CASE NO. 162/99

IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

In the matter between

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS

OF SOUTH AFRICA
APPELLANT

AND

GG CAROLUS AND OTHERS
RESPONDENT

BEFORE:
MAHOMED CJ, OLIVIER,  ZULMAN JJA,

MELUNSKY AND FARLAM AJJA

HEARD:

22 NOVEMBER 1999

DELIVERED:

1 DECEMBER 1999

FARLAM AJA

________________________________________________________________

J U D G M E N T

________________________________________________________________

FARLAM AJA:
[1] This is an appeal, brought with the leave of the Court a quo, against the
order made by Blignault J, sitting in the Cape of Good Hope High Court, on 15
April 1999, to the effect that orders made on 15 March 1999 by Moosa AJ in terms
of sections 38, 42 and 43 of the Prevention of Organised Crime Act 121 of 1998
(Athe Act@) be rescinded and that the appellant pay the respondents= costs on the
party and party scale.
[2] The judgment of Blignault J, which has been reported (see National Director
of Public Prosecutions v Carolus and Others, 1999 (2) SACR 27 (C)) was
followed by Hurt J, sitting in the Durban and Coast Local Division, in National

Director of  Public Prosecutions v P J Meyer (case No 6441/99), a decision given
on 29 July 1999.
[3] The main order made by Moosa AJ and was a preservation order in terms of
section 38 of the Act.  It prohibited the first respondent  and any other person from
dealing in any manner with certain properties which were listed in two annexures
to the order, the first dealing with certain immovable properties and the second
with certain movable property.
[4] It was common cause between the parties that the facts alleged by the
appellant as the basis for his contention that a preservation order should be made in
respect of the properties listed in the annexures to Moosa A J=s order all related to
activities or offences allegedly committed before 21 January 1999, the date on
which the Act came into operation.
[5] The decision of the learned judge in the Court a quo to rescind the orders
made by Moosa A J was based on two grounds, viz. (1) that chapter 6 of the Act,

which contained the sections relied on by the appellant in support of his application
for a preservation order, was not retrospective with the result  that it did not apply
to the alleged facts relied on by the appellant in support of his application for a
preservation order and (2) that on the evidence adduced by the appellant there were
no reasonable grounds from which the inference could be drawn that any of the
properties fell within the categories of property in respect of which a preservation
order could be made, i.e. that none of them was an Ainstrumentality of an offence@
or Aproceeds of unlawful activities@.
[6] In view of the decision to which he had come on the two points mentioned
above the learned judge did not decide a further point which was raised in the
proceedings before him, viz. whether certain provisions of the Act are
unconstitutional.
[7] When the matter was argued in this Court the parties were requested to
confine their submissions initially to the first point decided in the Court a quo, viz.

whether chapter 6 of the Act is retrospective.   It was agreed that if this point were
decided in favour of the appellant an opportunity would be afforded to the parties
to address arguments at a later date on the other matters referred to above.
[8] Before the parties= submissions and the judgment of Blignault J on the
retrospectivity point are considered it is necessary for me to summarise and in
some instances to quote in full the main provisions in the Act and then to say
something about retrospective legislation, degrees of retrospectivity and the
terminology used in respect thereof.
[9] The main considerations which prompted the passing of the Act are set out
in the Preamble, which before it was amended by Act 38 of 1999 was in the
following terms:
APreamble. - Whereas the Bill of Rights in the Constitution of the Republic

of South Africa, 1996 (Act No. 108 of 1996), enshrines the rights of
all people in the Republic and affirms the democratic values of human
dignity, equality and freedom;

AND WHEREAS the Constitution places a duty on the State to respect,

protect, promote and fulfil the rights in the Bill of Rights;

AND WHEREAS there is a rapid growth of organised crime, money
laundering and criminal gang activities nationally and internationally and
since organised crime has internationally been identified as an international
security threat;

AND WHEREAS organised crime, money laundering and criminal gang
activities infringe on the rights of the people as enshrined in the Bill of
Rights;

AND WHEREAS it is the right of every person to be protected from fear,
intimidation and physical harm caused by the criminal activities of violent
gangs and individuals;

