Mohunram and Another v National Director of Public Prosecutions and Another (Law Review Project as Amicus Curiae)

• Jurisdiction: South Africa
• Judge: Langa CJ, Moseneke DCJ, Madala J, Mokgoro J, Nkabinde J, O'Regan J, Sachs J, Van Der Westhuizen J, Yacoob J, Kondile AJ and Van Heerden AJ
• Judgment Date: 26 March 2007
• Citation: 2007 (4) SA 222 (CC)
• Docket Number: CCT19/06
• Hearing Date: 16 November 2006
• Counsel: Y N Moodley SC (with G J Leppan) for the applicants. W Trengove SC (with A Cockrell) for the first respondent. No appearance for the second respondent. M S M Brassey SC (with P McNally and M J Engelbrecht) for the amicus curiae.
• Court: Constitutional Court

Van Heerden AJ:

Introduction D

[1] This is an application for leave to appeal against a judgment of the Supreme Court of Appeal, [1] upholding an appeal from a judgment of the Pietermaritzburg High Court and replacing the order of that Court with an order declaring an immovable property forfeit to the State in terms of the Prevention of Organised Crime Act 121 of 1998 (POCA). E The property in question is registered in the name of the second applicant, Shelgate Investments CC (Shelgate). The first applicant, Mr Kumarnath Mohunram, holds a 100 % member's interest in Shelgate. The forfeiture order was granted on the basis that such property was an 'instrumentality' of an offence under the KwaZulu-Natal Gambling Act 10 of 1996 (the KZN Gambling Act). F

[2] On 19 October 2001 the Pietermaritzburg High Court granted a preservation order in terms of s 38(2) of POCA. The order related to a sectional title unit in a scheme known as the Malapin Centre together with an undivided share in the common property (the property). The G National Director of Public Prosecutions (NDPP), the first respondent before this Court, in due course applied to the High Court under s 48 of POCA for a forfeiture order in terms of s 50. A mortgage bond is registered over the property in favour of NBS, one of the operating divisions of BOE Bank Ltd (BOE), nominally the second respondent before this Court but which does not oppose any of the relief sought by H the applicants. BOE filed a notice in terms of s 39(3) of POCA as a party with an interest in the property. It did not oppose the application for a forfeiture order, but merely sought to retain its interest in the property through the mortgage bond registered in favour of NBS, more particularly its rights as a secured creditor in terms of s 43(3)(a) of POCA. I

[3] The High Court dismissed the NDPP's application for a forfeiture order, concluding that the property had not been shown to be an

Van Heerden AJ

A instrumentality of an offence. The NDPP appealed to the Supreme Court of Appeal, which upheld the appeal and granted the forfeiture order. It is that judgment against which the applicants now seek leave to appeal to this Court. They also apply for condonation for the late filing of the record. As the explanation given by them for the delay is satisfactory and the NDPP consented to the late filing of the record, the B condonation application should be granted.

[4] This Court has allowed the Law Review Project (LRP) to intervene in this matter as amicus curiae. Written as well as oral argument was addressed to the Court on behalf of the LRP. C

Factual background

[5] In 1998, Mr Mohunram purchased the 100 % member's interest in Shelgate. He took occupation of the premises, partitioned the building and commenced trading as Vryheid Glass and Aluminium. However, along with the legitimate glass and aluminium business, Mr Mohunram D also operated up to 57 gaming machines on the premises. This was done in contravention of s 44 of the KZN Gambling Act, which provides that no person may operate a casino [2] unless validly licensed. [3] In terms of s 3(3)(a) of the same Act, the owner of a building may not allow any other person to conduct any gambling activity therein or thereon unless E that person has been duly licensed. [4] Shelgate as owner acted in contravention of this section, 'allowing' its sole member, Mr Mohunram, to conduct the illegal casino. Mr Mohunram also contravened s 95(2), read together with s 55, of the Act by being in possession of unregistered gaming machines without a permit for the storage of these machines. Finally, by employing people to work in his unlicensed casino, Mr F Mohunram contravened s 3(4)(b) of the Act, which prohibits such employment. [5]

[6] In April 2001 Mr Mohunram was arrested in connection with his illegal casino operation. He was subsequently charged with 57 counts of contravening s 95(2) of the KZN Gambling Act (being in possession of G 57 unregistered gaming machines without the requisite permits), as well

Van Heerden AJ

as with three counts of contravening s 3(4)(b) [6] (employing three people A in his unlicensed casino). He paid admission of guilt fines of R1 500 each in respect of counts 1 to 57 (R85 500 in total) and of R1 000 each in respect of counts 58 to 60 (R3 000 in total). In addition, under the provisions of the KZN Gambling Act, he forfeited about R2 100, being moneys that were found and seized on the premises during a police raid. B His 57 gaming machines (which he valued at approximately R285 000 in total) were also seized and destroyed in terms of the same legislation. [7] Shelgate was not charged.

