited as the first respondent and A B Nkosi Contractors (Pty) Ltd, the second respondent. The orders were secured in terms of section 26 of the Prevention of Organised Crime Act 121 of 1998 (POCA). To avoid confusion the case against Mr Hlongwa is referred to as “Hlongwa matter” and against Dr Nkosi is referred to as “Nkosi matter”.

[2]      In both applications, a rule nisi was issued by VAN DER MERWE J, on 30 March 2004, in terms of section 26(3)(a). In terms of the provisional orders both defendants and the respondents were restrained from dealing with specified assets listed in the annexures to the orders. The orders together with the applicant’s founding papers were served on the defendants and the respondents. The defendants evinced their respective intention to oppose the confirmation of the rule. Both of them respectively filed almost similar answering affidavits and discovery affidavits and to which the applicant responded.

[3]      The defendants in their respective answering affidavits did not dispute the allegations in the applicant’s founding papers but broadly attack the constitutionality of Chapter 5 of POCA. They raised two issues: first, their right to remain silent in these proceedings; and secondly, that the provisions set out in Chapter 5 are unconstitutional since they deprived a person of control over his or her property and are not justifiable. Or to limit their application to the value of what is shown to be the benefit derived.

[4]      On the initial return day the rules were extended and both matters were set down on the roll of the opposed motion court of 15 October 2004. On that day the matters came before me. Since the issues were substantially similar, counsel agreed that a single hearing would avoid duplicity. Argument commenced and the rules were further extended to 4 November for further argument.

Structured orders

[5] On that day the rules were once again extended to 25 November 2004 when a brief ex tempore judgment was delivered indicating why the following orders were made:

(a) Hlongwa matter

“1. THAT the provisional restrain order is hereby discharged in respect of:

1.1 The two vehicle referred to in paragraph 2.1 and 2.2 of Annexure “A” (to the order Marked “X” at page 29);

1.2 All equipment and sundry items necessary for the Defendant’s practice as a registered radiographer and household goods (referred to in paragraph 6 of Defendant’s discovery affidavit, at paginated pages 276) are that the Applicant is to return:

1.2.1    the items, referred to in sub-paragraph 1.1 and 1.2 above, to the Defendant;

1.2.2    all household goods (referred to in paragraph 6 of the Defendant’s discovery affidavit at paginated pages 276) to the Defendant; and

1.2.3    the immovable property referred to in annexure “A” to the provisional order “X” (at page 29)

2. THAT the Defendant is to deal with the items referred to in subparagraph 1.1 and 1.2 as follows:

2.1      not to dispose of any of the items referred to above except with authorisation by this Court on reasonable cause shown or upon conclusion of the criminal case or upon an order in terms of section 18 of the Prevention of Organised Crime Act 121 of 1998 (“the Act”)

2.2      the Defendant to keep and/or use the said items until finalisation of the criminal case or until an order in terms of the section 18 of the Act is made;

2.3      the Defendant is to hand over one or more of the said items on a direction or order by the trial court of the criminal case instituted against the Defendant and for the purpose of confiscation order in terms of Section 18 of the Act.

3. THAT the Applicant is to pay the Defendant’s tax costs of this application.”

(b) Nkosi matter

“1. THAT the provisional restrain order is hereby discharged in respect of:-

1.1      All medical instruments and equipment at the defendants and first respondents consulting rooms at 24 Louisa Street, Brackenhurst, Alberton;

1.2      The household goods at the place of residence of the defendant’s situate at 24 Louise Street, Brackenhurst, Alberton;

1.3      All the motor vehicle referred to in paragraphs 3.1, 3.2, 3.4 and 3.5 in Annexure “A” to the order marked “X”;

1.4      The applicant return the assets referred to in sub-paragraphs 1.1, 1.2 and 1.3 of this order;

1.5      That the defendant and the first respondent are hereby ordered to deal with the assets referred to in sub-paragraph 1.1, 1.2 and 1.3 as follows:

1.5.1    not to dispose of the motor vehicle in sub-paragraph 1.3 of this order, except with authorisation of this court on reasonable cause shown or upon conclusion of the criminal case or upon on order in terms of Section 18 of the Prevention of Organised Crime Act 121 of 1998 (“the Act”);

1.5.2    defendant to keep and/or use the said motor vehicle until finalisation of the criminal case or until an order in terms of Section 18 of the Act is made;

1.5.3    defendant to hand over all or any of the assets referred to here above on a direction or order by the trial court at the criminal case instituted against the defendant and for the purpose of confiscation order in terms of Section 18 of the Act.

2. THAT the provisional restraint order is hereby confirmed in respect of the assets attached and/or seized by the curator as referred to in paragraphs 1.1, 1.2. 1.3, 1.4, 1.5, 2, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10 in Annexure “A” to the provisional restraint order of 30 March 2004 marked “X”.

3. THAT each party is to pay his and her costs of this application.”

[6] On 29 September 2005 the applicant delivered a “Request for Written Reasons” for the orders of 25 November 2005. The reasons for the orders are fully set out in this judgment.

Purpose and nature of a restraint order

[7] The purpose and nature of a restraint order is essentially the first step in the recovery of the proceeds of unlawful activities and profits of crime. This was aptly alluded to by Lord WOOLF CJ, in R v Dekkon and Others; R v Mcfaul; R v Knights and Another [2002] EWCD Crim 2954, [2003] 3 All ER 508, (CA) 510e , that:

“[1] One of the most successful weapons which can be used to discourage offences that are committed in order to enrich the offenders is to ensure that if the offenders are brought to justice, any profits which they have made from their offending is confiscated. It is therefore not surprising that Parliament has repeatedly enacted legislation designed to enable the courts to confiscate the proceeds of crime.”

