Phillips and Others v National Director of Public Prosecutions

Mr Andrew Lionel Phillips operated two businesses - The Ranch (a brothel) and The Titty Twister (a striptease venue) - at premises in Rivonia, Sandton. Following a police raid in February 2000, the NDPP obtained a preservation of property order under section 38 of the Prevention of Organised Crime Act 121 of 1998 (POCA) over the property, and appointed a curator bonis. Phillips faced criminal charges relating to keeping a brothel, procuring, living off proceeds of prostitution, and employing illegal aliens. In December 2000, the NDPP obtained a restraint order under section 26 of POCA against Phillips and 15 associated entities covering all property under his control in anticipation of potential confiscation orders following criminal conviction. The curator bonis stopped the businesses operating, resulting in no income to maintain properties and pay municipal charges. The applicants obtained various court orders against the curator bonis regarding property maintenance but prevented him from letting properties or using applicants' funds. Properties deteriorated and charges accumulated. The applicants then applied to rescind the restraint order, not on statutory grounds in section 26(10) of POCA (hardship), but on common law grounds based on the High Court's inherent jurisdiction, arguing impossibility of performance by the curator bonis.

• Whether the High Court has inherent jurisdiction, beyond the grounds specified in section 26(10) of POCA, to rescind a restraint order made under section 26(1) of POCA
• Whether section 26(10) of POCA provides an exhaustive list of grounds for varying or rescinding restraint orders or permits rescission on common law grounds
• The proper interpretation of section 26(10) of POCA in light of constitutional provisions, particularly section 173 of the Constitution (inherent power of courts)
• Whether section 173 of the Constitution empowers courts to ignore or side-step clear statutory provisions
• Whether it is permissible to raise constitutional challenges for the first time on appeal without proper pleading in lower courts
• The nature and scope of restraint orders under POCA - whether interim or final in character

Application for leave to appeal dismissed. No order as to costs.

The binding legal principles established are: (1) Section 26(10) of the Prevention of Organised Crime Act 121 of 1998 provides an exhaustive list of grounds upon which a restraint order made under section 26(1) may be varied or rescinded - courts have no inherent jurisdiction to rescind such orders on grounds beyond those specified in the statute; (2) Section 173 of the Constitution, which preserves courts' inherent power to protect and regulate their own process, does not empower courts to make orders that negate the unambiguous expression of legislative will or to ignore clear statutory provisions; (3) The inherent jurisdiction under section 173 is an extraordinary power to be exercised sparingly, primarily where there is a legislative lacuna in court process, and it cannot be used to bypass comprehensive statutory schemes; (4) Litigants cannot rely directly on constitutional provisions or common law to obtain relief where a statute comprehensively deals with the subject matter, without first challenging the constitutionality of the relevant statutory provisions; (5) Constitutional challenges must be explicitly pleaded in lower courts with proper notice to affected parties - they cannot be raised for the first time on appeal except in rare and exceptional circumstances where interests of justice so require; (6) Accurate and specific pleading is required in constitutional litigation to enable affected parties to respond and to adduce evidence where necessary, particularly regarding justification of limitations under section 36 of the Constitution.

The Court made several non-binding observations: (1) The true meaning and full ambit of section 173 of the Constitution was not definitively determined and was left for future cases where the issue directly arises; (2) It may be that in extraordinary circumstances, where there is a procedural vacuum or legislative lacuna, courts could legitimately claim inherent power under section 173 to supplement limited statutory procedures, but such circumstances would be rare; (3) The prohibition in restraint orders on "dealing in" property should be interpreted narrowly to refer to selling or encumbering property, rather than broadly to prevent all dealings including letting, to ensure the preservation purposes of POCA are achieved; (4) Courts making restraint orders should take care to ensure their terms are sufficiently flexible to ensure preservation of properties is not imperilled; (5) The NDPP, in formulating draft restraint orders, should bear in mind the need for flexibility to enable proper property preservation; (6) The difficulties experienced by the applicants arose substantially from their own lack of cooperation with the curator bonis and from their repeated court challenges preventing the curator from performing his duties; (7) The solution to the applicants' problems lay in amending the curator's powers under section 28 of POCA to permit letting of properties to generate income for maintenance, rather than rescinding the restraint order; (8) Much of the evidence relied upon by applicants related to a different property (54 Autumn Road) not actually subject to the restraint order but rather to a separate preservation order.

This case establishes important principles regarding the limits of courts' inherent jurisdiction under section 173 of the Constitution and the relationship between statutory remedies and constitutional powers. It clarifies that: (1) Section 173's grant of inherent power to courts cannot be used to circumvent or ignore clear statutory provisions; (2) Where legislation comprehensively regulates a particular area (like restraint orders under POCA), courts must apply the statutory scheme and cannot resort to common law or inherent jurisdiction unless there is a legislative lacuna; (3) Constitutional challenges must be properly pleaded at first instance with adequate notice to all parties - they cannot be raised for the first time on appeal except in exceptional circumstances; (4) The inherent jurisdiction of courts is an extraordinary power to be exercised sparingly, primarily to fill procedural gaps or protect the integrity of judicial process; (5) Litigants must exhaust statutory remedies before invoking constitutional or common law alternatives; (6) Restraint orders under POCA, while interim in duration, are sufficiently final in effect to be appealable but can only be varied or rescinded on the limited statutory grounds. The judgment reinforces the doctrine of separation of powers and judicial restraint in relation to legislative prerogatives.