May v Union Government

• Jurisdiction: South Africa
• Judge: Broome JP
• Judgment Date: 03 August 1953
• Citation: 1954 (3) SA 120 (N)
• Court: Natal Provincial Division

Broome, J.P.:

On 10th May, 1951, the plaintiff, an advocate practising D in Durban, was arrested in Durban by a police officer called Hobbs purporting to act on the authority of a warrant signed by one Louwrens who purported to act in his capacity as acting assistant magistrate in Johannesburg. Thereafter a preparatory examination was opened in Johannesburg against plaintiff and a number of other persons on charges of falsity and other offences. Plaintiff and others were committed for E trial and thereafter were brought before the Witwatersrand Local Division. After the first Crown witness had completed his evidence, application was made for the plaintiff's discharge, it being conceded by the Crown that the rest of the Crown evidence did not implicate him further. The application was opposed by the Crown, but not very F strenuously, and was granted, plaintiff being acquitted on 16th November, 1951. Plaintiff then instituted the present action claiming £10,000 as damages for wrongful arrest and £10,000 as damages for malicious prosecution. At the conclusion of the evidence Mr. Hathorn for the defendant formally conceded that Louwrens had not been formally appointed as acting assistant magistrate when he signed the warrant. G Thereafter at the beginning of his address Mr. Hathorn further conceded that the warrant was a nullity and that plaintiff's arrest was therefore unlawful. He did not formally concede that the defendant was responsible for the wrongful act of Hobbs, but he did not challenge that proposition and in my opinion could not have done so with any hope of success, for H Hobbs was a police officer performing a statutory duty within the scope of his employment and himself exercising no discretion. The plaintiff has thus established his first claim and there only remains, on this part of the case, the question of the quantum of his damages for the wrongful arrest, which will involve, however, a consideration of all the facts of the case. It will therefore be convenient at this stage to outline those facts.

Broome JP

Towards the end of the year 1944 Die Kopersbond Beperk, a company of which Kritzinger was then managing director, had in mind the purchase of a property known as Witpoortjie No. 10 for the purpose of laying out a township thereon and making a profit out of the resale of the township A lots. The property was owned by de Villiers who wanted £65,000 for it. The prime mover in the matter was Dr. Ross an estate agent. Others who figured in the negotiations were Bailey, an estate agent acting for de Villiers, and Miller, de Villiers' attorney. One of the difficulties was the incidence of the fixed property profits tax imposed by Act 40 of B 1942 upon the profits realised on transactions in immovable property. De Villiers was advised that he would not be liable in respect of the profit which he would realise on the sale to Kopersbond, because of the circumstances in which he had himself acquired the property. But Kopersbond's position was another matter. As the law then stood, they C would be liable to pay the tax of 13s. 4d. in the £ upon the profit which they would realise on their contemplated resale of the property in the form of township lots. A scheme was therefore devised whereby the purchase price would be inflated, and a deed of sale was executed in February 1945 by de Villiers as seller and in March 1945 by Kritzinger on behalf of Kopersbond as purchaser at £115,000 payable as to £60,000 D in cash and as to £55,000 by the delivery of 11,000 Kopersbond shares at the par value of £5 per share. Thereafter transfer was passed accordingly, the statutory declarations for transfer duty and fixed property profits tax being executed by de Villiers and Ross, giving the date of sale as 20th March, 1945. But at the same time other secret E documents were signed whereby de Villiers should sell the shares through an intermediary to the Kopersbond for £5,000. Thus the nett result of the whole transaction would be that de Villiers would receive and Kopersbond would pay no more than the £65,000 which was the price which de Villiers demanded. In justice to the plaintiff I ought to point out at once that he had no share in the preparation of these spurious F documents; he was consulted as an attorney (in which capacity he was then practising) at an earlier stage in the negotiations, and had dropped out of the picture by February 1945, as I shall show in due course.