[8] In order to catch the proceeds and profits of major crimes, our Legislature enacted the Prevention of Organised Crime Act of 1988 (POCA). In general terms, the purpose of the statute is to strip a person of assets that are obtained by means of the proceeds of criminal activity. This objective is achieved by means of a confiscation order provided for in part 2 of Chapter 5 Section 18-24. To attain that objective it is necessary to preserve the assets pending a confiscation order by means of a restraint order as provided for in part 3 of Chapter 5 Section 24A-29A. It is this restraint order which is deployed to prevent dealings with designated property and assets. The procurement of the restraint order by the applicant is invasive since it seizes the designated property and assets. Therefore, an appropriate starting point is to briefly allude to the nature of the restraint order, the procedure for its procurement and the remedies available to an affected person against whom a restraint order is granted on an ex parte application, which is a drastic procedure designated to surprise a suspect and enable the applicant to preserve assets before they are whittled away. Undoubtedly the purpose of the restraint order is to preserve the realisable property in respect of which a confiscation order has been made or may ultimately be made, that is, any property of the defendant By virtue of section 12, the reference to a defendant is to the accused or prospective accused in criminal proceedings instituted or to be institute. and the recipients of his or her affected gifts. The order may be made against “any person” Section 26(1). from dealing in manner with “any property” to which the order relates. Such an order may be made against the defendant as well as the recipients of his or her affected gifts. The order need, however, not be made in respect of all realisable property, that is, against all the property of the defendant and the recipients of his or her affected gifts Section 26(2) and (6). But, it may be made against all their property including the property they acquire after the order is made but may be limited to designated property specified in the order.

[9]      The court in exercising its discretion whether or not to grant a restraint order may limit the order to such items of property it may specify. It has a wide discretion to include in the order prohibiting the person against whom it is made from dealing in any way with the property to which it relates and may be subject to such conditions and exceptions as the court may specify in the order Section 26(1). At the time of making the order the court may authorise the seizure of all movables concerned and with any ancillary order it considers appropriate for the proper, fair and effective execution of the order Section 26(8), and also give directions concerning the manner in which the movables seized must be dealt with Section 26(9). The court may in its discretion provide in the restraint order for the reasonable living and legal expenses of the person against whom it is made, including his or her family or household, but only if that person has made full disclosure of his interests in the property subject to the restraint and cannot meet those expenses out of his unrestrained property Section 26(6). The reasonable legal expenses are for any proceedings instituted against him or her in terms of Chapter 5 or any criminal prosecution to which the proceedings may relate Section 26 (6)(b).

[10]     The court is also empowered to make any further order for the discovery of any facts as it considers necessary or expedient with a view to achieving the objects of the restraint order. It may include an order for the discovery of facts relating to any property over which the defendant has effective control and their whereabouts Section 26(7). It may appoint a curator bonis and order the person against whom the restraint is made, to surrender any property to which the order relates to the curator. The court may authorise the curator to perform certain functions in respect of all or any of the property subject to the restraint order on behalf of the person against whom the order is made but subject to the directions of the court Section 28(1). In addition, it may also order the registrar of deeds to make certain restrictive endorsements on the title deeds of the immovable property subject to the restraint order Section 29. The restraining regime is designed to prevent disposing of designated property and thereby preserving the assets for a future confiscation order in the event of a successful criminal prosecution.

Overview of procedural provisions
[11]     Parliament in enacting the legislation embodied in it procedural provisions to enable the High Court to make a restraint order Section 25(1) and 26(1). These provisions provide a convenient and fair machinery to enable the court to exercise its jurisdiction. Colloquially the proceedings under Chapter 5 are referred to as criminal forfeiture proceedings. An application for a restraint order constitutes civil proceedings Section 13(1) and (5) and it is collateral to subsequent criminal proceedings. Therefore, any question of fact must be determined on a balance of probabilities.

[12] It is only the National Director of Public Prosecutions who may way of an ex parte application seek a restraint order Section 26(1). The court, to which an application is made, may make a provisional restraint order with immediate effect coupled with a rule nisi calling upon the defendant to appear and show cause why the restraint order should not be made final. Section 26(3) The order must provide for a notice to be given to persons affected by the provisional order. Section 26(4)(a) Upon an application by the defendant, the court may anticipate the return day to discharge the provisional restraint order if twenty-four hours notice of the application is given to the applicant. Section 26(3)(c) The statutory procedural provisions are in essence the handmaidens of fairness and justice in the face of the invasive nature of the restraint order. What the court is required to do in all the circumstances is to ensure that the prosecuting authority do not ride roughshod over the rights of a prospective criminal defendant or an accused person.

Available remedies
[13] The general interest of the community underlying the POCA is designed to catch the proceeds and profits of crime. The initial step is the preservation of such proceeds and profits before they are siphoned off. However, important, but it will certainly not justify that a restraint order may be used as a shackle that the defendant or any third person may suffer. A prolonged restraint order may lead to injustice. Therefore, Parliament provided a spectrum of available remedies for anyone affected by a restraint order. When the restraint order is made before the defendant is charged the court must rescind the order if he is not charged within a reasonable time. Section 25(2) Any person affected by a restraint order may apply to the court which made the order to vary or rescind a restraint order if it is unduly onerous. If the court is satisfied that the operation of order will deprive the applicant the means to provide for his or her reasonable living expenses and cause undue hardship that he or she will suffer and which outweighs the risk that the property concerned may be dissipated in some way. Section 26(10)(a)(i) and (ii) The court shall rescind the restraint order when the proceeding against the defendant are concluded. Section 26(10)(b) When a court rescinds a restraint order that authorised the seizure of property then it shall make such other order as it considers apposite for the proper, fair and effective execution of the restraint order. Section 26(11) An affected person may also apply to the court at any time to vary or rescind the restraint order for cancellation of any restrictive endorsement on the title deed of the immovable property and deeds registrar shall give effect to the direction.²²⁵ Section 29(7)(b)⁵ The court may at any time vary or rescind an order for the appointment of a curator bonis on the application of any person affected by it.²²⁶ Section 28(2) and (3)⁶ The underlying rational for the availability of a wide spectrum of remedies to an affected person is that the restraint order is primarily for the purpose of aiding the enforcement of confiscation order and collateral to the criminal cause.

