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National Director of Public Prosecutions v James and Another (5597/06) [2011] ZAWCHC 127 (3 February 2011)

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9. The forfeiture application was thus pending before the High Court before the preservation of property order would have expired.²

10. No appearance to oppose the making of a forfeiture order in respect of the house or the money was entered by second respondent or anyone else. First respondent's opposition is limited to the house only.

11. The issues to be decided in this matter arc consequently:³

11.1. whether the house and the money are instrumentalities of the offences of dealing in drugs in contravention of section 13 of the Drugs Act and/or of housebreaking with the intention to commit an offence;

11.2. whether the house and the money are the proceeds of unlawful activities;

11.3. in the light of the notice of appearance by first respondent, whether the house should be excluded from any forfeiture order; and

11.4. whether the forfeiture sought will be disproportionate.

12. In section 1 of the Act "instrumentality of an offence" is defined as "any
property which is concerned in the commission or suspected commission of an offence". In National Director of Public Prosecutions v R O Cook Properties (Ptv) Ltd; National Director of Public Prosecutions v 37 Gillespie Street, Durban fPtv) Ltd and Another; National Director of Public Prosecutions v Seevnarayan⁴. that court considered that:

"The words 'concerned in the commission of an offence' must ... he interpreted so that the link between the crime committed and the property is reasonably direct, and that the employment of the property must be functional to the commission of the crime ... that the property must play a reasonably direct role in the commission of the offence. In a real or substantial sense the property must facilitate or make possible the commission of the offence, the property must be instrumental in and not merely incidental to, the commission of the offence. For otherwise there is no rational connection between the deprivation of property and the objective of the Act"⁵

13. Evidence was placed before me by way of affidavits filed by the applicant in
both the preservation application and the forfeiture application that:

13.1. The house was adapted to conceal and hide drugs. There are various trapdoors in the ceiling of the house to enable the concealment of drugs in the roof. The bath tub in the bathroom, adjoining the main bedroom, was modified so that it could be detached from the wall to give access to a hiding place for drugs. Various holes were made in the walls of the house to conceal drugs. These were covered with wall hangings. A secret compartment under a loose plank on the staircase was also used to conceal drugs.

13.2. During the period 2005 to September 2009 at least 52 search and seizure operations were executed at the house by the police. Invariably drugs were found in one or more of these hiding places or on the persons of people present at the house, including first respondent. The drugs included tik, dagga and heroin.

13.3. Apart from the drugs, a number of electronic scales were also found in the house at various times, as well as bank bags and various amounts in cash. The electronic scales are of the type used by drug dealers to weigh drugs. Bank bags arc used to pack the drugs for sale.

13.4. The police also found handwritten notes in the house which made it clear that drugs were being sold and that the first respondent was involved therein.

13.5. The house was generally known as a "drug shop" by members of the community who live in that area.

14. These allegations, which arc indicative of illegal drug dealing at the house on a large scale over an extended period of time, were not denied by the first respondent. She however contended that she was not aware thereof

15. On the evidence placed before me by the Applicant and which is not denied by the First Respondent, it is clear that the house was not only used as a base from which the drug dealing activities took place over an extended period of time, it was also adapted to serve as a place where drugs could be concealed and stored. The house clearly played a direct role in the commission of the offence of dealing in drugs in contravention of section 13 of the Drugs Act.

16. I consequently have no hesitation to find that, on the probabilities, the house was an instrumentality of the offence of dealing in drugs in contravention of section 13 of the Drugs Act.

17. Although the affidavits filed by the applicant provided ample proof that suspected stolen property was stored on the premises, as depicted on the various photographs annexed thereto, no facts were placed before me to warrant an inference that the house was the instrumentality of the offence of housebreaking with the intention to commit an offence. Although suspected stolen property was found on the premises on more than one occasion, on the facts placed before me, I cannot find that the house was an instrumentality of an offence in terms of sections 36 or 37 of the General Law Amendment Act, 1955 (Act No. 62 of 1955).

18. As far as the money is concerned, the applicant alleges that it constitutes an instrumentality of the offence of dealing in drugs in that the money was used to acquire drugs. No evidence to support this contention was placed for me.
In any event, the mere fact that the money was seized by the police flies in the face of this proposition. It was accordingly not proved that the money is an instrumentality of an offence.

