THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA

JUDGMENT

In the matter:

Case No: 398/09

S A METAL & MACHINERY CO (PTY) LTD
Appellant

and

THE STATE
Respondent

Neutral citation:
SA Metal & Machinery Co (Pty) Ltd v S (398/09) [2010]
ZASCA 81 (28 May 2010)

Coram:
NAVSA, VAN HEERDEN et BOSIELO JJA

Heard:
10 MAY 2010

Delivered:
28 MAY 2010

Summary:
Criminal law – Corporate accused – whether the conviction
of the corporate accused based on the conduct of
employees other than those expressly mentioned in the
charge-sheet is correct – whether the State has proved
beyond reasonable doubt that the appellant lacked
reasonable cause for the belief as required by s 37(1)(b) of
the General Law Amendment Act 62 of 1955 – whether
evidential burden of raising a reasonable doubt in relation to
reasonable cause discharged by accused.

ORDER

On appeal from: South Gauteng High Court (Satchwell J et Coppin AJ sitting
as a court of appeal).
The appeal is upheld and para 71 of the judgment of the court below is
set aside in its entirety and substituted as follows:
'The appeal of the second appellant, S A Metal & Machinery Co (Pty) Ltd,
against conviction is upheld and the conviction and related sentence are set
aside.'

JUDGMENT

BOSIELO JA (Navsa et Van Heerden JJA concurring).
[1] The appellant, SA Metal & Machinery (Pty) Ltd, was charged in the
Regional Court, Kempton Park, in terms of s 332 of the Criminal Procedure Act
51 of 1977 (the CPA) together with Mr Allan de Klerk ('De Klerk'), one of its
employees, with theft of:
(i)
approximately 2 900 kg of copper cathodes;1
(ii)
approximately 8 100 kg of Telkom copper wire;
(iii)
approximately 17 995 kg of Eskom-marked conductor.

1 A copper cathode is a large copper plate usually weighing more than 100 kg and having a
copper purity content of approximately 99 per cent. Zambia is one of the world’s leading
manufacturers and exporters of copper cathodes. It appears that cathodes from different
Zambian mines have a distinctive appearance related to the particular mine’s manufacturing
process. It also appears that the top of a stack of sheets is identified by the particular mine
with specific markings. Copper cathodes appear to be a sought after commodity on the
London Metals Exchange.

They were also both charged with a contravention of s 37(1)2 of the General Law
Amendment Act 62 of 1955 (the Act) in respect of the same items. It was alleged
that they had unlawfully acquired or received into their possession stolen goods
from another person or other persons. In terms of s 332(2) of the CPA Mr
Graham Barnett was cited as the representative of the appellant.

[2] At the end of the trial, both the appellant and De Klerk were acquitted on
the counts related to the theft of items (ii) and (iii) referred to above. They were
also acquitted on the count of theft of the copper cathodes. They were, however,
both convicted of a contravention of s 37(1) of the Act in relation to the copper
cathodes. The appellant was sentenced to a fine of R100 000, half of which was
suspended for five years, whilst De Klerk was sentenced to a fine of R10 000 or
two years' imprisonment. On appeal to the South Gauteng High Court (Satchwell
J, Coppin AJ concurring), De Klerk’s conviction and related sentence were set
aside. The appellant’s appeal against conviction was dismissed. The sentence
imposed by the Regional Court was, however, set aside and was substituted with
a fine of R80 000, half of which was suspended for five years. The present
appeal, with the leave of this court, is against the decision of the South Gauteng
High Court dismissing the appellant’s appeal against conviction.

2 Section 37(1) of the Act provides:
‘(a)
Any person who in any manner, otherwise than at a public sale, acquires or receives
into his possession from any other person stolen goods, other than stock or produce as
defined in s 1 of the Stock Theft Act, 1959, without having reasonable cause for believing at
the time of such acquisition or receipt that such goods are the property of the person from
whom he or she receives them or that such person has been duly authorized by the owner
thereof to deal with or to dispose of them, shall be guilty of an offence and liable on conviction
to the penalties which may be imposed on a conviction of receiving stolen property knowing it
to have been stolen except in so far as the imposition of any such penalty may be
compulsory.
(b)
In the absence of evidence to the contrary which raises a reasonable doubt, proof of
such possession shall be sufficient evidence of the absence of reasonable cause.’