Pre-requites for a restraint order

[14] It is common cause that the defendants in both matters were charged with the crime of fraud in that it was alleged that they respectively submitted fraudulent claims to certain medical aid schemes. From the Bar, both counsel indicated that the two defendants were to appear in the Pretoria Magistrate’s Court on trial during March 2005. Since criminal prosecutions were instituted against the defendants, the pertinent question was: when can a High Court make a restraint order. In this regard, the jurisdictional prerequisites for a restraint order are set out in section 25(1)(a). It reads as follows:

“A High Court may exercise the powers conferred on it by section 26(1) –

(a) When –

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

(ii)     either a confiscation order has been made against the 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 the defendant have not been concluded; ...

(b) ...”

[15]     The jurisdiction to make a confiscation order is vested in the criminal court which convicts the defendant qua accused.²²⁷ Section 18(1)⁷ Although a confiscation order may only be made after the defendant is convicted but a restraint order may be made once a defendant has been charged²²⁸ Section 25(1)(a). See para [14] above⁸ or about to be charged,²²⁹ Section 25(1)(b)⁹ or if there are reasonable grounds to believe that a confiscation order may ultimately be made against him or her. The restraint order merely freezes the defendant’s assets and those of the recipients of his or her affected gifts.

[16]     In the matters before me, the applicant sought the confirmation of the provisional restrain orders. The applicant had to show that one, the defendants had been charged. This was common cause. Two, that there were reasonable grounds to believe that (a) the two defendants may be convicted of the crimes with which they were respectively charged; and (b) that confiscations orders may be made against each of them. These are the jurisdictional pre-requites for the granting of a restraint order.

Reasonable grounds for believing
[17]     Before a court exercises its discretion vested by section 26, there must be reason to believe that a confiscation order may be made against the defendant in the event of him or her being convicted. The phrase “reasonable grounds for believing” places a much lighter burden of proof on the applicant than, for instance, “the court is satisfied”.³³⁰ See: Trust Bank van Afrika Bpk v Lief and Another 1963 (4) SA 752 (T); Agro Drip (Pty) Ltd v Fedgen Insurance Co Ltd 1998 (1) SA 182 (W) 186E; Vumba Intertrade CC v Geometric Intertrade CC 2001 (2) SA 1068 (W)⁰ The “reasonable grounds for believing” must have a factual basis for giving rise to such belief.³³¹ Cf: London Estates (Pty) Ltd v Nair 1957 (3) SA 591 (D) 592F¹ A blind belief hearsay evidence , does not suffice.³³² Cf: Native Commission and Union Government v Nthako 1931 TPD 234 at 242²

[18] In the unreported judgment of the National Director of Public Prosecutions v Visser and Others³³³ TPD Case No 6352/2002, 21 December 2001, at page 12³, VAN DER WESTHUIZEN J said:

“The essence seems to section 25(1)(b)(ii), namely that it must appear to the court that there are reasonable grounds for believing that a confiscation order may be made.

The word ‘appear’ probably relates to an onus of some kind. It must on a balance of probabilities look like there are reasonable grounds for believing that a confiscation order may be made. This does not mean that the court must be satisfied, on a balance of probabilities, that a confiscation order will indeed follow. The concept of ‘reasonable grounds’ is not strange or unique in our law. Some objective assessment is necessary. It is not clear to me what role exactly the word ‘believe’ plays in this regard.

Having said all the above, I agree with the applicant that the task of the court is not at this stage to conduct a criminal trial. The court certainly does not have to be convinced beyond reasonable doubt of a person’s guilt. There must also be reasonable grounds for believing that the trial court may find, when the inquiry is made, that the person has benefited. The court does not have to be able to calculate the benefit accurately.

One of the central questions is what the phrase ‘may be made’ (as opposed to will be made, or will probably be made, or is likely to me made, etc) may mean. If this phrase is separated from the preceding part of the sentence, it simply means that it is possible that a confiscation order may be made, or even that it is theoretically possible. This very liberal interpretation of the phrase ‘may be made’ would be so wide that it would make little proper sense in the context of this and probably several other cases. A restraint order will then almost always inevitably have to follow once a person is charged or to be charged, for example with theft. If one is charged, after all, it is theoretically possible that he or she will be convicted. And if it is theft that is at stake, there are grounds to believe that the thief has benefited. Theft is after all a deed of greed.

The word ‘may’ has to be read with the concept of ‘reasonable grounds’. If ‘may’ simply means the mathematical or theoretical possibility for it to happen, there is little scope for reasonableness and for any adjudication. In my opinion the term ‘may’ is deliberately wide to make the intention of the legislator clear, namely that a possibility would suffice and that a court does not have to be convinced beyond reasonable doubt, or even on a balance of probabilities, that a conviction will follow. Most courts would always say that it is not possible to look into the future and to prejudge a criminal trial still to come. But, perhaps because ‘may’ is linguistically at least potentially so wide that it would almost inevitably render the clause meaningless or unconstitutional, the court still has a discretion.

Therefore a number of factors are to be taken into account in exercising the court’s discretion. One factor must be the apparent strength or weakness of the expectation that a conviction will follow and that the person has benefited, so that the trial court may exercise its discretion to grant a confiscation order. This relates to specific allegations of criminal conduct, but also to the case as a whole. The apparent value and strength of the evidence against a respondent should be taken into account, which would include the availability of evidence needed, the credibility etc of witnesses, as well as the complexity of charges, bearing in mind that the eventual onus of proof in a criminal trial is one beyond reasonable doubt. In other words, I may suspect that a crime has been committed and persons have benefited. I may even be convinced, on the evidence before me, on a balance of probabilities, that this is the case. But I may conclude that in view of the eventual onus of proof it is extremely unlikely that a conviction will follow. Again it must be emphasized though that the idea is not to conduct a criminal trial on paper.”

