CONSTITUTIONAL COURT OF SOUTH AFRICA .CONSTITUTIONAL COURT OF SOUTH AFRICA ... [2013] ZACC 2 In the...

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Transcript of CONSTITUTIONAL COURT OF SOUTH AFRICA .CONSTITUTIONAL COURT OF SOUTH AFRICA ... [2013] ZACC 2 In the...

  • CONSTITUTIONAL COURT OF SOUTH AFRICA

    Case CCT 56/12

    [2013] ZACC 2

    In the matter between:

    NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant

    and

    MEIR ELRAN Respondent

    Heard on : 15 November 2012

    Decided on : 19 February 2013

    JUDGMENT

    JAFTA J (Moseneke DCJ, Nkabinde J and Yacoob J concurring):

    Introduction

    [1] The interpretation and application of section 44 of the Prevention of Organised

    Crime Act1 (POCA) is at the heart of this application for leave to appeal. The National

    Director of Public Prosecutions (NDPP) seeks leave to appeal against the judgment of the

    1 121 of 1998.

  • JAFTA J

    2

    Full Court of the South Gauteng High Court, Johannesburg (Full Court) which dismissed

    the NDPPs appeal with costs. The NDPP had appealed against an order that directed her

    to pay legal costs incurred by Mr Meir Elran (respondent) from property held in terms of

    a preservation of property order.

    [2] POCA authorises a High Court to grant a preservation order in respect of property

    believed on reasonable grounds to be proceeds or instrumentalities of criminal offences.2

    An order of this kind preserves property to which it applies until a forfeiture order is

    granted, a request for forfeiture is refused or the preservation order lapses.3 The effect of

    a preservation order is that no one may deal in any manner with property forming the

    subject matter of the order unless authorised by the High Court which has issued the

    order.

    2 Section 38(2) of POCA provides:

    The High Court shall make an order referred to in subsection (1) if there are reasonable grounds

    to believe that the property concerned

    (a) is an instrumentality of an offence referred to in Schedule 1; or

    (b) is the proceeds of unlawful activities; or

    (c) is property associated with terrorist and related activities.

    3 Section 40 of POCA provides:

    A preservation of property order shall expire 90 days after the date on which notice of the making

    of the order is published in the Gazette unless

    (a) there is an application for a forfeiture order pending before the High Court in respect of

    the property, subject to the preservation of property order;

    (b) there is an unsatisfied forfeiture order in force in relation to the property subject to the

    preservation of property order; or

    (c) the order is rescinded before the expiry of that period.

  • JAFTA J

    3

    [3] In terms of section 44 of POCA, a High Court may permit payment of reasonable

    living and legal expenses from the property that is subject to a preservation order.

    Facts and litigation history

    [4] On 6 March 2006 the NDPP obtained an order that preserved property of the

    respondent. The order was, however, not confined to the property described in it but

    covered any other property held by [the respondent], whether in his own name or not,

    including funds transferred from South Africa to any overseas account. This order

    required the respondent to surrender his entire estate to a curator bonis. The order

    authorised any person affected by it to approach the Court that granted it for its

    reconsideration, provided the NDPP and other parties mentioned in the order are given

    notice of no less than 72 hours. The preservation order afforded any party intending to

    oppose forfeiture of property to the State, 14 calendar days within which to deliver a

    notice of opposition to the NDPP.

    [5] The respondent delivered to the NDPP and lodged at the High Court the notice to

    oppose forfeiture. He then asked the curator bonis to provide him with reasonable living

    and legal expenses. In response the curator demanded to be furnished with certain

    information. The respondent submitted the information but the curator was not satisfied

    by it. The curator pointed out that payment for expenses in question would be considered

    once further information was submitted. This information related to a sale agreement in

  • JAFTA J

    4

    respect of the respondents shares in the Mackenna Game Farm and the paperwork on

    Body Rush LLC in which the respondent held half of the shareholding.