[7] Subsequently, the NDPP launched the proceedings that ultimately led to the forfeiture order in respect of the property and culminated in the present application. C

Application for leave to appeal

[8] Before leave to appeal to this Court can be granted, it is incumbent on the applicants to satisfy two requirements: (a) the application must D raise a constitutional matter or issues connected with decisions on constitutional matters; [8] and (b) it must be in the interests of justice that leave be granted. [9]

[9] In the light of the recent judgment of this Court in Prophet v National Director of Public Prosecutions, [10] it must be accepted that the application E for leave to appeal does indeed raise a constitutional issue. In Prophet, Nkabinde J, writing for a unanimous Court, held as follows:

'Asset forfeiture orders as envisaged under ch 6 of the POCA are inherently intrusive in that they may carry dire consequences for the owners or possessors of properties particularly residential properties. Courts are therefore enjoined by s 39(2) of the Constitution to interpret legislation such as the POCA in F a manner that ''promote[s] the spirit, purport and objects of the Bill of Rights'', to ensure that its provisions are constitutionally justifiable, particularly in the light of the property clause enshrined in terms of s 25 of the Constitution.' [11]

(Footnotes omitted.)

Van Heerden AJ

A [10] The applicants contended that it is also in the interests of justice to grant leave to appeal. According to them, the facts of this case are fundamentally distinguishable from those of previously decided cases where forfeiture orders in terms of POCA have been granted. The applicants submitted that this appeal highlights the questions whether, in the particular circumstances of this case, the property in question was B indeed an 'instrumentality of an offence' for the purposes of POCA and, if so, whether the forfeiture was 'proportional'. It was further argued that the mischief admitted to by Mr Mohunram is not the mischief envisaged in the long title of, or the preamble to, POCA. The Supreme Court of Appeal thus erred in failing to consider whether the Legislature intended C that a person who engaged in what the applicants called 'a universally condemned offence, such as drug dealing' ought to be treated in precisely the same way, as regards the forfeiture provisions, as a person who 'at all times pursued legitimate business interests' on the property in question and 'committed an offence simply by not having a licence for D that particular activity'.

[11] As indicated above, BOE did not oppose the application for leave to appeal and abides the decision of this Court. The NDPP conceded that the application for leave to appeal does raise a constitutional matter. It submitted, however, that it is not in the interests of justice to grant leave E to appeal because the applicants do not have reasonable prospects of success. [12] This Court should thus dismiss the application for leave to appeal or, alternatively, dismiss the appeal itself.

[12] The amicus curiae, the LRP, made it clear that it raised no challenge F to the constitutionality of POCA. It submitted, however, that this case raises a constitutional issue because the Supreme Court of Appeal interpreted the relevant provisions of the KZN Gambling Act and of POCA in the light of the text and the overall structure of the latter statute without proper regard to the Constitution, with the consequence that the forfeiture which it upheld in this case constituted: (i) an unlawful and G arbitrary deprivation of property and thus an infringement of s 25 of the Constitution; [13] and/or (ii) a penal deprivation of property that is grossly disproportionate, arbitrary and irrational and so infringed the 'cruel and unusual punishment clause' in the Constitution. [14] The grounds relied on by the LRP for these conclusions will be considered in greater detail H below.

Van Heerden AJ

[13] In my view, it is in the interests of justice that the applicants be A granted leave to appeal on the issues raised by them. As stated in Prophet:

'This issue [the forfeiture of the applicant's property] entails both what constitutes an instrumentality of an offence, and the proportionality of the forfeiture under ch 6. Both these questions raise important constitutional issues of substance and need to be determined to resolve the key complaint of B the applicant: the question whether the order declaring his property forfeit should be set aside.' [15]

The applicants contended that the facts in this present matter are fundamentally distinguishable from those of any of the decided cases in which civil forfeiture under POCA has been granted and requires a fresh C examination of both the issues of instrumentality of an offence and of proportionality of a forfeiture order. This being so, it is in the interests of justice that the applicants be granted leave to appeal on the issues raised by them.

Issues D

[14] As Harms JA pointed out in the Supreme Court of Appeal judgment in this case:

'There are usually three main issues in a case such as this to...