THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

Case No 173/05
REPORTABLE

In the matter between

THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS                                                                APPELLANT

and

KUMARNATH MOHUNRAM                                FIRST RESPONDENT
SHELGATE INVESTMENTS CC                     SECOND RESPONDENT
BOE BANK LIMITED                                           THIRD RESPONDENT

Coram:  Harms, Mthiyane, Conradie, Jafta JJA and Maya AJA

Heard:
7 March 2006

Delivered: 17 March 2006

Summary:
Prevention of Organised Crime Act 121 of 1998 – forfeiture –
gambling
premises
–
instrumentality
of
an
offence
–
proportionality.

Neutral citation: National Director of Public Prosecutions v
Mohunram [2006] SCA 11 (RSA)

JUDGMENT
_____________________________________________________

HARMS JA:

[1] The Prevention of Organised Crime Act 121 of 1998 (to which I intend
to refer as ‘POCA’) provides, inter alia, for forfeiture of property which, in civil
proceedings, is found on a balance of probabilities to have been ‘an
instrumentality of an offence referred to in Schedule 1’ (s 50(1)(a)). An
‘instrumentality of an offence’ is defined to mean any property which ‘is
concerned in the commission’ of an offence (s 1). Listed in the schedule is
‘any offence under any legislation dealing with gambling, gaming or lotteries’.
Casinos and gambling fall within the legislative competence of both national
and provincial legislatures (Schedule 4 of the Constitution). In KwaZulu-Natal
these matters are regulated by the KwaZulu-Natal Gambling Act 10 of 1996.
Since it is common cause that the respondents have contravened the
Gambling Act, the appellant, the National Director of Public Prosecutions,
sought to have immovable property (a sectional title unit in the town Vryheid
together with an undivided share in the common property in accordance with
the applicable participation quota) belonging to the second respondent,
Shelgate Investments CC, declared forfeited. (The first respondent, Mr
Mohunram, is the only member of Shelgate.) C N Patel J, in the Natal
Provincial Division, dismissed the application with costs on the basis that the
property had not been an ‘instrumentality’ of any offence under the Gambling
Act. He refused leave to appeal but this Court subsequently granted the
necessary leave.

[2] POCA has been the subject of a number of leading judgments and the
forfeiture provisions, more particularly, have been considered by this Court in
recent times. This judgment does not raise any novel issues of interpretation
and is more concerned with the application of the Act to the particular facts of
the case. There are usually three main issues in a case such as this to decide
and they are (a) whether the property concerned was an instrumentality; (b)
whether any interests should be excluded from the forfeiture order; and (c)
whether the forfeiture sought would be disproportionate. In the present
circumstances issue (b) will be referred to at the end of the judgment because
it is not an issue between the parties to the appeal.

[3] It is common cause that Mohunram used part of the property as a
casino: he operated 57 gambling machines on the property in contravention of
s 44 of the Gambling Act, which states that no person may operate a casino
unless validly licensed. (The word ‘casino’ is defined in s 1 as ‘any premises
upon which . . . gaming machines may be played.’) In terms of s 3(3)(a) of this
Act, the owner of a building may not allow any other person to conduct any
gambling activity therein or thereon unless that person has been duly
licensed. Shelgate as owner did just that, having permitted Mohunram to
conduct the casino.

[4] It will immediately be apparent that in both instances use of premises is
of the essence of the crimes as defined. Without use of premises there are no
crimes. The complications that arose in cases such as Cook,1 Parker2 or
Prophet3 do not arise in the present instance. It follows in my view ineluctably
that the particular premises were an instrumentality of the crimes; they were
intimately concerned in their commission. The High Court, on the other hand,
held that the premises were, in this case, merely a venue for the commission
of these crimes. It held that the gambling machines were the means or
instruments of the crime and not the premises. This finding, in my judgment,
does not take into account the definitions of the crimes involved. If the
Gambling Act had only provided for the criminalisation of the possession or
use of gambling machines, the finding might have had some merit but even
then it would have been necessary to conduct, in the light of all the facts, an
inquiry along the lines suggested in Prophet (at para 27). Another
consideration relied on by the High Court was the fact that part of the property
only had been used for a casino. The High Court found that the provision does
not apply if part of a property is used in the commission of a crime and not the
whole. There is no justification for this interpretation. ‘Property’ is defined in
POCA to include any ‘immovable’ thing and immovable property is identified
with reference to its cadastral description, ie, it is the property as described in

1 National Director of Public Prosecutions v R O Cook Properties (Pty) Ltd 2004 (2) SACR 208
(SCA).
2 National Director of Public Prosecutions v Parker SCA judgment of 1 December 2005 case 624/04.
3 Prophet v National Director of Public Prosecutions 2005 (2) SACR 670 (SCA).

the deeds office.4 It is highly unlikely that the whole of an immovable property
can ever be used in the commission of a crime and the restriction would make
the provision meaningless. The fact that part of a property was used in the
commission of a crime generally does not determine whether or not the
property was an ‘instrumentality’, although it may be relevant in considering
proportionality.

[5] Proceeding then to the proportionality issue, ie, whether forfeiture was
constitutionally justified in the light of especially the property clause and the
protection against double jeopardy, it has been held that forfeiture may not be
ordered if the forfeiture would be significantly disproportionate to the crime
concerned. Although the respondents did not raise this issue pertinently, as
was their duty, and although the High Court did not pronounce thereon in the
light of its conclusion on ‘instrumentality’, the matter was properly argued and
requires consideration.