The proceeds of unlawful activities

19. "Proceeds of unlawful activities" arc defined in section 1 of the Act as "any property or any service, advantage, benefit or reward which was derived, received or retained, directly or indirectly ... in connection with or as a result of any unlawful activity carried on by any person, and includes any property, representing property so derived'.

20. "Property" includes money and immovable property and unlawful activity is defined as "any conduct which constitutes a crime or which contravenes any law, whether such conduct occurred in the Republic or elsewhere”.⁶

21. Niehaus, in his founding affidavit, alleges that the house was purchased with money raised as a result of illegal drug dealing, and that it therefore constitutes the proceeds of unlawful activities, as defined in section 1 of the Act. This was denied by ihe first respondent. She alleges that the property was purchased with money she acquired from a life insurance policy on the life of her late father. Counsel for the applicant submitted that first respondent's allegation in this regard is not to be believed and that I should reject same. I am however of the view that her evidence in this regard can not be rejected out of hand, and as this is an application for final relief. 1 am enjoined to apply the rule in Plascon-Evans.⁷

22. I consequently find that the applicant has failed to prove on a balance of probabilities that the house constitutes the proceeds of unlawful activities.

23. With regard to the money, the probabilities arc overwhelmingly in favour of a finding that it constitutes the proceeds of unlawful activities. This is what is alleged on behalf of the applicant in both the preservation application and the forfeiture application. Neither the first respondent nor the second respondent has indicated that they wish to oppose the making of a forfeiture order with regard to the money or has placed any facts before me to gainsay the facts placed before me by the applicant with regard to the money. I accordingly find that the money is the proceeds of unlawful activities as defined in section 1 of the Act.

Should the house be excluded?

24. The first respondent docs not deny that the house was being used as a "drugshop", that illegal drug dealing transactions were conducted from the house and that the house was adapted to facilitate the concealment and storage of drugs. She alleges that she was not aware of the adaptations made to the house to facilitate the storage and concealment of drugs or of the second respondent's drug dealing activities on the ground floor.

25. Section 52(1) of the Act reads as follows:

"52(1) The high court may, on application -

(a) under section -48(3); or

(h) by a person referred to in section 49(1)

and when it makes a forfeiture order, make an order excluding certain interest in property which is subject to the order, from the operation thereof"

(the reference to section 48(3) should be read as a reference to section 48(4).)

26. Subsection 52(2A)(a) of the Act provides as follows:

"(2A) The High Court may make an order under subsection (I), in relation to the forfeiture of an instrumentality of an offence referred to in schedule I or property associated with terrorist and related activities, if it finds on a balance of probabilities that the applicant for the order had acquired the interest concerned legally, and -

(a) neither knew nor had reasonable grounds to suspect that the property in which the interest is held is an instrumentality of an offence referred to in schedule I or ..."

27. It is clear from the first respondent's notice of appearance to oppose the making of the forfeiture order and the affidavit tiled in answer to the applicant's founding affidavit, that she is relying on the so-called "innocent owner" defence, or put differently, that the house should be excluded from any forfeiture order on the basis of section 52 of the Act. The effect of reliance on section 52 is that an onus is placed on the first respondent to prove on a balance of probabilities that she had acquired the house legally and that she never knew, nor had reasonable grounds to suspect, that the house is an instrumentality of an offence referred to in schedule 1.⁸

28. The first respondent, in her answering affidavit, stated that when she moved into the house in 2005 to reside on the top floor, the second respondent resided on the ground fioor and "at that stage the second respondent did actively deal in drugs and stolen property, as set forth in the various police statements She however denied lhal she had any knowledge that the house had been modified to facilitate the storage and concealment of drugs or that she actively participated in the illegal activities on the premises. She also seems to allege that since she moved into the house, she was not aware of the second respondent's activities on the ground floor.

29. The first respondent's denial that she was aware of the drug dealing activities in the house and of the modifications to the house to facilitate the storage and concealment of drugs, rings hollow in the face of the following facts contained in the applicant's founding affidavit, which she did not deny;

29.1. She occupied the main bedroom on the top floor of the house. The bath in the en-suite bathroom to the main bedroom was installed in such a manner that it could be detached from the wall and on a number of occasions during search and seizure operations by members of the police, drugs were found concealed behind this bath;

29.2. On 23 October 2007 SAPS members searched the main bedroom and found tik, heroin, an electronic scale, bank bags and R6 120.00 in cash in the main bedroom;

