S v Miles

• Jurisdiction: South Africa
• Judge: Leon J and Kumleben J
• Judgment Date: 24 February 1978
• Citation: 1978 (3) SA 407 (N)
• Hearing Date: 07 February 1978
• Court: Natal Provincial Division

Kumleben J:

The appellant was convicted in the court a quo of the theft of R3 800 and sentenced to two years' imprisonment, the whole of which period was suspended on appropriate conditions. He appealed against the conviction and sentence but Mr Pretorius, who appeared on his behalf, confined his argument to the merits of the conviction.

G The charge sheet alleged that during the period from January to September 1974 the appellant stole an amount of R8 308,44 from the complainant, a Mr Meagher.

The background facts giving rise to this charge were not in dispute. The H appellant and a Mr Latham carried on business in partnership under the style of "Construction Services". This partnership for a fee undertook the supervision and construction of houses for clients. A prospective client would initially see Mr Latham. He would design the home and draw up the plans. The appellant would then take over and supervise the construction of the dwelling house. The customary fee was 15 per cent of the nett cost of the building. From time to time as the building progressed amounts of money would be paid to the partnership by or on behalf of the client to defray the building costs and for payment of the fee.

This was substantially the procedure followed when complainant

Kumleben J

approached the partnership towards the end of 1973 in connection with a dwelling he proposed erecting at Westville. After preliminary discussion with Mr Latham, a written contract was concluded between appellant, on A behalf of the partnership, and complainant. (The fate of this document will be discussed in due course.) Initially the building of the house proceeded according to plan and in terms of their agreement. A banking account had been opened at the Trust Bank under the name "Construction Services/Meagher". Amounts were paid into this account by or on behalf of the complainant. The appellant, who had the sole right to make withdrawals B from this account, initially used the money for expenses incurred in connection with the erection of complainant's house. At a certain stage, however, the partnership was short of funds and sums from this account were withdrawn by appellant and used by him to meet other commitments of the firm. (For reasons which will later emerge it is not necessary to give C details of the amount thus used or to explain how the amount of R8 308,44 came to feature in the charge sheet.) The partnership failed to overcome its financial problems and in due course the partnership estate and inevitably the estates of the two partners were sequestrated. Mr Bruce, who was one of the State witnesses, was appointed trustee in the insolvent estates.

D By using the money for purposes unrelated to the dwelling house of complainant, the State alleged that appellant misappropriated it, and thus committed theft. The appellant, on the other hand, alleged that in terms of their agreement such monies were not in the nature of trust funds and could be used by him or the partnership for any purpose. It was his contention that the agreement gave rise to a "debtor/creditor" E relationship and that complainant's remedy was therefore exclusively a civil one. In R v Scoulides 1956 (2) SA 388 (A) at 394 SCHREINER JA explained the distinction between a trust relationship and other situations in these terms:

"These cases establish that the ownership at different points of time of F the individual notes or coins is not important in deciding whether a theft of them has been committed. What is decisive is whether the sum of money, considered as such and not as made up of individual notes and coins, which the accused person took or consumed was already wholly his to deal with as he pleased for his own benefit, or whether it was really held in trust for the complainant."

(See, too, S v Verwey 1968 (4) SA 682 (A) and S v Graham 1975 (3) SA 569 (A) G .) It was thus essential for the State to prove beyond a reasonable doubt, by reference to the agreement or to any other relevant circumstances, that the monies were handed over in trust and not pursuant to what is commonly known as a "cost plus" building contract or any other agreement, such as would have entitled appellant to use the funds for an H extraneous purpose and would have accorded complainant no more than a civil remedy for failure to implement its terms.

Before us Mr Pretorius, in a well presented argument, submitted: Firstly, that the magistrate erred in admitting secondary evidence of the terms of the written contract. Secondly, with reliance upon the recent decision of S v De Blom 1977 (3) SA 513 (A), that mens rea in the commission of the alleged offence had not been proved. This contention was based upon certain uncontradicted evidence which suggested that appellant had acted in good faith and on legal advice.

Kumleben J

There can be no doubt that the written contract, if it did not expressly deal with the basis on which the money was to be paid by complainant to A appellant, must have included terms which would have had a material bearing upon the question whether a trust relationship existed. In the nature of things this is what one would expect and, indeed, the secondary evidence on record confirms this. In the circumstances Mr Viljoen, who appeared for the State, did not contend that...