AND WHEREAS organised crime, money laundering and criminal gang
activities, both individually and collectively, present a danger to public order
and safety and economic stability, and have the potential to inflict social
damage;

AND WHEREAS the South African common law and statutory law fail to
deal  effectively with organised crime, money laundering and criminal gang
activities, and also fail to keep pace with international measures aimed at
dealing effectively with organised crime, money laundering and criminal
gang activities;

AND BEARING IN MIND that it is usually very difficult to prove the
direct involvement of organised crime leaders in particular cases, because
they do not perform the actual criminal activities themselves, it is necessary
to criminalise the  management of, and related conduct in connection with
enterprises which are involved in a pattern of racketeering activity;

AND WHEREAS persons should not benefit from the fruits of organised
crime and money laundering, legislation is necessary for the preservation
and forfeiture of property which is concerned in the commission or
suspected commission of an offence;

AND WHEREAS there is a need to devote such forfeited assets and
proceeds to the combatting of organised crime and money laundering;

AND WHEREAS the pervasive presence of criminal gangs in many
communities is harmful to the well being of those communities, it is
necessary to criminalise participation in or promotion of criminal gang
activities@.

[10] The Act itself is divided into eight chapters.  In what follows I shall quote
from the Act as it was before it was amended by Act 38 of 1999.
[11] The first chapter, headed ADefinitions and Interpretations@, consists of a
section (section 1) which contains sixteen definition provisions, of which it is

necessary to quote those relating to the categories of property in respect of which
preservation orders under section 38 can be made, viz. Ainstrumentality of an
offence@ and Aproceeds of unlawful activities@, as well as the definitions of Apattern
of criminal gang activity@ and Apattern of racketeering activity@:
A >instrumentality of an offence= means any property which is concerned in
the commission or suspected commission of an offence, whether within the
Republic or elsewhere;
>proceeds of unlawful activities=, means any property or part thereof or any
service, advantage, benefit or reward which was derived, received or
retained, directly or indirectly, in connection with or as a result of any
unlawful activity carried on by any person, whether in the Republic or
elsewhere, except for purposes of Chapter 5 where it means -
(a)
any unlawful activity carried on by any person; or
(b)
any act or omission outside the Republic which, if it had occurred in
the Republic, would have constituted an unlawful activity,
and includes any property representing property so derived;
>pattern of criminal gang activity includes the commission of two or more
criminal offences referred to in Schedule 1: Provided that at least one of
those offences occurred after the date of commencement of Chapter 4 and
the last of those offences occurred within three years after a prior offence
and the offences were committed  -
(a)
on separate occasions; or
(b)
on the same occasion, by two or more persons who are members of,

or belong to, the same criminal gang;
>Pattern of racketeering activity= means the planned, ongoing, continuous
or  repeated participation or involvement in any offence referred to in
Schedule 1, of which one of the offences occurred after the commencement
of this Act and the last offence occurred within 10 years (excluding any
period of imprisonment) after the commission of such prior offence referred
to in Schedule 1@

[12] The second chapter, as the heading indicates, deals with offences relating to
racketeering activities.  Its provisions appear to be modelled on, or at least strongly
influenced by, a statute passed by the United States Congress in 1970, viz the
Racketeer Influenced and Corrupt Organisations Act (ARICO@).
[13] The third chapter deals with offences relating to proceeds of unlawful
activities.  Among the offences relating to the proceeds of unlawful activities
created by the chapter is an offence described in the marginal note to section 4 as
Amoney  laundering@.  Section 6 deals with the acquisition, possession or use of
proceeds of unlawful activities.  It reads as follows:
AAny person who-

(a)
acquires;
(b)
uses; or
(c)
has possession,
of property and who knows or ought reasonably to have known that it is or
forms part of the proceeds of unlawful activities of another person, shall be
guilty of an offence.@

