Asset Forfeiture

Help! A curator has control of my assets

The purpose of the Prevention of Organised Crime Act 1998, (“POCA”) is to offer a civil remedy for the preservation, seizure, and forfeiture of property or assets which, as a natural consequence, are concerned with the carrying out of unlawful activities.

The National Director of Public Prosecutions (“NDPP”) may, in terms of POCA, apply to Court for an order restraining a person from dealing with property or assets that are suspected to form part of a crime, thereby preserving the assets. Section 163 of the Tax Administration Act, 2011 provides similar relief in terms of preservation of a person’s property or assets.

A restraint order is interim relief with no definitive or dispositive effect and a person affected by such an order is not left without recourse. In terms of Section 26(10) of POCA, an affected person may, on application to Court, seek an order to vary or rescind the restraint order if the Court is satisfied –

(i) “that the operation of the order concerned will deprive the applicant of the means to provide for his or her reasonable living expenses and cause undue hardship for the applicant; and

(ii) that the hardship that the applicant will suffer as a result of the order outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed, or transferred; and

(b) shall rescind the restraint order when the proceedings against the defendant concerned are concluded.

The late Justice Skweyiya in his Constitutional Court judgment in Phillips And Others v National Director Of Public Prosecutions 2006 (1) SA 505 (CC) remarked that “… courts, in making restraint orders, and the NDPP in formulating draft orders, should be careful to ensure sufficient flexibility in their terms to ensure that the preservation of properties subject to restraint orders was not imperiled by the terms of that order.

The appointment of a curator and their duties are set out in sections 28, 32, and 42 of POCA but are generally subject to the applicable provisions of the Administration of Estates Act, 1965 (“Estates Act”). Against this backdrop (and crucial to the mechanism provided for in POCA) is section 26 read with section  28 of POCA. Section 26 provides for the granting of a restraint order which prohibits a person charged or to be charged with an offence from dealing with the property or assets concerned, with the objective that it will be confiscated by the State. Section 28 allows for the appointment, by the Court that has granted the restraint order, of a curator bonis to take possession and control of the restrained property. The curator’s conduct is at all times subject to the directions of the Court. Such directions can be varied from time to time in instances where the Court directs that the curator performs a particular act concerning the property or directs that the curator takes care of or administers the property. In certain circumstances where the restrained property is a business or undertaking, the Court may direct that the curator carries on with the business or undertaking with due regard to any law which may be applicable.

The purpose of a POCA restraint order and POCA itself was dealt with by the Supreme Court of Appeal in the matter of Phillips & Others v National Director of Public Prosecutions 2003 (6) SA 447 (SCA), where the Court analysed three elements of the restraint order before it, having regard to the evidence presented, namely: (1) the prohibition against dealing in any manner with the restrained property; (2) the appointment of a curator bonis to seize the property in order to take control and care of it and administer it; and (3) surrender of the restrained property to the curator. The Court held that these three elements are based on provisions of POCA which are contained in chapter 5 thereto:

“…and embody a scheme structured to enable the State to obtain confiscation of the proceeds by means of which convicted criminals have succeeded in making crime pay.”

The duties of the curator bonis under a preservation order, are to preserve and care for the restrained property or assets pending investigation. A further duty of the curator, which is of paramount importance is for him or her to account to the parties whose property or assets form part of the restraint. The latter duty to account is a statutory one under POCA and the Estates Act. However, this is notwithstanding  the fiduciary duty under common law to the parties whose property or assets is subject to a restraint order.

FAIRBRIDGES WERTHEIM BECKER

Dhahini Naidu
Director
Commercial Litigation
and
Zolani L Dhlamini
Associate
Commercial Litigation

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