29.3. On 3 July 2007 first respondent was arrested with regard to SVi bags of tik that were found behind a trapdoor in the bathroom ceiling. She was in the bathroom at the time;

29.4. On 22 October 2007 when the main bedroom was searched by members of the police, they discovered two bank bags of tik and a third bag with tik as well as heroin behind the trapdoor in the ceiling of the bathroom;

29.5. On 11 November 2008, the first respondent was arrested in the house after members of the police found tik in her handbag. At the same time of the police seized an electronic scale, R2 370.00 in cash and various other items that were found in (he house;

29.6. During the period 2005 to September 2009 at least 52 search and seizure operations were executed at the house by the police. Drugs such as tik, heroin and dagga, as well as large amounts of cash and items associated with the drug trade, were seized at or near the house;

29.7. On 4 October 2007 a notice was served on the first respondent informing her that illegal activities relating to drug dealing and stolen goods were taking place at the house. She was informed that should she fail to stop the use of the house as an instrumentality of these offences, the applicant may apply for the forfeiture of the house.

30. I accordingly find that the first respondent knew that the house is instrumentality of an offence referred to in schedule 1 of the Act.

31. It follows that the house cannot be excluded from a forfeiture order on the
basis of section 52.

Proportionality

32. In considering whether a forfeiture order should be made with regard to property, a court must ensure that such forfeiture does not or will not amount to arbitrary and therefore unconstitutional deprivation of property. The court must be satisfied that the consequences of the forfeiture order are proportionate to the purpose for which it is made. In National Director of Public Prosecutions v R () Cook Properties (Ptv) Limited⁹ the Supreme Court of Appeal said the following:

"... The Act requires property owners to exercise responsibility for their property and to account for the stewardship of it in relation to its possible criminal utilisation. The pursuit of those category objectives cannot exceed what is constitutionally permissible. Forfeitures that do not rationally advance the interrelated purposes of Chapter 6 are unconstitutional. Deprivations going beyond those that remove incentives, deter the use of property in crime, eliminate or incapacitate the means by which crime may be committed and at the same time advance the ends of justice are in our view not contemplated by or permitted under the Act"

Although I do not have evidence as to the present market value of the house, it was purchased in 2007 for R80 000.00. The money amounts to R12 320.00.

33. The evidence placed before me by the applicant and which was not denied by the first respondent, shows that the house was continually used as a basis for drug dealing activities and as a place where drugs were stored and concealed. Notwithstanding at least 52 search and seizure operations during the period 2005 to September 2009 at the house by the police, and the numerous arrests of the various people involved in the drug dealing activities, including second respondent and first respondent, these operations proved wholly inadequate to prevent the illegal drug dealing operations.

34. In these circumstances, the following extract from National Director of Public Prosecutions v Vcrmaak¹⁰ is apposite:

"[11] Where an offence has been committed in the course of a broader enterprise of criminal activity that is being conducted by the offender in association with others it can serve not only to inhibit the particular offender from continuing that activity but also to arrest a continuance of that activity by others who are party to the ongoing enterprise. And even where the offence committed in the course of an ongoing criminal enterprise that is being conducted by the offender atone the withdrawal of property is capable of having a severely inhibiting effect on its continuance. It seems to me, in other words, that forfeiture is likely to have its greatest remedial effect where a crime has become a business.

[12] Conversely, where the offence is not committed in the course of ongoing criminal activity, as in cases of the kind that are now in issue, the ordinary criminal remedies are quite capable of serving the purpose of deferring the commission of further offences, whether by the particular offender or by other offenders. If the sentences that are available to serve that purpose are inadequate it is open to the legislature to remedy that defect, but I do not think that forfeiture should be seen as a means of topping up' penalties that are imposed by a court.

[13] It seems to me that those two extremes assist in exercising the discretion to order forfeiture: the closer the offence comes to the first extreme the more appropriate it will be to order forfeiture; and the closer the offence is to the second extreme the less appropriate that will be. That seems to me what Moseneke DCJ had in mind (and 1 respectfully agree) when he said, in one of the three judgments delivered in Mohunram, none of which commanded a majority:

'fl]n deciding whether or not forfeiture of properly would be proportionate, the question whether the instrumentality of the offence is sufficiently connected to the main purpose of POCA must be considered. I join Sachs J in emphasising that the mure remote the offence in issues is to the primary purpose of POCA, the more likely it is that forfeiture of the instrumentality of the crime is disproportionate. In other words, when ordinary crime is in issue, the sharp question should be asked whether if is a crime that renders conventional criminal penalties inadequate. '

Naturally, the approach that I suggest is not inflexible. There might be cases in which the offence, by itself falls within the second class that I have described, but where the circumstances in which it is committed call for something additional to the ordinary remedies to inhibit further offences."