[19] Subsequently, VAN DER WESTHUIZEN J in National Director of Public Prosecutions v Alexander David and Others³³⁴ 2001 (2) SACR 1 (TPD) 8c/d – h/i⁴ stated:

“It must therefore appear to the court that there are reasonable grounds, obviously at the time of the application, to believe that a confiscation order following a conviction may – and not will – be made. Naturally the law of evidence applies. However, the court hearing the restraint order application clearly does not have to be convinced in terms of any particular burden of proof that a conviction and confiscation will follow. The court has to form an opinion based on appearance and reasonableness as to future possibilities.

I, respectfully, am not of the opinion that it could be argued on the wording of s 25(1) that a court has to be satisfied on a balance of probabilities that a conviction and confiscation order will indeed follow. Perhaps it could be said that it must, on a balance of probabilities then, appear to the court that there are reasonable grounds for believing that a confiscation order may follows.

In forming such an opinion or a belief a court obviously has to take into account that the onus of proof in the criminal trial will indeed be on the State, and that it is beyond reasonable doubt. What does this say regarding the admissibility of for example hearsay evidence? Hearsay evidence is generally inadmissible, but it is well known that there are exceptions. These have to be applied within the context of a particular case and situation. By its nature the evidence available to a court in a restraint order application may not necessarily be as direct and concrete as could be expected to secure a criminal conviction. After all, s 25(1)(b) even allows for this procedure where a court is satisfied that the person is still to be charged with an offence. It might sometimes be unavoidable to take some hearsay evidence into account. Certainly support of any hearsay allegations in the relevant affidavits would be most valuable, inter alia in view of the drastic consequences of this procedure. It would be highly undesirable to grant an order in an application merely based on wild and unsupported hearsay allegations.”³³⁵ My italics for emphasis⁵

[20] In an application for a restraint order in section 26 proceedings the applicant is liberated from proving that a confiscation will be made. All that is required is reasonable grounds of believing that the criminal court may and not necessarily will make a confiscation order.³³⁶ See: National Director of Public Prosecutions v Kyriacou 2004 (1) SA 379 (SCA) para [10] at 385; para [49] at 395G-H.⁶ In National Director of Public Prosecutions v Phillips and Others³³⁷ 2002 (4) SA 60 (W) 81D/E – G/H ⁷ HEHER J (as he then was) said:

“[12] In my view an application for a restraint order is analogous (although not identical) to an application for an interim interdict and attachment pendente lite. In so far as such relief contains elements of finality, the legislature could never have intended that it should be defeated by reason of conflicts of fact per se. Nor would a reference to evidence be appropriate: that might well anticipate the enquiry at the criminal trial and impinge on the right of silence. The prima facie case is proof of a reasonable prospect of obtaining both a conviction in respect of the charges levelled against the defendant and a subsequent confiscation order under section 18(1). It is appropriate in determining whether the onus has been discharged to apply the long accepted test of taking the facts set out by the applicant together with any facts set out by the respondent which the applicant cannot dispute and to consider whether, having regard to the innate probabilities, the applicant should on those facts obtain final relief at a trial (for this purpose, the confiscation hearing). The facts set up in contradiction by the respondent should then be considered and, if serious doubt is thrown upon the applicant’s case, he cannot succeed.”

Approach to factual disputes in section 26 proceedings

[21] The approach adopted by HEHER J was endorsed by the Supreme Court of Appeal in Phillips and Others v National Director of Public Prosecutions³³⁸ 2003 (6) SA 447 (SCA) 452 and 453⁸, HOWIE P noted:

“[17] Turning the respondent’s argument, its starting point was that HEHER J had rightly held that a restraint order was analogous to an application for an interim interdict or for attachment of property pending litigation.

I may point out that HEHER J did not actually hold that a restraint order is analogous to an interim common law restraint pendente lite. He merely commented ... that there is a similarity.”

“[20] Counsel for the respondent is right, in my view, in submitting that a restraint order is only of interim operation and that, like interim interdicts and attachment orders pending trial, it has no definitive or dispositive effect as envisaged in Zweni. Plainly, a restraint order decides nothing final as to the defendant’s guilt or benefit from crime, or as to the propriety of a confiscation order or its amount.”

[22] In National Director of Public Prosecutions v Kyriacou,³³⁹ 2004 1 SA 379 (SCA) 385. My emphasis in italics⁹

MALAMBO AJA (as he then was) said:

“[10] ... Section 25(1) (a) confers a discretion upon a court to make a restraint order if, inter alia, there are reasonable grounds for believing that a confiscation order may be made ... While a mere assertion to that effect by the appellant will not suffice (National Director of Public Prosecutions v Basson 2002 (1) SA 419 (SCA); 2001 (2) SACR 712 para [19] at 428B-C) on the other hand appellant is not required to prove the fact that a confiscation order will be made, and in those circumstances there is no room for determining the existence of reasonable grounds for the application of 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.”

[23] NEGPEN J in National Director of Public Prosecutions v Rudman and Others⁴⁴⁰ ECD Case No 15/2004 (undated).
⁰, followed the approach enunciated in Kyriacou, supra, and noted:

“[15] ... The information referred to would only have indicated that second defendant has consistently denied having been involved in any criminal activity and would have provided details of his defence. This, accordingly, would have given rise to a dispute of fact. It is not appropriate for a court, when considering whether or not to grant a provisional restraint order, or for that matter a final restraint order, to attempt to resolve disputed facts in relation to the guilt or otherwise of a defendant. This will be done by the trial court. Furthermore, the usual rule in motion proceedings’ as set out in Plascon-Evans Paints Limited v Van Riebeek Paints (Pty) Limited 1987 (3) SA 623 (AD), does not apply when it comes to determining whether or not reasonable grounds exist for believing that a confiscation order may be made (see National Director of Public Prosecutions v Kyriacou 2003 (2) SACR 524 (SCA) at 529f-h [10]).”