[3] Before us the issue was whether the court below, having held that De
Klerk rightly believed that the cathodes in question were sold to the appellant by
Meadon Scrap, whose property it was or who had sold them with the requisite
authority, correctly concluded that the appellant did not hold the same belief.

[4] An exposition of the salient facts is necessary. The appellant is one of
South Africa’s leading scrap metal merchants. It conducts operations in
Elandsfontein, Gauteng and in Cape Town, the latter location being its
headquarters. At all material times, De Klerk was employed as a manager at
Elandsfontein. In the course of its daily business activities, the appellant
purchases and receives scrap metals from a range of registered scrap metal
dealers. The appellant does not purchase scrap metal off the street.

[5] It is common cause that approximately five weeks before the incident on
which the conviction was based, a truck carrying 65 tons of copper cathodes was
hijacked in Gauteng whilst it was in the process of delivering its load from Zambia
to a purchaser. The police, acting on information supplied by an informant, called
on De Klerk at the appellant’s Elandsfontein premises to find out whether he had
any knowledge of the hijacked goods. De Klerk told them that he had been
approached by a scrap metal dealer who had offered him 15 tons of cathodes.
He had heard rumours about the hijacking and had rejected the offer. There is a
dispute about whether De Klerk had told a policeman that he had persuaded his
employer not to purchase stolen goods.

[6] It is clear from the evidence of witnesses who have extensive experience
in the scrap metal industry that, although copper cathodes sometimes find their
way into the open market, for example, by way of a police auction or the sale of
surplus stock, such occurrences are the exception rather than the rule.

[7] The uncontested evidence of Barnett and De Klerk was that on a number
of occasions they had, on behalf of the appellant, purchased copper cathodes
from certain registered dealers, without incident. In one instance they were able
to demonstrate that the copper cathodes they had purchased had been sourced
from a police auction in Zambia. It is not per se unlawful to purchase or possess
copper cathodes. Some of the dealers from which they purchased these
cathodes were importers of scrap metal.

[8] During or about April 2003, De Klerk, who conducts purchases and
administers sales mostly telephonically from an office above ground level at the
appellant’s Elandsfontein premises, was advised by his yard foreman, Mr Hans
Visser ('Visser'), that the latter had received copper cathodes from a scrap dealer
registered with the appellant, namely, Meadon Scrap. Because there was a
container already loading copper for export, De Klerk telephoned Mr Mark Sellier
('Sellier), who was responsible for foreign sales and who was stationed at head
office, to enquire whether he could load the cathodes into the container. He
received an answer in the affirmative. Consequently, De Klerk instructed Visser
to load the cathodes into that container.

[9] Visser was primarily responsible for receiving, inspecting and sorting the
scrap metal purchased from registered dealers. De Klerk had confidence in
Visser as the two had worked together successfully for many years. De Klerk did
not personally inspect the cathodes and did not link them to the enquiry by the
police more than a month earlier. It is uncontested that the appellant and Meadon
Scrap conduct many business transactions with each other on an ongoing basis.

[10] It is common cause that containers bearing the cathodes in question were
intercepted and impounded by the police at Durban harbour and that those
cathodes were part of the consignment hijacked in Gauteng, referred to earlier.

[11] The court below took into account that s 37(1) of the Act required the
State to prove that an accused was found in possession of goods which were
acquired otherwise than at a public sale and that the goods had been stolen. In
seeking a conviction the State had relied upon the evidential provision in s
37(1)(b) of the Act. Satchwell J rightly stated that this evidential provision only
operated in the absence of evidence to the contrary which raises a reasonable
doubt. The learned judge rightly rejected the evidence of an employee of the
appellant, Mr Ngobeni, who had testified that he had witnessed a number of
cathodes hidden within the appellant’s Elandsfontein premises. His evidence was
contradictory and unreliable.