[6] The respondents’ main complaint is that Mohunram had paid admission
of guilt fines amounting to R88 500,00 in respect of the illegal casino
operation; under the provisions of the Gambling Act he forfeited R2 102,10,
being monies that were found on the premises during a police raid; and his
gaming machines (which he valued at R285 000) were, also in terms of the
Gambling Act, seized. See s 94(4). This, they say, was enough punishment
(as if punishment were the object of forfeiture). They again raise the fact that
part only of the property had been used for gambling and not the whole
property. And they argue that the loss of the value of the property would be
disproportionate.

[7] As far as the first point is concerned, it should be borne in mind that the
property of Shelgate is the subject of the forfeiture application and not the
property of Mohunram. And these are business premises, not residential.
Shelgate, to date, has lost nothing due to its own illegal actions. Admittedly,
Mohunram is the ultimate beneficiary of Shelgate but that should not conceal

4 Cf Dlamini v Joosten unreported SCA judgment 30/05 of 30 November 2005.

the fact that one has to respect the separate corporate personality of
Shelgate. Mohunram and Shelgate have had the advantages of their separate
legal personalities and they have to bear the consequences thereof. In
addition, the argument loses sight of Mohunram’s illicit income from the
operation which, on the available evidence, amounted to about R360 000
during the one year when he ran the operation after an amendment to the
Gambling Act that made it clearly illegal. It also does not take into account the
seriousness of the crime as reflected in the penalties and forfeitures provided
for by the Gambling Act (s 94). As first offenders Mohunram risked
imprisonment of ten years and Shelgate a fine of R2m.

[8] The other two points can be dealt with as one. The area of the
sectional title property is 542 sq metres. Although Mohunram did conduct a
legitimate business on part of the property, we have not been informed as to
the respective sizes of the two areas. Taking into account that he had 57
gaming machines and a gambling booth, the area occupied by his casino
operation could not have been insignificant. One can get some indication of
the size of the gambling area if one considers that after the casino was closed
down he subdivided the casino area and let the two portions. Turning then to
the value of the property, at least one thing is clear and that is (bearing in
mind the bond of the third respondent (BOE Bank Ltd)) that the equity of
Shelgate, is far less than the value of the property. The figures are in dispute,
the appellant believing that there is value for the state in a forfeiture order
while the respondents think not. However, since the appellant utilised motion
proceedings, he is generally bound by the version of the respondents.
According to Mohunram, the property market in Vryheid at the relevant time
was ‘severely depressed’ and he thought that it was unlikely that the
outstanding bond would be realised should the property be sold. (We are not
concerned with the present value or the present state of the market, matters
about which we in any event do not have any knowledge.) Accepting this
evidence, as we must, there does not appear to be any merit in the argument
that forfeiture would have been disproportionate to the crimes involved.

[9] The appeal has, consequently, to succeed. The order that is about to

issue reflects the interests of the bondholder and that prior to the proceedings
before Patel J a curator bonis had been appointed as part of a preservation
order in terms of s 38 of POCA.

ORDER:
1.
The appeal is upheld with costs including costs consequent upon the
employment of two counsel.
2.
The order of the court a quo is to be replaced with the following: -
(a)
An order is granted under s 50(1) of the Prevention of Organised
Crime Act, No 121 of 1998 declaring forfeit to the state the property
described as:
(i) Section 2 as shown and more fully described on sectional
plan no SS 577/96 in the scheme known as the Malapin Centre
in respect of the land and building or building situate at 244
Utrecht Street, VRYHEID, in the Transitional Local Council Area,
Vryheid; and
(ii) an undivided share in the common property in the scheme
apportioned to the said section in accordance with the
participation quota as endorsed on the said sectional plan;
(b)
the curator bonis appointed in terms of the preservation order
made on 19 October 2001 will continue to act in such capacity;
(c)
the interest of the third respondent is hereby excluded from the
operation of this order;
(d)
the curator bonis, as of the date on which the forfeiture order
takes effect, shall be empowered to perform the following:
(i)
subject to consultation with the third respondent, to
dispose of the property by sale or other means;
(ii)
deduct the fees and expenditure associated with his
function as a curator bonis;
(iii)
settle the outstanding balance on the home loan bond
account number 8350103059 held by the second
respondent at a branch of the third respondent;
(iv)
deposit the balance of the proceeds into the Criminal
Asset Recovery Account;

(e)
the Registrar of the High Court, Natal Provincial Division, is
directed to publish a notice of this order in the Government Gazette as
soon as possible; and
(f)
the first and second respondents are directed to pay the
applicant’s costs jointly and severally.

____________
LTC HARMS
JUDGE OF APPEAL

CONCUR:

MTHIYANE JA
CONRADIE JA
JAFTA JA
MAYA AJA
Supreme Court of Appeal of South Africa

MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME
COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
17 March 2006

Status:
Immediate

Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal

THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS

v

K MOHUNRAM & 2 OTHERS

The SCA today upheld an appeal by the National Director of Public
Prosecutions with costs. The effect of the judgment is that the
property (a sectional title unit in Vryheid) of Shelgate Investments
CC was forfeited in favour of the Criminal Asset Recovery Account.
The first respondent, Mr Kumarnath Mohunram, the only member of
the CC, conducted an unlawful casino on part of the property,
operating 57 gaming machines. These had been confiscated and he
had paid an admission of guilt fine of R88 500. The High Court,
Pietermaritzburg, refused to declare the sectional title unit forfeited
because the casino had been conducted on part of the property only
and because, so it held, the property was not ‘an instrumentality of
the crime’ (a requirement for forfeiture of a specific asset). The SCA
disagreed, holding that the property was indeed an instrumentality of
the crimes defined in the relevant Gambling Act. The fact that part of
the property had been used, it held, was relevant in determining

whether forfeiture was disproportionate or not. The SCA found, on
the facts, that it was not disproportionate and made the order as
mentioned.