    [6] Meanwhile the NDPP launched forfeiture proceedings in July 2006. The

    respondent is yet to file opposing papers in those proceedings. Apparently the delay has

    been caused by the curators failure to pay for legal expenses.

    [7] The respondent instituted an application in the High Court seeking payment of his

    monthly living expenses and a sum of R250 000 for legal fees. The NDPP opposed it. In

    a judgment delivered in March 2007, the application was dismissed on technical grounds.

    An appeal was not pursued because the respondent could not pay legal fees.

    [8] The respondent engaged new attorneys and instituted a fresh application for the

    same relief, except that he excluded the claim for living expenses. The second

    application was launched in June 2009. In support of the claim for legal expenses, the

    respondent relied on the affidavits which were used in the earlier, unsuccessful

    application. These affidavits set out in detail his financial position as it was in 2006. The

    respondent averred that he had acquired no assets since the date of the preservation order.

    [9] In opposing this application, the NDPP disputed the need for the relief claimed and

    raised a number of defences. First, the NDPP contended that the respondent has property

    that is not subject to the preservation order and from which he could meet the legal

  • JAFTA J

    5

    expenses. In support of this leg of the defence, the NDPP relied on inferential reasoning.

    The NDPP pointed out that the respondent had been able to support himself and his

    family for a period of three years since the preservation order was granted. With

    reference to the respondents monthly living expenses, which were estimated at

    R100 000, it was claimed that he could not afford these expenses without a substantial

    source of income, which he has failed to disclose.

    [10] Second, the NDPP asserted that the respondent had failed to make a full disclosure

    of his interest in property. Specific reference was made to the following:

    R5.4 million received by the [respondent] as part payment of the full purchase price of

    R12.5 million for the sale of his shares in Mackenna Game Farm. Approximately R1.7

    million deposited into the account of SA Homestead during the period June 2005 and

    January 2006, with the [respondent] being the only signatory on the account. Foreign

    transfers amounting to $22 000, transferred by the [respondent] to various bank accounts

    in Israel, one of which is in the name of Ben Hamo, the original name of the

    [respondent] prior to his name change. Approximately R1.1 million transferred into the

    bank account of Daria Bachtas, the [respondents] wife.

    [11] Third, the NDPP contended that the respondent failed to provide a sworn and full

    statement of his assets and liabilities. She pointed out that the respondent had attached to

    his founding affidavit a list of liabilities only, which excluded assets and that list, it was

    contended, did not constitute a sworn statement as required by the relevant provision of

    POCA.

  • JAFTA J

    6

    [12] Fourth, the NDPP submitted that the application should be dismissed on the

    ground that the respondent failed to comply with the preservation order which required

    him to continue making monthly payments under the mortgage bond he held at the time

    the order was made. It was also stated that in non-compliance with clauses 10 and 14 of

    the preservation order, the respondent failed to repatriate these properties: 1 000 shares in

    Ciena valued at approximately R18 000; 300 shares in Oracle valued at approximately

    R25 000; half of the shares in Body Rush LLC, the value of which was about

    R1.6 million; and an amount of approximately $8 000 transferred to the account of one

    Ben Hamo.

    [13] Regarding the assertion that he had property not covered by the preservation order,

    the respondent replied as follows:

    I reiterate that since the granting of the preservation order in March 2006 I have not

    been in a position to pay my living and legal expenses and have been forced to live on

    loans and charity from friends and family. All my bank accounts have been frozen and

    all my worldly assets have been placed under preservation. The preservation order is all-

    encompassing and includes all and any property held by me. . . . I am not in a position to

    meet my living and legal expenses and since March 2006 I have lived off loans and

    charity from my friends and family. . . . The living expenses detailed in my founding

    affidavit relate to the living expenses which were incurred by me prior to the granting of

    the preservation order. As a result of the preservation order I have been unable to pay my

    monthly living expenses and have had to drastically reduce same. I cannot afford to

    make payments of the amounts due in respect of my home loan and have fallen into

    arrears in respect of water and electricity, rates and taxes, maintenance obligations and

    other monthly expenses. I am in d