Some years later Professor Wiehahn, an accountant, was appointed by the G Minister of Economic Affairs in terms of sec. 95 of the Companies Act to investigate the affairs of Kopersbond. In due course he enlisted the help of the Attorney-General of the Transvaal who in turn enlisted the help of the police, and criminal proceedings were instituted. Eventually indictments were preferred against Kritzinger, Luttig and Borchardt (directors of Kopersbond at the relevant time), Kammeyer (Kopersbond's H financial adviser), Miller and the plaintiff. The main charge was falsity, in that they falsely and with intent to defraud represented to the Receiver of Revenue that the purchase price of the property was £115,000 when they knew that it was only £65,000, Kopersbond being desirous of evading the incidence of fixed property profits tax. There was an alternative charge of contravening sec. 43 (1) (e) (iii) of Act 40 of 1942 by preparing or maintaining false deeds with intent to evade the tax. There was another charge as well, but

Broome JP

not against the plaintiff, and it is irrelevant. In the result, all the accused except Kritzinger were discharged at various stages of the case on the ground that at the most their participation amounted to the performance of acts of preparation. Kritzinger was convicted on the alternative charge. Dr. Ross, it will be observed, was not charged at all. As we shall see later, it was decided to call him as a Crown witness, but no indemnity was ever granted to him.

A I now revert to the first claim, viz. the wrongful arrest. Defendant in its plea denied that Hobbs acted in the course of his employment as its servant, and alleged alternatively that the arrest was lawful in that it was effected pursuant to a valid warrant. Then followed particulars of the alternative allegation, which included:'From information taken upon oath, there were reasonable grounds of suspicion that the plaintiff had committed the crime of falsity . . .'

Plaintiff thereupon asked for further particulars of, inter alia, the reasonable grounds of suspicion, to which defendant replied:

'The grounds of suspicion were:

(1)

About January, 1945, Die Kopersbond Beperk, a limited liability company (hereinafter called Kopersbond) was negotiating for the C purchase of a farm known as 'Witpoortjie No. 10', situate in the district of Krugersdorp.

(2)

Kopersbond intended, after purchasing the farm, to establish a township on part thereof and to sell the township lots for profit.

(3)

The seller was prepared to sell the farm for £65,000, a price which Kopersbond was prepared to pay.

(4)

Kopersbond was desirous of avoiding liability for the Fixed D Property Profits Tax (as provided for by Act 40 of 1942, as amended).

(5)

About January, 1945, the plaintiff, then an attorney practising in Johannesburg, was consulted in Johannesburg on behalf of Kopersbond as to the question of its liability for the said tax in the aforesaid circumstances. The plaintiff advised Kopersbond that it would be liable to pay the said tax on the profits of sales of the township lots and then evolved or assisted in E evolving a scheme which, the plaintiff advised, would, if adopted, effectively enable Kopersbond to evade liability for the said tax.

(6)

This scheme consisted of the entering into of contracts between de Villiers (the seller), Kopersbond and its nominee whereby it would be made to appear that the price paid for the said farm by Kopersbond was £115,000, whereas in truth and in fact, the price would be £65,000.

(7)

The said scheme was designed to induce the Commissioner for Inland Revenue or his representative at Roodepoort (within whose area the said farm was situated) to believe that the true price of the said farm was £115,000 in order that, when F sales of the township lots took place, Kopersbond's liability for the said tax would be eliminated or reduced.

(8)

In furtherance of the said scheme, the plaintiff prepared certain draft documents designed to give effect to it.

(9)

The plaintiff, Kritzinger (a director of and representing Kopersbond) and de Villiers were aware that the true purchase price of the said farm would be £65,000.

(10)

On or about the 20th March, 1945, Kopersbond agreed to buy the G said farm for £65,000, but, in furtherance of the said scheme, the written contract between Kopersbond and de Villiers falsely reflected the purchase price as £115,000.

(11)

During June, 1946, and in furtherance of the said scheme, Kopersbond and de Villiers falsely represented to the Commissioner of Inland Revenue or his representative at Roodepoort, that the true purchase price of the said farm was £115,000.'

H It will be observed that the allegations in these further particulars are in form allegations of fact. Mr. Fannin, in opening the plaintiff's case, remarked upon this, and said that he...