Phillips and Others v National Director of Public Prosecutions

• Jurisdiction: South Africa
• Judge: Howie P, Zulman JA, Nugent JA, Conradie JA and Mlambo AJA
• Judgment Date: 04 September 2003
• Citation: 2003 (2) SACR 410 (SCA)
• Docket Number: 202/2002
• Hearing Date: 15 August 2003
• Counsel: M R Hellens SC (with M D C Smithers) for the appellants. W H Trengove SC (with I V Maleka SC and A Cockerell) for the respondent.
• Court: Supreme Court of Appeal

Howie P:

[1] For many years first appellant has owned and operated a business J

Howie P

called the Ranch. It is conducted on suburban premises in Sandton. The business involves providing a venue and facilities where A men can go to have sexual relations with women prostitutes, or sex workers. The women are not employees of the business. They are free agents. However, they work there in shifts and to gain access to the premises they each have to pay first appellant a certain sum per shift. B Each customer has to pay him an admission charge. In addition, the customers pay the women for sexual services rendered but first appellant receives no part of those payments. The current amount each of the women has to pay is R450 per shift and a customer's entry fee is R250.

[2] Arising out of his conduct of this business first appellant is presently facing criminal prosecution on several counts. Two are C based on the provisions of the Sexual Offences Act 23 of 1957. Under s 2 he is charged with keeping a brothel and, under s 20(1)(a), with living off the earnings of prostitution. It is unnecessary for present purposes to refer to the other charges.

[3] In December 2000 the present respondent, the National Director of Public Prosecutions, applied ex parte to the D High Court in Johannesburg for a restraint order in terms of the Prevention of Organised Crime Act 121 of 1998 (the Act). Cited as respondents were first appellant and 14 companies or close corporations of which he is either sole shareholder or sole member. The application came before Labe J in Chambers, who issued a provisional E restraint order in the form of a rule nisi, with immediate effect pending the return day, in respect of all first appellant's realisable property and the property owned by his companies and corporations. That same day the property was seized and attached, some of it at first appellant's home. On the return day appellant sought F the discharge of the order. Having heard argument, Heher J confirmed the rule but subsequently granted first appellant and the other erstwhile respondents leave to appeal to this Court. The judgment of Heher J is reported as National Director of Public Prosecutions v Phillips and Others 2001 (2) SACR 542 (W) (2002 (4) SA 60). G

[4] Of the various issues raised on appeal the first that requires consideration is the contention on behalf of the respondent that the order made by Heher J is not appealable.

[5] As the learned Judge confirmed the rule without modification, regard must be had to the contents of the provisional H order. Summarised, its three elements relevant to the present point were these. First, having described the property to which the order related, it prohibited first appellant, and anyone having knowledge of the order, from 'dealing in any manner with the property, except as required or permitted by this order'. Second, a curator bonis was appointed to seize the property, to take control and I care of it and to administer it. Third, any of the restrained property in the possession of the appellants had to be surrendered to the curator.

[6] These three elements were variously based on provisions of the Act. Consideration of respondent's contention therefore requires analysis of the material sections. They are contained in chap 5 and embody a J

Howie P

scheme structured to enable the State to obtain confiscation of the proceeds by means of which convicted criminals have succeeded in A making crime pay.

[7] Chapter 5 comprises ss 12 - 36. In s 18(1) it is provided that in the event of any conviction the trial court may hold an enquiry to determine whether the accused (referred to in the Act as 'the defendant') derived any benefit from his offence. If so, that court may make a confiscation order against him. B

[8] To ensure in advance that the offender's assets, or any of them, are available at the time of trial so as to satisfy a confiscation order, respondent is empowered by s 26 to apply to the High Court for a restraint order prohibiting the defendant from dealing in any manner with his assets. The making of a confiscation C order is within the exercise of a wide discretion accorded the trial court. Although I refer to 'the trial court' for convenience, it is made clear in s 13 that proceedings for a confiscation order, and for a restraint order, are in all material respects civil proceedings, inter alia, in regard to the rules of evidence and the D requirement that facts be established only on a balance of probabilities.

[9] In terms of s 18(2) the quantum of a confiscation order may not exceed the lesser of two amounts. One is the value of the benefit which the defendant derived either from the offence or offences of which he is convicted and, according to s 18(1)(c), from any other criminal activity which the E court finds to be 'sufficiently related' to those offences. The second determinative amount is that which might be attained by realising, among other things, such assets as the defendant has at the time of the confiscation order. For convenience I shall refer to the assets subject to the restraint order as 'the restrained assets'. F

[10] In terms of s 25 the High Court hearing an application for a restraint order has a discretion to grant it only if certain jurisdictional facts are established. The most important one for present purposes is that there are reasonable grounds to believe that a confiscation order may be made against the defendant. G

[11] If a restraint order is made the Court must at the same time make an order authorising seizure of all movable restrained assets (s 26(8)); may at any time appoint a curator bonis to take control and care of the restrained assets (s 28(1)); and may at any time order the endorsement of restrictive conditions on the title deeds of any immovable restrained assets (s 29(1)). H

[12] A restraint order has only temporary duration. It operates pending the outcome of later events. In terms of s 26(10)(b) it must be rescinded by the High Court when the proceedings against the defendant are concluded. Conclusion, says s 17, occurs on acquittal (whether at trial or on review or appeal) or if no confiscation order is made despite conviction, or if the confiscation order is satisfied. I

[13] Apart from rescission in those instances the Act makes provision for variation or rescission by the High Court of restraint orders and related orders in other circumstances. In terms of s 26(10)(a) the Court may vary or rescind a restraint, seizure or other ancillary order on the J

Howie P

application of any person affected, provided it is satisfied on each of two particular grounds. A The first is that the operation of the order will deprive the applicant of the means to provide for his reasonable living expenses and cause him undue hardship. The second is that such hardship outweighs the risk that the restrained assets may be destroyed, lost, damaged, concealed or transferred. B

[14] There is no such restriction on the High Court's power in relation to orders appointing curators bonis and orders for the surrender of property which may be varied or rescinded at any time (s 28(3)), and orders for the endorsement of restrictive conditions on title deeds, which may be rescinded at...