[12] Satchwell J had regard to De Klerk’s evidence, in terms of which he had
placed himself in possession of the cathodes. She took into account that Visser’s
report to De Klerk was unchallenged. The learned judge considered, in favour of

De Klerk that he had, on a previous occasion, rejected an offer of cathodes from
a doubtful source. She concluded that the evidential burden of raising a
reasonable doubt in relation to reasonable cause had been discharged and
consequently set aside his conviction and related sentence.3

[13] In respect of the case against the appellant the court below rejected the
submission on its behalf, that since the State’s case against the appellant was
dependant upon the actions of De Klerk and since he was innocent, so too
should be the appellant. The court below had regard to s 332 of the CPA which
provides that any act performed by a servant of a corporate body in the exercise
of his or her powers shall be deemed to have been performed by the corporate
body. The court reasoned that the appellant had taken possession of the
cathodes even before De Klerk was informed of their presence and that they
must have been unloaded, weighed and sorted before Visser made his report.
Satchwell J stated that although Visser’s report to De Klerk is hearsay it did lead
to his state of mind and he could thereby resist liability. The learned judge
reasoned that the appellant could not similarly rely on what was told to De Klerk
by Visser, who was not a witness. She concluded that since no other employee
at the Elandsfontein premises had testified about the receipt of the cathodes the
appellant had not produced any evidence that challenged the statutory
presumption referred to above and consequently dismissed the appeal by the
appellant.

3 Although the owner of Meadon Scrap had denied selling the cathodes to the appellant it
should be borne in mind that he was himself facing prosecution in relation to other matters
and it is unsafe to accept his evidence in this regard. Also, he conceded in cross-examination
that he had five dealerships trading as Meadon Scrap and that he would not necessarily know
of each and every delivery that went in and out of his business.

[14] The problem is that in seeking to hold the appellant liable the State, in the
charge sheet, expressly and exclusively relied on the actions of De Klerk and Mr
Barnett. It is common cause that Mr Barnett was not involved in the transaction
and at material times was stationed in Cape Town.

[15] Before us, in order to overcome this problem, the State sought an
amendment to the charge sheet to include employees of the appellant other than
De Klerk. The respondent relied on section 86 of the CPA which provides as
follows:-
(1)
Where a charge is defective for the want of any essential averment therein, or where
there appears to be any variance between any averment in a charge and the evidence adduced
in proof of such averment, or where it appears that words or particulars that ought to have been
inserted in the charge have been omitted therefrom, or where any words or particulars that ought
to have been omitted from the charge have been inserted therein, or where there is any other
error in the charge, the court may, at any given time before judgment, if it considers that the
making of the relevant amendment will not prejudice the accused in his defence, order that the
charge, whether it discloses an offence or not, be amended, so far as it is necessary, both in that
part thereof where the defect, variance, omission, insertion or error occurs and in any other part
thereof which it may become necessary to amend.
(2)
The amendment may be made on such terms as to an adjournment of the proceedings
as the court may deem fit.'

[16] The State had identified De Klerk as the employee or director of the
appellant on whose conduct it relied for holding the appellant liable. At no stage,
before or during the trial, was there any indication that the net was being cast
wider. The appellant tailored its defence accordingly. To allow an amendment at
this stage would cause very real prejudice, and would be subversive of the notion

of a fair trial as embodied in section 35(3)(a) and (i) of the Constitution. The
amendment is consequently refused, see R v Metal Salvage Co (Pty) Ltd &
others 1953 (4) SA 257 (C) at p 265C-H and Musa J Moloi & others v Minister for
Justice and Constitutional Development & others (as yet unreported) (CCT
78/09) [2010] ZACC 2 (4 February 2010) paras 10–20.

[17] Having rightly concluded that it could not be said that De Klerk did not
have reasonable cause to believe that he could lawfully purchase the copper
cathodes in issue and further that the entity which sold them was either the
owner or had had lawful authority to sell or dispose of them, the learned judge
erred in convicting the appellant.

[18] In the result, the appeal is upheld and para 71 of the judgment of the court
below is set aside in its entirety and substituted as follows:
‘The appeal of the second appellant, SA Metal & Machinery Co (Pty) Ltd, against
conviction is upheld and the conviction and related sentence are set aside.’

___________________
L O BOSIELO
JUDGE OF APPEAL

APPEARANCES:

For appellant:
O L Rodgers SC

Instructed by:
Snitchers Attorneys

c/o Earle Friedman Attorney, Johannesburg

Lovius Block, Bloemfontein.

For respondent:
F Mohamed

Instructed by:
Director of Public Prosecutions, Johannesburg

Director of Public Prosecutions, Bloemfontein.