THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT

Case No:  477/08

In the matter between:

JOHN OUPA MICHELE                                                         FIRST APPELLANT
KHAZAMULA JOSEPH MASHABANA                            SECOND APPELLANT
v

THE STATE                                                                                    RESPONDENT

Neutral citation:
Michele v S (477/2008) [2009] ZASCA 116
(25 September 2009).
Coram:
Lewis, Mlambo JJA, Leach AJA
Heard:
8 September 2009
Delivered:
25 September 2009

Summary:
Criminal procedure – appeal against sentence – undue delay in
dealing with an application for leave to appeal – mental anguish
caused as a result taken into account by appeal court in
determining appropriate sentence – sentence reduced.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from: High Court, Pretoria (Daniels J and Van Loggerenberg AJ
sitting as a full bench).

The following order is made:

The appeal succeeds. The order of the high court is set aside and substituted
with the following:
‘1
The appeal succeeds.
The sentence imposed by the regional magistrate on each appellant is set
aside and replaced with the following:
“Four years’ imprisonment, two years of which are suspended for three years on
condition the accused is not convicted of fraud committed during the period of
suspension.”’

________________________________________________________________

JUDGMENT
________________________________________________________________

LEACH AJA (LEWIS and MLAMBO JJA concurring)

[1] This is an appeal against the sentence imposed on the appellants in the
Regional Court at Polokwane in April 2002 pursuant to their conviction on a
charge of fraud to which they had pleaded guilty. They were each sentenced to
seven years’ imprisonment, two years of which were conditionally suspended for
three years. Their appeal to the High Court, Pretoria, against this sentence was
unsuccessful and was dismissed on 20 October 2003.

[2] A week later, on 27 October 2003, the appellants proceeded to lodge an
application for leave to appeal to this court. However, despite the Director of
Public Prosecutions having addressed a number of letters to the registrar of the
high court asking for the matter to be enrolled for hearing, almost five years
passed before the application was eventually heard on 25 August 2008. The
circumstances which gave rise to this undue delay are shrouded in mystery with
the application appearing in some way to have become lost in an administrative
morass in the office of the registrar. The situation may have been exacerbated
because the judge who presided at the appeal retired.

[3] Be that as it may, when the application was ultimately heard the court
expressed the view that the lengthy delay was a factor which this court might
take into consideration in regard to the question of sentence, and for that reason
granted leave to appeal. In this way the matter has now reached this court more
than seven years after sentence was initially imposed. I shall return to this aspect
of the matter in due course.

[4] The subject matter of the charge against the appellants was a fraud they
perpetrated against Old Mutual Insurance Company Limited. On 8 October 1998
the appellants took out a life policy with Old Mutual insuring the life of one
Manaka who was employed by the first appellant. The first appellant was the
nominated beneficiary of the policy which came into effect in January 1999 and
provided for the sum of R377 520 to be paid on the death of Manaka, including
an initial amount of R20 000 to cover funeral expenses.

[5] On 23 February 1999, the appellants submitted a claim under the policy to
Old Mutual, falsely stating that Manaka had died on 14 February 1999 as a result
of a head injury sustained in a motor car accident. The claim was lodged with
fraudulent intent as the appellants knew that Manaka had not died. Unaware of
the truth, Old Mutual immediately paid the agreed funeral cover of R20 000 to the
first appellant by way of an electronic transfer of funds. Fortunately, it later
ascertained that the claim was fraudulent and refused to pay the balance of
R357 520 claimed under the policy.

[6] Both appellants were businessmen who were in receipt of an adequate,
albeit not large, income. The first appellant owned both a filling station and a
construction company and also carried on business as an insurance broker. The
second appellant conducted both a security business and a cleaning service.
Both appellants were first offenders and regular churchgoers. At the time
sentence was imposed in the trial court the first appellant was 32 years of age,
unmarried but maintaining a minor child, while the second appellant was 42
years of age, married with six children between the ages of 17 and 7 years.

[7] On behalf of the appellants it was argued that they had both shown
remorse by pleading guilty and showing their willingness to repay to Old Mutual
the money it had disbursed under the policy, and that the trial court had
misdirected itself by not placing sufficient emphasis on their remorse. Although it
is indeed so that during argument their legal representative suggested to the trial

court that the appellants should be ordered jointly and severally to repay the
amount, the clearest evidence of their remorse would have been their immediate
repayment of the embezzled money. If the appellants were truly remorseful, it is
surprising, to say the least, that they did not do so and it is not without
significance that in the heads of argument filed in this court it is again suggested
on their behalf that a suspended period of imprisonment, conditional upon them
repaying the amount of R20 000, would be appropriate. This, too, hardly smacks
of remorse. However, for present purposes I am prepared to accept the
suggestion of appellants’ counsel that the appellants had been ill advised by a
previous legal representative and that they had at all times been willing to repay.
But that fact and their plea of guilty does not necessarily mean that the
appellants were truly remorseful, particularly as their fraud, once discovered,
would have been almost impossible to deny. A guilty plea in an open and shut
case is often a neutral factor.

[8] The trial magistrate nevertheless accepted a degree of remorse on the
part of the appellants, evidenced by their plea of guilty and their offer to repay,
and in my view it has not been shown that he in any way misdirected himself by
not placing more emphasis on this factor. I am also not persuaded by the
appellants’ further argument that the trial magistrate misdirected himself by failing
to take into account the fact that their numerous employees would suffer if they
were to be incarcerated. This possibility was specifically mentioned by the
magistrate in his judgment but was not considered as being sufficient to justify a
non-custodial sentence.