[24] In an application for a restraint order a prima facie case is proof of a reasonable prospect of obtaining a conviction in respect of the charges levelled against the defendant and a subsequent confiscation order. To determine whether the onus has been discharged the Plascon-Evans test only becomes applicable where the version put forward by the applicant is not disputed or agreed upon by the respondent. In the two matters the applicant purported to disclose the nature and tenor of available evidence which is substantially hearsay as it will become apparent later in this judgment. The defendants simply elected to make a bold denial. They failed to put their version before the court, except for asserting their fundamental right to silence. Notwithstanding the constitutional issue raised by the defendants the court was constrained by the applicant’s versions which was substantially based on unattested hearsay information.

Applicant’s version
[25] In both matters the deponent to the founding affidavits is Advocate Juliana Galetlane Rabaji, the Special Director of Public Prosecutions. She has no personal knowledge of any of the jurisdictional requirements for the restraint orders. Regarding the first requirement, she relied on the affidavit by Mbongo Marcus Koyana employed by the National Prosecuting Authority as a state advocate, and pertaining the second requirement she relied on the affidavit by Helen Gugu Motepe, a chartered account and employed as a manager at Pricewaterhouse Coopers Forensic Service (Pty) Ltd. The latter stated that on her examination of the “various evidentiary materials” she was of the opinion that two types of fraudulent activities occurred. These were fictitious claims that were submitted to the medical aid funds for consultations with the defendants whilst the specific member or his or her dependants were not consulted at all. According to Motepe the submissions of claims were with the assistance of the members of the medical aid funds. It was represented that the defendants were consulted but a fictitious charge was raised and a portion of it was paid to the member. She deposed that she had the opportunity to examine “the evidence against the various claimants”. Rabaji relied in both matters on Motepe’s affidavits. Her allegations that it was likely that fraud might be substantially greater and that she was not yet in a position to state the exact extent of the fraudulent claims. It was apparent that Rabaji’s assertions were factually baseless and incorrect as it will become clearly apparent soon.

(a) “Cash loan”
Hlongwa matter

[26] In support of the allegation of the “cash loan” claims pertaining to Hlongwa, the applicant relied on the affidavits by Ncgobo and Onica Nkosi. In paragraph 7 (p 89) Ncgobo explained “the process”. He did not assert that he had personal knowledge of the allegations made. In light of his statement that he never met any of the patients, however they would visit the clinic without his knowledge. Thus, he could not have had personal knowledge. At best these allegations are hearsay. There was no basis advanced by the applicant to admit such hearsay evidence. The allegations were exstreamly vague by simply referring to “a lot of people” but not identifying a single person. Nor were any of these persons identified in the applicant’s papers. This was particularly startling since the investigation commenced on 20 December 2002. Ncgobo only deposed to his affidavit on 10 June 2003 that was nine months prior to lauching application in March 2004. The vague allegations did not appear to implicate the defendant, Hlongwa. There was a mere reference to people visiting “the surgery” and people visiting “the doctor”. It was not disputed that there were several medical practitioners at the specific practice. Nkosi’s affidavit did not even mention the defendant. The only reference to the defendant appeared in paragraph 14 of the affidavit. It was a single sentence dealing with the allegation against the defendant that “within three to four months, there were patients coming and informing me that they had appointments with her in connection with cash requests.” There was no elucidation what these alleged cash requests were. This certainly was not evidence proving, prima facie, any of the requirements for fraud. In any event this allegation was simply hearsay. There was no basis why this court ought to have admitted such unsubstantiated hearsay information. There were material contradictions between the affidavits of Ncgobo and Nkosi. Both alleged that it was their duty to usher patients into the defendant’s room. Ncgobo alleged that he processed some of the defendant’s claims, whereas Nkosi stated that a certain Nhlanhla processed the defendant’s claims. The applicant, furthermore, failed to indicate a single claim that was lodged which allegedly fell into the category of “cash loan” claims. The applicant’s entire case pertaining to “cash loan” claims was based upon unsubstantiated allegations of hearsay by two individuals who materially contradicted each other.

Nkosi matter

[27] Regarding Dr Nkosi, almost a similar pattern prevailed as in the case of Hlongwa. In support of the allegation of the “cash loan” claims, the applicant relied on the affidavit by Friedland and Onica Nkosi. Friedland’s affidavit contained no incriminating evidence against the defendant. From Onica Nkosi’s affidavit it was clear that she had no personal knowledge of any activities that could be remotely characterised as fraud. She merely alleged that patients told her that they wanted to speak to Dr Nkosi about cash. But she conceded that she was not aware “how much cash was paid or requested”. According to her Matthews Xishe handled the claims. Further, the applicant failed to indicate a single claim lodged which it alleged fell into the category of “cash loan” claims.

[28] The evidence presented by the applicant regarding “cash loan” claims in respect of both defendants was based upon unsubstantiated allegations of hearsay by certain individuals. There was no reasons advanced by the applicant why such hearsay should have been admitted. In the absence of such reasons this court found that the applicant did not make out a case.

(b) Fictitious claims

[29] The applicant’s allegation that fictitious claims were submitted in both matters. In support of this allegation the applicant annexed affidavits by eight Medcor Medical Aid Scheme members regarding the Hlongwa matter and by two members of the same scheme pertaining to the Nkosi matter.

