Phillips and Others v National Director of Public Prosecutions

• Jurisdiction: South Africa
• Judge: Langa CJ, Moseneke DCJ, Mokoro J, O'Regan J, Sachs J, Skweyiya J, Van der Westhuizen J and Yacoob J
• Judgment Date: 07 October 2005
• Docket Number: CCT 55/04
• Hearing Date: 12 May 2005
• Counsel: M Smithers SC (with him M Chaskalson) for the applicants. M J D Wallis SC (with him A Cockrell) for the respondent.
• Court: Constitutional Court

Skweyiya J:

B [1] This case concerns the nature of a restraint order under s 26 [1] of the Prevention of Organised Crime Act 121 of 1998 (the Act) and the circumstances in which it may be varied or rescinded by the court that granted it. It comes to this Court by way of an application for leave to appeal brought by Mr Andrew C Lionel Phillips and 15 other applicants against the judgment and order of the Supreme Court of Appeal (SCA). The SCA reversed the decision of the Johannesburg High Court (the High Court) granting the applicants an order rescinding the restraint order made under ss 26(1) and (3) of the Act that had been obtained by the National Director of Public Prosecutions (NDPP) against the assets of the applicants. D

[2] The primary issue in the case is whether the High Court had the power to rescind the order it had made in terms of s 26 of the Act on grounds other than those specified by the Act. [2] The SCA and the High Court differed on this question, with the SCA holding that the High Court did not have E such power.

[3] Litigation between the parties started as far back as the year 2000. I therefore consider it necessary to give a brief description of the parties to the litigation and the relevant background. I also set out in some detail the facts giving rise to the High Court application to have the restraint order rescinded and the F treatment of that application in the High Court and in the SCA.

Parties to the litigation

[4] The first applicant is Mr Phillips. The second and 13th applicants are companies with limited liability, incorporated in terms of the Companies G

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Act. [3] The third to 12th and 14th to 16th applicants are close corporations duly registered and A incorporated in accordance with the provisions of the Close Corporations Act. [4] Mr Phillips is either the sole shareholder or sole member of the second to 16th applicants. He is in effective control of the assets of the other applicants.

[5] The respondent is the NDPP who in terms of ss 179(1) and (2) of the Constitution of the Republic of South Africa, B 1996 [5] is head of the Prosecuting Authority in the country. He has the power to institute criminal proceedings on behalf of the State and to carry out any necessary functions incidental to instituting criminal proceedings.

Relevant background to the litigation C

[6] Mr Phillips owned and operated a business known as The Ranch which provided a venue and facilities for paying male customers to have sexual intercourse with female prostitutes who were not employees. This business was conducted on premises at 54 Autumn Road, Rivonia, Sandton, D owned by the 16th applicant. Another business, The Titty Twister, owned by the 11th applicant was operated on the same premises in tandem with The Ranch. It presented striptease shows. The second applicant (Laddies Lark (Pty) Ltd) and the 11th applicant (Swinging Trading Twister Close Corporation) were intimately engaged in the operation of the business E of The Ranch and The Titty Twister respectively.

[7] On 2 February 2000 law enforcement officers raided and searched the premises on which the two businesses were conducted. Following this raid, on 4 February 2000, the NDPP launched proceedings in respect of the immovable property on which the two F businesses were conducted, together with the buildings thereon, and obtained a preservation of property order in terms of s 38 of the Act, [6] prohibiting any person from dealing with them. A curator bonis, Mr Reynolds, was G

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appointed in terms of s 42 of the Act. [7] The NDPP has given notice of its A intention to apply for a forfeiture order of the property in terms of s 48 of the Act. [8]

[8] Mr Phillips continued running the businesses on the immovable property despite the existence of two court orders, and the fact that he was charged with various offences. He faces several charges in terms of the Sexual Offences B Act, [9] including the keeping of a brothel, [10] procuring or attempting to procure females to have unlawful sexual intercourse, [11] and living off the proceeds of prostitution. [12] He is also facing charges in terms of the Aliens Control Act [13] relating to the employment of illegal aliens, [14] authorising illegal aliens to conduct business as prostitutes or striptease C dancers, [15] and aiding and abetting illegal aliens to remain in this country. [16] The trial on these charges has commenced but has not yet been completed.