[9] The severity of the appellants’ crime cannot be gainsaid. They acted
purely out of greed and their scheme was carefully planned and executed as is
shown by their having lodged false documents including police statements, a
death certificate, a post mortem medical report, a police accident report and a
certificate from a local prosecutor relating to a police docket, in support of their
claim. The severity of white-collar crime such as this should not be

underestimated. Evidence was led that the Old Mutual alone suffers loss of some
R2m per annum from similar frauds. Of course the result of this type of conduct is
that innocent persons have to pay higher premiums to obtain insurance cover.
And while the actual loss suffered by Old Mutual was limited to the R20 000 paid
out for funeral expenses, had the fraud not been discovered its potential loss
amounted to a further R357 520.

[10] As was pointed out in this court in S v Sadler1 ‘white-collar’ crimes such as
fraud have a corrosive effect on society and even first offenders should expect
rigorous punishment including, where appropriate, incarceration. As was
remarked by Mlambo AJA in S v Barnard2 the decision in Sadler ‘dispelled the
notion that persons convicted of this type of offence were not criminals and were
therefore entitled to be kept out of prison’.

[11] As a general rule an appeal court may not interfere with a sentence unless
there is a material misdirection by the trial court or unless the sentence is
startlingly inappropriate with there being a striking disparity between it and the
sentence the appeal court would have imposed. The essential question to be
addressed is whether the sentencing court properly exercised its discretion
properly.3

[12] I share the trial court’s view that imprisonment was called for in this case.
However, the trial court did not give sufficient weight to the fact that although the
potential prejudice to the complainant was substantial, the actual loss suffered
was far less severe. Moreover, in my view, a sentence of no more than five
years’ imprisonment, two years suspended, should have been imposed. There is
sufficient disparity between that sentence and the sentence imposed for this
court to interfere. In the light of both that disparity and the trial court’s

1 2000 (1) SACR 331 (SCA) paras 11-13.
2 2004 (1) SACR 191 (SCA) para 15.
3 See eg S v Pieters 1987 (3) SA 717 (A) and S v Sadler above para 8.

misdirection, I conclude that the trial court did not exercise its sentencing
discretion properly and that this court is entitled to interfere.

[13] In considering what would be an appropriate sentence, it is necessary to
return to the lamentable delay which occurred after the application for leave to
appeal to this court was lodged in the high court. While an appeal court will
generally only consider the facts and circumstances known when sentence was
initially imposed, this court has recognized that in exceptional circumstances
factors later coming to light may be taken into account on appeal where it is in
the interest of justice to do so.4 In S v Roberts5 this court was called upon to
increase a wholly suspended sentence imposed on the respondent who had
murdered his wife. In considering what period of imprisonment would be
appropriate, it remarked that it would be ‘callous to leave out of account the
mental anguish the respondent must have endured’ during a period of about two
years between the state setting the appeal process in train and the appeal being
heard. In the present case, where the appellants have been obliged to wait for a
period of six years without clarity as to their future, there is all the more reason to
do so. In my view, it is a factor to which this court should have regard in the
assessment of an appropriate sentence.

[14] Taking it and all the other circumstances I have mentioned into account, I
am of the view that a sentence of four years’ imprisonment, two years
suspended, is the appropriate sentence for each appellant. The sentence of the
trial court must therefore be set aside.

[15] In the result, the appeal succeeds. The order of the high court is set aside
and substituted with the following:
‘1
The appeal succeeds.

4 See eg S v Karolia 2006 (2) SA 75 (SCA) paras 36-38.
5 2000 (2) SACR 522 (SCA).

The sentence imposed by the regional magistrate on each appellant is set
aside and is replaced with the following:
“Four years’ imprisonment, two years of which are suspended for three years on
condition the accused is not convicted of fraud committed during the period of
suspension.”’

_____________________
L E LEACH
ACTING JUDGE OF APPEAL

APPEARANCES:

COUNSEL FOR APPELLANTS:   S Joubert
INSTRUCTED BY:
Macintosh Cross & Farquharson; Pretoria

CORRESPONDENT:
Naudes Inc; Bloemfontein

COUNSEL FOR RESPONDENT: L Pienaar
INSTRUCTED BY:

Director of Public Prosecutions; Pretoria
CORRESPONDENT:
Director of Public Prosecutions; Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
25 September 2009

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.

J O MICHELE & ANOTHER  v  THE STATE

In 2002 the appellants were convicted of an insurance fraud and sentenced to
seven years’ imprisonment, two years of which were conditionally suspended. An
appeal to the High Court, Pretoria against this sentence was dismissed in
October 2003. Although the appellants immediately lodged an application for
leave to appeal to the Supreme Court of Appeal, the application was only heard
some five years later in August 2008, when leave to appeal was granted.

The Supreme Court of Appeal today upheld the appellants’ appeal. It held that
while the total potential loss to the complainant was R377 520 the actual loss
suffered was only R20 000, and that the trial court had not paid sufficient regard
to this fact. In the light of this misdirection and the mental anguish the appellants
must have suffered during the lengthy period awaiting finality in the appeal, the
sentence was reduced to four years’ imprisonment, two years of which were
conditionally suspended.