Lawful deprivation of property rights: An analysis of National Director of Public Prosecutions v Botha

“Corruption affects us all. It intersects at points of social, political, economic and ethical discourse with no end in sight and thus remains an elusive malignancy slowly eroding our hard-won democracy.”

6 May 2020 6 min read Dispute Resolution Alert Article

Government corruption and social, political and economic discourse have been at the front of South Africans’ minds recently. Courts such as the Constitutional Court are burdened with a civic duty to protect both social and economic interests of the country and to remind every government official that no one is above the law. The Constitutional Court did just that in the case of National Director of Public Prosecutions v Botha N.O. and Another (2020) ZACC 6 . In this article we analyse how the Court tackled these issues.

The tender and kickback

During her time as Head of Department for the Northern Cape Department of Social Services and Population Development (HOD), Ms. Botha awarded tenders to a company known as Trifecta Investment Holdings (Pty) Ltd (Trifecta) which would acquire desolate buildings within the Northern Cape, renovate the buildings and lease the buildings to government departments at exorbitant rates. Ultimately this led to the government suffering a loss of an estimated R26 billion.

In return for the tenders, Trifecta renovated Ms. Botha’s family home amounting to R1,169,068.49 and through convoluted and illicit means Ms. Botha undertook to pay for these renovations by issuing a certificate of indebtedness and entering into a “loan agreement” with Trifecta for amounts that the Court appreciated to be less than the costs of the renovations.

The fallout

Subsequently Ms. Botha left her employment as HOD and was elected to Parliament. She failed to declare the gratifications received from Trifecta as she was required to do which lead to a parliamentary inquiry being launched against her. Upon investigation the parliamentary committee ruled that, firstly, Ms. Botha was guilty of receiving a benefit from an improper relationship with Trifecta, and secondly, she was found guilty of having misled the parliamentary committee. This led to the National Director of Public Prosecutions (NDPP) launching civil proceedings against Ms. Botha for offences of tender corruption. The factual basis of these offences overlaps with the ethical breaches considered by the parliamentary committee. The NDPP then sought a forfeiture order in respect of the proceeds (in the form of the renovations to her property) Ms. Botha received pursuant to her alleged offences under Chapter 6 of the Prevention of Organised Crimes Act (POCA).

The High Court held that the property in question could be forfeited in terms of POCA. This judgment was taken on appeal and the Supreme Court of Appeal held that the property could potentially be forfeited, but on a proportionality assessment as otherwise such forfeiture would amount to arbitrary deprivation of property in terms of section 25(1) of the Constitution.

The issues that the SCA had to consider were, firstly, whether section 25(1) of the Constitution protects the unlawful proceeds of crime from arbitrary deprivation, and secondly, whether the doctrine of proportionality applies to both instrumentality and proceeds of unlawful activity in terms of section 50 of POCA.

The minority judgment

The minority judgment first considered whether the unlawful proceeds constituted property that must be protected against arbitrary deprivation in the Constitution. The minority considered the fact that the ambit of the definition of ‘property’ must be widely construed to include various forms of interest in various categories of property. The minority reasoned that unlawful proceeds do form part of property as defined under section 25(1) which in turn led the SCA to consider the necessity of a proportionality assessment, which is required by the Constitution.

The forfeiture of property in terms of sections 48 and 50 of POCA is quite draconian in nature and this effect is mitigated by applying a proportionality analysis which in turn ensures that the forfeiture does not amount to an arbitrary deprivation of property. The mere fact that property had been unlawfully acquired did not mean it should not be protected against arbitrary deprivation which is sought to be prevented by section 25 of the Constitution.

The minority held that the protection against arbitrary deprivation of property is fundamental in nature and does not require an element of lawfulness. However, once it is found that the property in question was indeed unlawfully acquired, the deprivation thereof will not be arbitrary. On this basis, the minority found that it is possible to hold that unlawful proceeds can be property for the purposes of section 25(1), but that the forfeiture thereof does not lead to arbitrary deprivation.

The minority then turned its attention to whether a proportionally assessment is required in terms of POCA, notwithstanding the fact that this is already required by section 25(1) of the Constitution. The minority considered that in previous cases before it, it has held that a proportionality analysis must be done in terms of section 50(1)(a) of POCA, which relates to property being used as “instrumentality in an offence”. Despite the current case being in terms of section 50(1)(b) of POCA, which dealt with property as “unlawful proceeds”, the minority held that it would be difficult to accept that a court would have to conduct a proportionality analysis in respect of one, but not the other, and therefore, concluded that a proportionality analysis is required.

The minority ordered the renovated property be forfeited in repayment of the R1,169,068.49. It held that the money Ms. Botha had purportedly “repaid” was a mere attempt at a cover up and should not be credited from the full amount, which the majority judgment concurred with.

The majority judgment

The majority judgment, in its concurrence with the minority, also pointed out that while forfeiture was warranted, it did not constitute forfeiture of Ms. Botha’s family home in its entirety, since not all of the home was constructed with proceeds from unlawful activities. Such a forfeiture would indeed amount to an arbitrary deprivation of rights. The majority thus agreed with the minority’s order that failing payment of the amount, a curator bonis be appointed to sell the house in order to pay the R1,169,068.49 and have the net disbursed to the estate of Ms. Botha.

However, the majority differed with the minority on two issues: The first being that it was of the view that it is not necessary to determine whether section 25 of the Constitution is applicable since POCA itself has a relevant standard for determining arbitrary deprivation. It held further that even in the event that such a determination was necessary, as Ms. Botha had no rights to the proceeds in issue, such proceeds cannot constitute property which should be afforded protection under the Constitution. Secondly, it held that a proportionality analysis is only required where there are property rights that would be affected by the forfeiture order. In the instance where Ms. Botha had no right to the property in question, there were no property rights to be deprived. The majority thus found it inappropriate to apply a proportionality analysis where there is no lawfully recognised interest in the property to begin with.

This case provides clarity on the interplay between section 50 of POCA and section 25 of the Constitution. The court found that a person who obtained property unlawfully has no rights to that property and that property does not enjoy the protection against arbitrary deprivation that section 25 of the Constitution affords to property lawfully acquired.

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