[9] On 22 December 2000 the NDPP applied ex parte to the High Court in terms of s 26 of the Act for a restraint order against Mr Phillips and the other applicants, other D than the 16th applicant, the owner of the property at 54 Autumn Road, Rivonia. The application did not relate to

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this property but rather to the businesses of The Ranch and The Titty Twister as conducted by Mr A Phillips and the 11th applicant. [17]

[10] The High Court granted a provisional restraint order on 22 December 2000 which was made final on 31 July 2001. [18] The applicants appealed unsuccessfully to the SCA against this order. [19] The order was in respect of all property under the control of Mr Phillips whether in his name or not. B The restraint order was made in anticipation of the trial court making a confiscation order in terms of s 18 of the Act [20] in the event of Mr Phillips being convicted in his criminal trial. The purpose of

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the confiscation would be to deprive Mr Phillips of any benefits which may have been derived A by him from the offences upon which he might be convicted or any other criminal activity which the trial court might find to be sufficiently related to those offences.

Court proceedings and orders obtained against the curator bonis

[11] Mr Van den Heever was appointed as the curator bonis under s 28 of the Act [21] in B respect of the assets subject to the restraint order. He was authorised to take possession of the property, care for it and administer it. [22] He duly took charge of the property and not surprisingly, caused the businesses of The Ranch and The Titty Twister to stop operating. The businesses stopped generating income resulting in there being no funds to pay various charges accruing in C respect of rates, electricity, water and other related charges. In the time that followed the properties began to deteriorate and arrear charges accumulated which prompted the applicants to launch a number of applications directed at the curator bonis.

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[12] A court order was obtained by the applicants on 23 August 2002 declaring the curator to be responsible for the A payment of all arrear and future charges in relation to the properties. Following this, an order was obtained on 21 November 2002 compelling the curator to restore the properties to the condition in which they had been on 22 December 2000 (the date on which the provisional restraint order in terms of s 26(1) was made by B the High Court). The curator attempted to obtain the necessary funds which would enable him to maintain the properties by letting them out, but on 6 March 2003 an urgent interdict was obtained by the applicants preventing the curator from letting the properties. The curator failed to restore the properties to the condition in which they had been on 22 December 2000 as directed by the Court, and the applicants launched court C proceedings to have the curator found to be guilty of contempt of court for failing to comply with the order of 23 August 2002 declaring him to be responsible for payment of charges on the properties.

[13] The application by the applicants was however dismissed by the High Court on 19 March 2003. The curator, in an D attempt to ensure that the properties were properly maintained and the charges on the properties were paid, attempted to use some of the applicants' funds in accounts held at financial institutions, but was prevented from doing so because of yet another court order obtained by the applicants on 23 June 2003 directing that the E curator restore the credit balances in the applicants' accounts.

[14] The applicants have relentlessly challenged every aspect of the restraint order, including its nature and everything done under it by the curator bonis. They have made every effort to regain possession and control of the properties affected by the order. F

[15] In the proceedings which give rise to the present application, the applicants applied to the High Court to rescind the restraint order. [23]

The High Court application G

[16] The main case made out on the papers in that application is that the restraint order should be rescinded because it is impossible for the curator bonis to discharge his duties under it. The contention is that the preservatory purpose of the restraint order is not being served as a result of the deterioration of the immovable properties owned by the applicants and the accumulation H of municipal charges, in the form of rates in respect of the immovable properties. This is primarily due to the failure of the curator to have the restraint order implemented. The attitude adopted by him and the NDPP is that he (the curator) is not obliged to pay municipal charges in respect of the properties or to incur the cost of restoring, maintaining and securing them unless there were realisable funds from the properties to I do so. According to the applicants, far from preserving the properties, the effect of the order has in fact been to

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reduce the value of the properties and thus undermine the prospect of full value being realised A in the event of conviction and a confiscation order being made in terms of s 18 of the Act.

[17] Although the restraint order was one granted in terms of s 26(1) and (3) of the Act, the applicants chose not to make out a case for the rescission of the order based on the...