The National Director of Public Prosecutions v Savvas Ioannou Kyriacou

The respondent was convicted by Lombard J in the Orange Free State Provincial Division on 25 September 2001 on 102 counts of receiving stolen property knowing it was stolen, and was sentenced to 15 years' imprisonment. The property involved was valued at approximately R4.5 million. After conviction, the court ordered the property to be returned to the rightful owners in terms of section 34(1)(a) of the Criminal Procedure Act 51 of 1977. The following day, the court commenced an enquiry under section 18(1) of the Prevention of Organised Crime Act 121 of 1998 to determine whether a confiscation order should be made. On 11 October 2001, before that enquiry concluded, the High Court (Cillié J) made a provisional restraint order on an ex parte application by the National Director of Public Prosecutions (NDPP) in terms of section 26 of the Act. The order authorized a curator bonis to take possession of various close corporations, trusts controlled by the respondent, and other specified property including his residence. On the return day, Cillié J set aside the provisional restraint order. The NDPP appealed with leave.

• Whether there were reasonable grounds for believing that a confiscation order may be made against the respondent as required by section 25(1)(a)(ii) of the Prevention of Organised Crime Act
• Whether the fact that the trial court had already ordered the return of the stolen property to the rightful owners precluded the making of a confiscation order
• Whether the presumptions in section 22 of the Act applied to the respondent's other property holdings
• Whether the NDPP's failure to disclose the section 34(1) forfeiture order in the ex parte application warranted setting aside the restraint order
• The proper test and evidentiary requirements for granting restraint orders under the Prevention of Organised Crime Act

The appeal was upheld by majority decision (4-1). The order made by the court a quo was set aside and substituted with an order confirming the provisional restraint order. The respondent was ordered to pay the costs of the application, including the costs occasioned by the employment of two counsel.

The binding legal principle is that for a restraint order to be granted under section 25(1)(a)(ii) of the Prevention of Organised Crime Act 121 of 1998, the National Director of Public Prosecutions need only establish reasonable grounds for believing that a confiscation order may be made - not prove on a balance of probabilities that one will be made. The court retains discretion under section 18(1) to make confiscation orders not only in relation to the specific offences of conviction but also in relation to benefits derived from criminal activity sufficiently related to those offences. The fact that a defendant has been deprived of the specific proceeds of the offences of conviction (e.g., through a section 34 forfeiture order) does not preclude the making of a confiscation order based on benefits from related criminal activities. The presumptions in section 22 of the Act apply where a defendant holds property and has not adequately explained legitimate sources of income to justify such holdings, creating prima facie evidence that such property constitutes proceeds of unlawful activities. A defendant's failure to provide detailed explanations rebutting these presumptions, combined with evidence of a pattern of criminal conduct, can constitute reasonable grounds for believing a confiscation order may be made.

Mlambo AJA observed (obiter) that it would be an improper exercise of the court's discretion to order the confiscation of further property in relation to crimes where the defendant has already been deprived of the benefit through other court orders (such as section 34 orders), if those crimes alone were being considered. However, this does not end the enquiry where related criminal activity is alleged. Brand JA commented (obiter) that it would be most unlikely that a 'fence' who had operated on the scale demonstrated by the respondent (102 counts involving R4.5 million) would be so unlucky as to be caught in possession, on one single occasion, of all the stolen property he had ever received. Southwood AJA, in dissent, observed that the clear purpose of the confiscation provisions is to ensure that defendants do not continue to enjoy the benefit of proceeds of unlawful activities, and emphasized that these must be specific unlawful activities, not merely suspected ones. He also reiterated the principle that utmost good faith must be observed in ex parte applications and that failure to disclose material facts may entitle a court to set aside an order even if the non-disclosure was not wilful or mala fide.

This case is significant in South African law for establishing important principles regarding restraint orders under the Prevention of Organised Crime Act 121 of 1998. It clarified that: (1) the test for granting restraint orders under section 25(1)(a)(ii) requires only reasonable grounds for believing a confiscation order may be made, not proof on a balance of probabilities; (2) courts have discretion to make confiscation orders not only in relation to the specific offences of conviction but also to benefits derived from related criminal activity; (3) the fact that proceeds of specific crimes have been forfeited under other provisions does not preclude a confiscation order based on related criminal activities; (4) the presumptions in section 22 play an important role in asset forfeiture proceedings and place an onus on defendants to explain the sources of their property holdings; (5) restraint orders should not be granted only sparingly or in the clearest cases - the statutory test governs; and (6) the court's powers under the Act are broad and designed to ensure convicted criminals do not continue to enjoy proceeds of criminal activity. The case demonstrates the court's willingness to apply the proceeds of crime legislation purposively to achieve its objectives of depriving criminals of ill-gotten gains.