The provisions in this chapter are for the most part re-enactments of the
provisions in chapter 5 of the Proceeds of Crime Act 76 of 1996 (Athe Proceeds
Act@), which came into operation on 16 May 1997 and was repealed by the Act.
Section 6 is substantially a re-enactment of section 30 of the Proceeds Act.
[14] The fourth chapter deals with offences relating to criminal gang activities
and, like chapter 2, appears to be modelled on certain provisions in the RICO Act.
[15] Chapter 5, which deals with the proceeds of unlawful activities, is very
largely a re-enactment of the first four chapters of the Proceeds Act, which was
enacted by Parliament pursuant to proposals made by the Law Commission in its
report entitled International Co-operation in Criminal Prosecutions ( project 98),

in which an account was given of the initiatives taken in the British
Commonwealth and elsewhere to combat large-scale criminal activity, inter alia,
by enacting legislation providing for the confiscation of the profits of organised
crime.  These developments had induced Parliament in 1992 to enact the Drugs and
Drug Trafficking Act 140 of 1992, which come into operation on 30 April 1993.
That Act provided, in Chapter V, for confiscation orders and restraint orders in
respect of realisable property which were similar to those  already in existence in
various Commonwealth countries and which were directed at the proceeds of drug
offences.  The Law Commission recommended that the statutory regime providing
for the forfeiture of the proceeds of drug offences should be extended to all
offences and the draft bill annexed to its report, which was largely based on
legislation already in existence elsewhere in the Commonwealth, was enacted by
Parliament as the Proceeds Act.
[16] For a survey of the developments in the Commonwealth, particularly in

Australia, which led to enactment of legislation introducing (or in some case re-
introducing) forfeiture procedures designed to strengthen the arm of the State in
combating  organised crime, particularly certain offences such as drug offences, see
the judgment of Kirby P, with whom Mahoney and Hendley JJA concurred, given
in the New South Wales Court of Appeal in DPP v Toro-Martinez and Others
(1993) 33 NSWLR 82 at 86-87.
[17] Chapter 5 of the Act  provides for the making of confiscation orders against
persons convicted of offences, which orders are designed to force the convicted
persons to disgorge the proceeds they have received as a result of the offences of
which they have been convicted and as a result of other criminal activity which the
court finds to be sufficiently  related to those offences.  Before making a
confiscation order the court concerned holds an enquiry in order to determine the
value of the benefits received by the accused in connection with the criminal
activity in respect of which the order is to be made.

[18] Provision is also made in  chapter 5 for restraint orders to be made by the
High Court prohibiting persons from dealing with property which may be realised
to satisfy a confiscation order,  for the seizure of such property and for the
appointment of a curator bonis to take care of the property until it is realised or the
restraint order is rescinded.
[19] Confiscation orders, which have the effect of civil judgments against the
accused person in question, are satisfied from the proceeds of property held by that
person or certain gifts made by the accused person to other persons.
[20] It is clear from section 12 (3) and section 19 (1) of the Act,  which are both
contained in  chapter 5, that the provisions of chapter 5 (as was the case with the
first four chapters of the Proceeds Act) are retrospective in the sense that in
determining the value of the proceeds of an accused person=s unlawful activities the
Court is not confined to those activities which took place after the coming into
operation of the Act or the Proceeds Act but is obliged to consider also unlawful

activities which took place before the  Act came into operation.
Section 12 (3) reads as follows:
AFor the purposes of this Chapter, a person has benefited from unlawful
activity if he or she has at any time, whether before or after the
commencement of this Act, received any advantage, payment, service or
reward including any property or part thereof in connection with any
criminal activity carried on by him or her or by any other person.@

Section 19 (1) is in the following terms:

ASubject to the provisions of subsection (2), the value of a defendant=s
proceeds of unlawful activities shall be the sum of the values of the
payments or other rewards received by him or her at any time, whether
before or after the commencement of this Act, in connection with the
criminal activity carried on by him or her or any other person.@
(The emphasis is mine.)