Hlongwa matter

[30]     Mpendu alleged that he reviewed annexure MG1 which was a summary of claims submitted by the defendant to MediHelp and MX Health. In this regard, he did not aver that he had personal knowledge. Moreover, he did not reveal the source of his information. Mpendu’s allegation was that his dependant’s did not consult with the defendant because he “would also have known” if any of his dependants had seen a doctor. He did not indicate which of his dependants consulted the defendant and when such a consultation took place. However, according to him he did not know who B Hlongwa was and that he was never approached by anyone to give his medical aid particulars in return for cash. This begs the question as to how these particulars would have been available to the defendant in order to submit allegedly fictitious claims. This aspect was not addressed at all by the applicant.

[31]     Similarly, with regard to the deponents’ knowledge of the claims submitted, was equally applicable to the other seven Medcor members, except that Sibanyoni identified a Mr T Maiwashe as the person who showed him the annexures to his affidavit. Further, a bald allegation was made about two of the six visits. One Mogomotsi indicated that over the relevant period she was a dependant on her deceased husband’s membership of Medcor Medical Aid Scheme. She alleged that there were certain charges for her son and others for herself but there was no elucidation as to how she came make such an allegation. She conceded that she had no knowledge as to whether or not her deceased husband had seen the defendant. The affidavit by Khoza is inherently contradictory and ought to be ignored. He alleged that he did not know who B Hlongwa was. He conceded that the defendant legitimately raised charges against his medical aid number on two occasions. He had no knowledge of it, his dependants saw the defendant. The affidavit by Madlopha was not commissioned at all. However, only a bald statement was made that two of the nine claims over a period of a year were not correct. The affidavit by Mamaru did not make much sense since he purported to confirm that two specific claims were not “legitimate claims”. However, two dates did not correspond with any of the dates of the nine claims. Further, Dladla made a bald allegation that two of the five claims listed were not in respect of consultations by him or his dependants. And Molaudi alleged that he never consulted with the defendant and did not know him. He confirmed that he was never approached by anyone. Once again there was no indication as to how the defendant would have been in a position to claim against Molaudi’s medical aid number.

[32]     The affidavit of Wessel van Vuren was of no assistance. The assertion made by Motepe that Van Vuren stated that Medcor made payments to the defendant and that documents in support were supplied, however, this was not supported by the affidavit of Van Vuren. The affidavit by Lesomo appeared to be an attempt to show that the defendant received payment from MX Health. In support of the allegation that claims were received from the defendant under practice number 3901688. But, from annexure “B” it was apparent that another person, a certain Mrs P A Shabalala also made use of the same practice number. Nowhere in the applicant’s papers, it indicated how it ascertained that claims were made by the defendant and not by Shabalala.

Nkosi matter

[33] Likewise, the applicant alleged that fictitious claims were also submitted by Dr Nkosi. In support of this allegation affidavits of two members of Medcor Medical Aid Scheme were annexed to the applicant’s papers. Both Motepe and Wessel van Vuren, employed by Medihelp, alleged that they reviewed the annexures, allegedly summaries of claims submitted by the defendant to MediHelp and MX Health. In this regard it appeared to the court that they had no personal knowledge since the source of the information was not disclosed nor was there an affidavit confirming the content of the documents that were attached. Khoza conceded that he consulted with the defendant but he did not consult the defendant “for the procedures as indicated”. This bald allegation did not show any intention to defraud on Dr Nkosi’s part. Mathibako made similar references in his affidavit. Neither of the affidavits of Khoza and Mathibako were commissioned as required by the regulations in terms of section 10 of the Justices of the Peace and Commissioners of Oaths Act 16 of 1963. The affidavit of Wessel van Vuren was no assistance. The claims made by Motepe that Van Vuren stated that Medcor made payments to the defendant and that documents in support thereof were supplied, was not supported by the affidavit of Van Vuren. Lastly, the affidavit by Lesomo, employed by MX Health appeared to be an attempt to show that the defendant received payment from MX Health, however, this was not linked to any alleged fraudulent transactions.

Thrust of the defendants’ argument
[34] The applicant needed to disclose the nature and tenor of the available evidence in order to establish a reasonable prospect of obtaining a conviction and a confiscation order.⁴⁴¹ National Director of Public Prosecutions v Tam and Others 2004 (1) SACR 126 (W)¹ The main thrust of the argument advanced by Mr Bester, on behalf of the defendants, was that the applicant’s conduct in the presentation of both matters was characterised by inaptitude or disdain of the basic rules of procedure and evidence. In ex parte applications which are likely to have severe consequence to the defendants, the applicant can not simply be allowed to rely on unattested and hearsay information. JOFFE J in Swissborough Diamond Mines v Government of RSA⁴⁴² 1999 2 SA 279 (T) at 345F² admonished:

“Regard being had to the functions of affidavits, it is not open to an applicant or a respondent to merely annex to its affidavit documentation and to request the court to have regard to it.”

[35]     In both matters the applicant relied first, upon supporting affidavits which were defective in that they did not comply with the requirements for the commissioning of an affidavit, secondly on hearsay information and thirdly on purported expert evidence.

         (c)      Commission of affidavits
[36]     The applicant relied upon the supporting affidavits obtained in terms of section 28(6) of the National Prosecuting Authority Act 32 of 1998. This section requires that the oath or affirmation must be administered by the Investigating Director. This requirement was not met in any of the supporting affidavits and as such the applicant could not rely on their contents. Further, the requirements for the commissioning of an affidavit are set out in the Justice of the Peace and Commissioners of Oaths Act 16 of 1963 and the regulations thereunder.⁴⁴³ GN R1258 GG 3619 of 21 July 1972 (Reg Gaz 1649), as amended by GN R1648 GG 5716 of 19 August 1977 (Reg Gaz 2516), GN R1428 GG 7119 of 11 July 1980 (Reg Gaz 3030) and GN R774 GG 8169 of 23 April 1982 (Reg Gaz 3411).³ The regulations require that:

“4(1) Below the deponent’s signature or mark the commissioner of oaths shall certify that the deponent has acknowledge that he knows and understands the contents of the declaration and he shall state the manner, place and date of taking the declaration.