36. A forfeiture order in respect of the house and the money in this case would immediately stop the house from being used as a basis for illegal drug transactions and other offences. It would also convey to the community at large that "the law does not turn a blind eye to the persistent and obdurate pursuit of criminal business and will act to demonstrate that [this] does not pay”.¹¹

37. In these circumstances I have come to the conclusion that the forfeiture of the house and the money will not be disproportionate to the purposes which POCA aims to achieve.

Section 28(1 He) nf the Constitution

38. In her notice of appearance, first respondent stated that she has four minor children. At the time the letter constituting the notice of appearance was written, she was residing, with her children, in a different house together with her mother and other members of her family. Her complaint was that she was staying, with her four children, in one room.

39. In terms of section 28(1 Xc) of the Constitution, every child has a right to shelter. At the time when the forfeiture application was instituted, first respondent lived with her children in a room in another house in Mitchells Plain. I am consequently satisfied that if an order for the forfeiture of the house is granted, it will not deprive the children of a shelter.

Conclusion

40. I therefore make the following order:

40.1. In terms of section 50 of the Prevention of Organised Crime Act, 1948 (Act 121 of 1998):

40.1.1. the immovable property, erf 92700, Mitchells Plain, located at 4 Bontcbok Crescent, Eastridge, Mitchells Plain; and

40.1.2. the amount of R12 320.00 in cash, presently in possession of the curator bonis, Mr Andre van Heerden, are declared forfeited to the State;

40.2. Mr Andre van Heerden of SAB & T Insolvencies and Corporate Recoveries (Pty) Limited, may continue to act as curator bonis in this matter and he is hereby authorised to:

1. pay the cash amount of R12 320.00 and any interest earned thereon, after deducting his fees and disbursements as allowed by the Master of the High Court thereon, into the Criminal Asset Recovery Account, held at the Reserve Bank, Account No. 80303056;

2. dispose of the immovable properly. Erf 22700 Mitchells Plain, located at 4 Bontebok Crescent, Eastridgc, Mitchells Plain, by public auction and to pay the proceeds of the sale, after deducting his fees and disbursements as allowed by the Master of the High Court thereon, into the Criminal Asset Recover)' Account, held at the Reserve Bank, Account No. 80303056.

3. The first respondent is ordered to pay the costs of this application.

VAN ZYL, AJ

1National Director of Public Prosecutions v Seleoane | 2003| All SA 102 (NC)

2Levy v NDPP 2002 (1) SACK 162 (WLD).

3National Director of Public 1'roseaiti oris v Mohunnini and Others 20(16 (1) SACK 55-1 (SCA) at para |2|, as chccl with approval in Mohunram and Another v National Director of Public Prosecutions and Others [2006] ZASCA 12; 2007 (6) BCLR 575 (CC) at para |I4|

42004 (2) SACK 208 (SCA).

5At para J31|. See also Prophet v National Director of Public Prosnecutions 2006 (I) SA 38 (SCA) a I paras |26| and |27|; National Director of Public Prosecutions v Parker 2006 (3) SA 198 (SCA) footnote 1 to para |1| and para |I4| NDPP v Geyser and Another [2008] ZASCA 15; 2008 (2) SACR 103 (SCA) at para|17|.

6Section 1 of the Act.

7Plascon-Evans Paints Ud v Van Riebeeck Paints (Ptv) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634H-l.

8"This section burdens the owner with an onus to prove certain facts on a balance ofprobabilities before the court can make an exclusionary order. Although the Constitutional Court referred to this loosely as creating an 'innocent owner' defence, a literal reading of s 52(2A)(a) would suggest that innocence is not enough. In the case of post-statute offences, if the owner fails to prove absence of knowledge or absence of reasonable grounds for suspicion, on such a reading the property stands to be forfeited even if he or she was unable to do anything about the scheduled defence or its continuation.", NDPP v R Q Cook Properties (Pry) Ltd (supra) para |24|.

9(supra) at para [29].

1020O8(l)SACR 157 (SCA).

11Howie P in National Director Public Prosecutions v Gcvscr (supra) at para |35|.