[21] In contradistinction to Chapter 5, which provides for orders directed at
persons convicted of criminal offences, Chapter 6, which is headed ACivil
Recovery of Property@, makes provision for orders to be made for the forfeiture of
property which is tainted because it is linked to the commission of crime either

because it is proved, on a balance of probabilities, to be Aan instrumentality of an
offence@ referred to in Schedule 1 of the Act or because it is proved, according to
the same standard of proof, to be Athe proceeds of unlawful activities@.  Such orders
may be made even if no one has been convicted of having used the property or of
having been guilty of the unlawful activities of which the property is said to be the
proceeds.
[22] Mr Seligson SC, who appeared with Mr Jamie for the appellant, stated that
the provisions in this chapter were modelled on a statute recently enacted in New
South Wales, the Criminal Assets Recovery Act,  1990.
[23] Section 38 of the Act, which provides for the making by a High Court of
preservation of property orders in respect of certain property, reads as follows:
A38. Preservation of property orders.-
(1) The National Director may by way of an ex parte application apply to a
High Court for an order prohibiting any person, subject to such conditions
and exceptions as may be specified in the order, from dealing in any manner
with any property.

(2) The High Court shall make an order referred to in subsection (1) if there
are reasonable grounds to believe that the property concerned-

(a)
is an instrumentality of an offence referred to in Schedule 1; or
(b)
is the proceeds of unlawful activities.
. . .@

[24] Subsequent sections provide, inter alia, for the giving of notice of
preservation of property orders (section 39), the duration of preservation of
property orders (section 40),the seizure of property subject to preservation orders
(section 41), the appointment of a curator bonis in respect of property (section 42),
orders directed to registrars of deeds in respect of immovable property subject to
preservation orders (section 43) and the variation and recission of preservation
orders (section 47).
[25] Part 3 of Chapter 6 deals with forfeiture orders.
Section 48, which deals with applications for forfeiture orders, reads as
follows:

A48. Application for forfeiture order. -
(1) If a preservation of property order is in force the National Director may
apply to a High Court for an order forfeiting to the State all or any of the
property that is subject to the preservation of property order.
(2) The National Director shall give 14 days notice of an application under
subsection (1) to every person who entered an appearance in terms of section
39 (3).
(3) A notice under subsection (2) shall be served in the manner in which a
summons whereby civil proceedings in the High Court are commenced, is
served.
(4) Any person who entered an appearance in terms of section 39 (3) may
appear at the application under subsection (1)-
(a)
to oppose the making of the order; or
(b)
to apply for an order-
(i)
excluding his or her interest in that property from the

operation of the order; or
(ii)
varying the operation of the order in respect of that

property,
and may adduce evidence at the hearing of the application.@

[26] After dealing in section 49 with cases where persons alleging an interest in
property which is subject to a preservation order apply for leave to enter
appearance in terms of section 39 (3), the Act provides in section 50 for the making
of forfeiture orders.  The section contains the following:

A50
Making of forfeiture order. -
(1)
The High Court shall, subject to section 52, make an order applied
for under section 48(1) if the Court finds on a balance of probabilities that
the property concerned-
(a)
is an instrumentality of an offence referred to in schedule 1; or
(b)
is the proceeds of unlawful activities.
(2)
The High Court may, when it makes a forfeiture order or at any time
thereafter, make any ancillary orders that it considers appropriate, including
orders for and with respect to facilitating the transfer to the State of property
forfeited to the State under such an order.
(3)
The absence of a person whose interest in property may be affected
by a forfeiture order does not prevent the High Court from making the
order.
(4)
The validity of an order under subsection (1) is not affected by the

outcome of criminal proceedings, or of an investigation with a view to
institute such proceedings, in respect of an offence with which the property
concerned is in some way associated.@

[27] Section 52, which provides for the making of orders excluding certain
interests in property from the operation of forfeiture orders, as far as is material,
reads as follows:
A(1) The High Court may, on application -
(a)
under section 48 (3) [which is presumably a misprint for
section 48 (4)]; or

(b)
by a person referred to in section 49(4) [i.e., a person given
leave to enter an appearance late in order to oppose the making
of a forfeiture order or to apply for an order excluding his or
her interest in the property concerned from the operation of a
forfeiture order in respect thereof],
and when it makes a forfeiture order, make an order excluding certain
interests in property which is subject to the order, from the operation
thereof.
(2)
The High Court may make an order under subsection (1) if it finds on
a balance of probabilities that the applicant for such an order -
(a)
had acquired the interest concerned legally; and
(b)
neither knew nor had reasonable grounds to suspect that the
property in which the interest is held -
(i)
is an instrumentality of an offence referred to in
Schedule 1; or
(ii)
is the proceeds of unlawful activities.@

[28] Section 54 provides for the situation where a person affected by a forfeiture
order did not receive notice of the application therefor.  Subsection (1)
provides that such a person may apply for an order excluding his or her
interest in the property concerned from the operation of the order or varying
the operation of the order in respect of such property.