(2) The commissioner of oaths shall –

(a) sign the declaration and print his full name and business address below his signature; and

(b) state his designation and the area for which he holds his appointment or the office held by him if he holds his appointment ex officio.”

[37] It was clearly apparent that there was non-compliance with regulation 4(2). There was nothing before court indicating that the affidavits were deposed to before a commissioner as required in regulation 4(1). Further, there was an element of uncertainty as to whether or not either an oath or an affirmation was administered to the deponents. Thus, a document purporting to be an affidavit is not evidence.⁴⁴⁴ Caldwell v Chelcourt Limited 1965 1 SA 304 (N) 307E⁴ Regulation 4 has been held to be directory, however, the discretion is only exercised in favour of accepting the affidavits where substantial compliance has been proved.⁴⁴⁵ S v Munn 1973 3 SA 734 (NC) 738A – C and S v Msibi 1974 4 SA 821 (T)⁵ The applicant did not seek condonation for the defects.⁴⁴⁶ Swart v Swart 1950 1 SA 263 (O)⁶ The defects, therefore, could not to be condoned.

(d) Inadmissible hearsay

[38] Our courts have declined to countenance the admission of hearsay evidence unless there is urgency or special circumstances to warrant the acceptance of such evidence⁴⁴⁷ Galp v Tansley NO and Another 1966 4 SA 555 (C) 558 & 560; Southern Pride Foods (Pty) Ltd v Mohidien 1982 3 SA 1068 (C) 1071H – 1072B; Cerebos Food Corporation Ltd v Diverse Foods SA (Pty) Ltd and Another 1984 4 SA 149 (W) 157E-H; Swissborough Diamond Mines v Government of RSA 1999 2 SA 279 (T) 336G-J⁷. The applicant’s case against the defendants was substantially based on hearsay information. Section 34(1) of the Law of Evidence Amendment Act 45 of 1988 provides that a statement made by a person in a document tending to establish that fact shall be admissible as evidence provided that the person who made the statement had personal knowledge of the matters dealt with in the statement and that person is called as a witness unless he is dead or unfit by reason by his bodily or mental condition or he is outside of the Republic and it is not reasonably practicable to secure his attendance or all reasonable efforts to fine him were without success. Section 3 of the Law of Evidence Amendment Act provides that hearsay evidence shall not be admitted as evidence in any proceedings unless the parties agreed to the admission thereof or the person upon whose credibility the probative value of such evidence depends testifies him – or herself or the court, having regard to the factors set out in the section, is of the opinion that such evidence should be admitted in the interests of justice.

[39] Neither Advocate Rabaji in the founding affidavits claimed that hearsay evidence should be admitted, nor did Mrs Biseswar contend in argument that these matters were of exceptional nature and special circumstances prevailed that justified in admitting hearsay evidence. In Southern Pride Foods (Pty) Ltd⁴⁴⁸ 1982 3 SA 1068 (C) 1071C – 1072E, my emphasis in italics⁸, ODES AJ said:

“[T]he applicant was not entitled to rely on hearsay evidence in launching the application, and the passages referred to later in this judgment must accordingly be struck out.

Even if I am incorrect in the conclusion arrived at in regard to the urgency of the matter I am of the view that the hearsay passages should in any event be struck out. After holding that our Courts have permitted hearsay evidence to be admitted in affidavits in interlocutory matters of an urgent kind, THERON J in Galp’s case supra held at 559G:

‘But one important point emerging from the cases which I have enumerated in the proceeding paragraph is this, viz that our Courts have consistently refused to countenance the admission as evidence – for any purpose whatever – of any statement embodying hearsay material, save where such statement has properly been made the subject of an affidavit ... of information and belief, ie save where the deponent ... has not only revealed the source of information concerned but in addition has sworn ... that he believes such information to be true and furnished the ground for his belief.’

In Mia’s case supra, SCHREINER J (as he then was) dealt specifically with the necessity for averring in applications of urgency containing hearsay statements that the deponent believes in the truth of the statement in question. At 104 he expressed himself as follows:

‘It seems to me, however, that the foundation for the admission in application of this sort of what would otherwise not be evidence is the deponent’s sworn or solemnly affirmed statement that he is informed and believes that certain facts exist. We have no rule requiring any particular form to be used and it may be assumed that any language showing that the deponent affirms his belief in the information would suffice. But it would not in my view be sufficient for the deponent merely to set out statements made by other persons without indicating whether he believes them to be true or not. The deponent’s assurance that he believes the statements to be true may not provide a strong guarantee that they are true but it is the least that should be required of the deponent.’

See also Harris’ Executor v Weinberg 1938 CPD 134; Mall (Cape) (Pty) Ltd v Merino Ko-operasie Bpk 1957 (2) SA 347 (C) at 353.

The Courts were not indulging in formalistic fantasies in requiring an affidavit or affirmation ‘of information and belief’ for the admission of hearsay statements. Sound and practical reasons exist for the twofold requirement. The source of information must be disclosed to enable a respondent, confronted by an allegation normally inadmissible as hearsay, to check its accuracy. And when the Courts prescribe the disclosure of the source of information, they mean, in my view, a disclosure with a degree of particularity sufficient to enable the opposing party to make independent investigations of his own, including, if necessary, verification of the statement from the source itself. General statements as to source such as ‘one of the respondent’s creditors’ will not suffice to constitute an adequate compliance with the requirements. Such statements tell the opposing party nothing and are no more a disclosure of source than the well-worn phrase, ‘I have been informed’.

The statement on oath or the affirmation by a deponent that he believes the truth of the hearsay statement is equally essential for the reasons stated by SCHREINER J in Mia’s case supra and quoted above. If, moreover, the deponent is unable to state that he believes the truth of the hearsay information furnished to him, he can hardly be permitted to rely upon it for the relief which he seeks.

