National Director of Public Prosecutions v Johannes Erasmus van Staden and 11 Others

The National Director of Public Prosecutions (NDPP) brought an ex parte application in camera in the Western Cape High Court for a restraint order in terms of section 26(1) of the Prevention of Organized Crime Act 121 of 1998 (POCA). The application sought to restrain Johannes van Staden, his family members and various business entities from dealing with property pending a criminal trial for fraud against the South African Revenue Service (SARS). The fraud charges related to fraudulent VAT returns. The high court (Traverso DJP) granted provisional restraint orders and a rule nisi calling on the respondents to show cause why the orders should not be made final. The NDPP's application was supported by affidavits from Mr J K Rossouw (Deputy Director of the National Prosecuting Authority) and Mr F P Scholtz (SARS investigator). During a search and seizure operation on 27 November 2008, the fourth respondent Mr C de Vries, an employee of Van Staden and financial director of the Indo Atlantic Group, volunteered to make a statement to Scholtz about the investigation. He was advised to consult an attorney first, which he did. De Vries provided a sworn statement on 8 September 2009, after the provisional restraint order had been granted. The founding affidavits disclosed that De Vries had been interviewed and had offered to make a sworn statement, but it had not been furnished at the time of the ex parte application. When the application for confirmation of the restraint order came before Blignault J, Van Staden opposed it. He complained that he had not had access to De Vries's affidavit, though he had in fact been given an electronic copy. The high court (Blignault J) discharged the order against Van Staden, finding that the NDPP had not acted in good faith (uberrima fides) when it sought the ex parte order by relying on oral information from De Vries without obtaining his sworn statement as soon as possible, and by not placing the affidavit before the court when confirmation was sought. Van Staden's businesses went into liquidation as a result of the restraint order. The NDPP appealed to the Supreme Court of Appeal.

• Whether the NDPP failed to act in good faith (uberrima fides) when bringing an ex parte application for a provisional restraint order under section 26(1) of POCA by relying on oral information from a witness without obtaining a sworn statement before the application
• Whether the NDPP was obliged to obtain and file a sworn statement from De Vries as soon as practically possible after the grant of the provisional restraint order
• Whether the NDPP acted unfairly by providing De Vries's affidavit to Van Staden in electronic form on a CD without an index
• Whether the duty of utmost good faith applicable to ex parte proceedings extends to opposed proceedings for confirmation of a provisional order
• Whether a provisional restraint order that has been discharged is appealable
• Whether there were reasonable grounds for believing that a confiscation order may be made against Van Staden if convicted of fraud

The appeal was upheld with costs including those of senior counsel. The order of the high court was set aside and replaced with an order confirming the provisional restraint order granted on 12 December 2008. The respondent (Van Staden) was ordered to pay the costs of the application including those of senior counsel.

The binding legal principles established are: 1. The duty of utmost good faith (uberrima fides) applicable to ex parte applications for provisional restraint orders under section 26 of POCA does not extend to opposed motion proceedings for confirmation of such orders. Material non-disclosure or dishonesty in opposed proceedings may be dealt with by costs orders but cannot deny substantive relief to which a party would otherwise be entitled. 2. An applicant for a provisional restraint order does not breach the duty of good faith by relying on oral information from a witness who has offered to provide a sworn statement but has not yet done so, where: (a) the applicant discloses to the court that the witness has been interviewed and has offered to provide a statement that has not yet been furnished; (b) the oral information is corroborated by other objective evidence; and (c) the witness is an accused person who cannot be compelled to provide a statement. 3. An order discharging a provisional restraint order granted ex parte is appealable, notwithstanding that there is nothing to revive once the provisional order has been discharged. 4. The test for confirming a provisional restraint order under POCA is whether there are reasonable grounds for believing that there might be a conviction and a confiscation order. The court is not required to determine whether the defendant is probably guilty or has probably benefited from an offence. The court need only ask whether there is evidence that might reasonably support a conviction and a consequent confiscation order, and whether that evidence might reasonably be believed. The evidence need not be evaluated for veracity unless it is manifestly false or unreliable. 5. Providing discovery documents, including witness statements, to a legally represented litigant in electronic form without an index does not constitute unfairness or inequality of arms where the recipient has access to the documents and the means to search them electronically, and has been provided with funds for legal representation.

The court made several non-binding observations: 1. On the characterization of POCA restraint orders: Lewis JA noted that although the effect of a restraint order may be harsh, it is not generally accepted to be "draconian" as the high court had described it. The defendant is not deprived of property arbitrarily but is simply restrained from dissipating alleged proceeds of unlawful activities until conviction and a court determination that proceeds should be confiscated. 2. On Van Staden's allegations of hardship: The court observed that Van Staden's allegations about being reduced to penury were not substantiated in the papers, and his complaints related largely to how the court-appointed curator was conducting his business affairs. The court noted he was entitled to apply for living expenses, which he did. 3. On section 24A of POCA: The court noted it was unclear whether this section, which provides that restraint orders remain in force pending appeal against confiscation decisions, refers to orders that have been confirmed or also to provisional orders. However, it was not necessary to decide this question in the case. 4. On access to witness statements in criminal proceedings: The court referred to Shabalala v Attorney General, Transvaal for the proposition that even where access to witness statements by an accused is justified, it does not follow that copies of statements must be furnished. A fortiori, Van Staden was not entitled to a printed version where he had access to the document on CD. 5. On Van Staden's conduct: The court made critical observations about Van Staden's conduct in the appeal process, describing it as "deplorable" - he failed to file heads of argument on time, refused to cooperate on the record, requested postponements at the last minute without good reason, and continued to file irrelevant material relating to unrelated charges. This conduct was noted by Van Staden's own counsel as deplorable.

This case is significant in South African law for clarifying the scope of the duty of good faith (uberrima fides) in applications for provisional restraint orders under POCA. It establishes that: 1. The duty of utmost good faith applies to ex parte applications but does not extend to opposed proceedings for confirmation of provisional orders (following Trakman NO v Livschitz). 2. When an applicant for a provisional restraint order discloses that a witness has been interviewed and has offered to provide a sworn statement that has not yet been furnished, and the oral information is corroborated by other objective evidence, this does not constitute a breach of the duty of good faith, particularly where the witness is an accused person who cannot be compelled to provide a statement. 3. A discharged provisional restraint order is appealable, even though there is nothing to revive. 4. The test for granting a provisional restraint order is whether there are reasonable grounds for believing that there might be a conviction and a confiscation order, not whether the defendant is probably guilty - the court need only ask whether there is evidence that might reasonably support a conviction and confiscation order, and whether that evidence might reasonably be believed. 5. Providing discovery documents in electronic form does not constitute unfairness where the recipient has access to them and the means to search them, and where the recipient is legally represented and has been provided with funds for legal costs. The case also provides guidance on the approach to realisable property held through trusts, companies and family members where there is evidence of control by the defendant. The judgment reinforces that while POCA restraint orders have serious effects, they are not arbitrary deprivations of property but provisional measures pending conviction and confiscation proceedings, and courts should not impose unrealistic burdens of disclosure on the NDPP in ex parte applications where reasonable grounds are shown.