I am therefore unable to agree with the contention that the failure to comply with the above requirements for the admission of hearsay statement is a mere technicality.”

[40] Moreover, in both matters the alleged factual inaccuries in the hearsay depositions certainly reflected on the veracity of the applicant’s witnesses. This was especially prejudicial to the defendants since they were unable to properly rebut hearsay evidence under the circumstances. This was certainly the critical moment for a final adjudication pertaining to the restraint orders and the applicant’s replying affidavits did not seek to remedy the deficits in the presentation of its case against both defendants.

(e) Purported expert evidence.

[41] A further problem was regarding Motepe’s affidavit upon which Rabaji relied. A witness may testify in one of two capacities, either he or she is a person who has knowledge of certain facts which is placed before court in support of a claim, or as an expert qualified in relation to a specific specialised subject and is competent to convey his or her expert opinion to the court as well as the basis upon which his or her opinion has been formed and what documents or other sources have been considered in forming the opinion. It is clear from the affidavit by Motepe that she is not a person with knowledge of the events upon which the applicant attempted to rely. The only other possibility was that Motepe was endeavouring to depose to an affidavit as an expert. There was lack of clarity on this aspect. However, as an expert the test of the admissibility of the opinion of an expert is whether or not the court can receive appreciable assistance from him or her on a particular issue. In other words, the test is a relative one depending upon the particular subject and the particular witness with reference to that subject. Otherwise the evidence would be supererogatory and superfluous and, therefore I was not admitted.⁴⁴⁸ Gentiruco AG v Firestone SA (Pty) Ltd 1972 1 SA 589 (A) 616A-J; Ruto Flour Mills Ltd v Adelson (1) 1958 4 SA 235 (T)⁸ An expert’s opinion can only be admissible where by reason of his or her special knowledge and skill that he or she is in a better position to draw inferences than the judicial officer. The expert witness is required to state his or her opinion either as an inference from facts within his or her own knowledge or upon the basis of facts proved by others. In both matters, Motepe clearly did not have any personal knowledge as a bases for her opinion. Thus, the only possibility was limited to drawing inferences from what was alleged by others. The crucial question was, whether there was evidence upon which to reasonably believe that the defendants may be convicted and that a confiscation order may be made against them. The inferences drawn by Motepe could not assist the court. In addition, the evidence upon which Motepe’s opinion was based was not proven because it was substantially hearsay. The applicant attempted to circumvent the rules of evidence by trying to rely on expert opinion to persuade the court of the defendants’ misdemeaner. There is absolutely no basis in our law nor any room for such a principle. Mr Bester correctly submitted that such a principle would make a mockery of an accused person’s right to a fair trial which includes the right to be presumed innocent.⁴⁴⁹ Section 35(3)(h) of the Constitution ⁹ The court was not concerned about an accused person’s guilt or innocence in the restraint order proceedings.

Conclusion

[42]    Thus, there was no evidence of any cogency that pointed that the provisional restraint orders should be made final. Nor did Mrs Biseswar contended that the interest of the state was being prejudiced if the orders were not confirmed. However, inspite of the defects and weakness in the applicant’s case against both defendants, the court was inclined to structure appropriate orders.

[43]     What was crucial, was that the defendants were charged with the crime of fraud and were to appear on trial in the Pretoria Magistrate Court during March 2005. It was against this pending prosecution and what they deposed to in their respective discovery affidavits that the court structured the orders so that there could be no disposition of property without the authorisation of the court or upon the finalisation of the criminal prosecutions or until a confiscation orders were made. Further, in the case of Hlongwa an immovable property was already sold in execution on 26 April 2004 and it was not necessary to confirm the restraint of a property that was already disposed of. Broadly, the orders were tailored so that on the one hand to preserve the property even in the hands of the defendants pending the out came of the criminal prosecution and on the other hand not to unduly deprive the defendants and their families from using the property with least restraint but adequately protect from disposition.

[44]     In structuring the two orders, I was mindful of the following dicta by ACKERMANN J in Fose v Minister of Safety and Security⁵⁵⁰ [1997] ZACC 6; 1997 3 SA 786 (CC) 799F-G/H and 826H-I. See also Pretoria City Council v Walker [1998] ZACC 1; 1998 2 SA 363 (CC) para [96]; S v Z and 23 similar cases [2004] 1 All SA 438 (E) paras [37] – [38]⁰:

“[19] Appropriate relief will in essence be relief that is required to protect and enforce the Constitution.²⁰ Depending on the circumstances of each particular case the relief may be a declaration of rights, and interdict, a mandamus or such other relief as may be required to ensure that the rights enshrined in the Constitution are protected and enforced. If it is necessary to do so, the courts may even have to fashion new remedies to secure the protection and enforcement of these all-important rights.

.....

[69] In our context an appropriate remedy must mean an effective remedy, for without effective remedies for breach, the values underlying and the right entrenched in the Constitution cannot properly be upheld or enhanced. Particularly in a country where so few have the means to enforce their rights through the courts, it is essential that on those occasions when the legal process does establish that an infringement of an entrenched right has occurred, it be effectively vindicated. The courts have a particular responsibility in this regard and are obliged to ‘forge new tools’ and shape innovative remedies, if needs be, to achieve this goal.”

[45] Inspite of the invasive nature of restraint orders and the shortcomings in the applicants’ case, the court exercised its wide discretion, by not simply discharging or confirming the rules but striking a fair balance between the legitimate objectives of the POCA and the rights of the defendants. Under the circumstances, both orders were structured as responsive and effective measures within the bounds of the rule of law.

                                                                        E M PATEL
                                                      JUDGE OF THE HIGH COURT

Heard on: 15 October; 4 & 25 November 2004
For the Applicant: Adv P Biseswar
Instructed by: The State Attorney, PTA
For the Defendants: Adv A Bester
Instructed by: Messrs Glover Inc, JHB
Date of Judgment: 17 February 2006