Subsection (8) provides as follows:
A(8) The High Court may make an order under subsection (1) if it finds on
a balance of probabilities that the applicant for such an order -
(a)
had acquired the interest concerned legally; and
(b)
neither knew nor had reasonable grounds to suspect that the
property in which the interest is held -
(i)
is an instrumentality of an offence referred to in
Schedule 1; or
(ii)
is the proceeds of unlawful activities.@

[29] In terms of section 56(2) on the date when a forfeiture order  takes effect the
property subject to the order is forfeited to the State and vests in the curator bonis
appointed in respect thereof on behalf of the State.
[30] Section 57(1) provides for the sale of the  forfeited property by the curator
bonis, subject to any order for the exclusion of interests
made, inter alia, in terms of section 52(2)(a)
The presumption against retrospectivity
[31] An important legal rule forming part of what may be described as our legal

culture provides that no statute is to be construed as having retrospective operation
(in the sense of taking away or impairing a vested right acquired under existing
laws) unless the legislature clearly intended the statute to have that effect: see
Peterson v Cuthbert & Co Ltd 1945 AD 420 at 430.  In the context of penalties for
criminal offences (which is the subject now under consideration)  this Court laid
down in R v Sillas 1959 (4) SA 305 (A) at 311 E - F that where a penalty is
increased the accused is entitled to be treated on the basis of the penalty existing at
the date of the offence, and that a penalty cannot without express words or clear
implication, (my emphasis) be increased against a wrongdoer after the commission
of the offence (per Schreiner JA). In the same case it was further held by Schreiner
JA that the basic  rationale of the presumption is that the Legislature must be taken
not to have intended anything unjust.
Consistent with the underlying rationale of the presumption and the
requirement that it can be rebutted only by express terms or clear implication, is the

rule that if the court is left in doubt as to the operation of the statute, the law as
existing before the enactment must be applied.  This was correctly stated by Van
Winsen AJ in Njobe v Njobe and Dube NO 1950 (4) SA 545 (C) at 552 as follows:
AThe amending Proclamation is avowedly purporting to make
retrospective a state of affairs which did not previously have retrospective
effect.  If  because of its inept wording, the Proclamation leaves in doubt the
nature and extent of its retrospective effect, then so much of the previously
existing legal position as is not clearly and unambiguously affected by the
amending Proclamation must be treated as unaffected thereby.@

[32] This canon of interpretation was described by my brother Olivier JA in
Transnet Ltd v Chairman, National Transport Commission 1999 (4) SA 1 (SCA) at
7 A as a Atime-honoured principle@ and in Gardner v Lucas (1878) 3 App Cas.
582, a decision of the House of Lords, Lord Blackburn (at 603) described it as a
Ageneral rule, not merely of England and Scotland, but, I believe, of every civilised
nation@.
[33] In the Transnet Ltd case, supra, at 7 B - D, it was pointed out that a

distinction is made in the case law between A>true= retrospectivity (i.e. where an Act
provides that from a past date the new law shall be deemed to have been in
operation) and cases where the question is merely whether a new statute or an
amendment of a statute interferes with or is applicable to existing rights@.
Reference was then made to a number of decisions of this Court, starting with
Shewan Tomes and Co Ltd v Commissioner of Customs and Excise 1955 (4) SA
305 (A) at 311. ATrue@ retrospectivity was described (at 7 E) as being Astrong@
while the adjective Aweaker@ was applied to retrospectivity in the second sense as it
is used in our case law.
[34] In Benner v Canada (Secretary of State) (1997) 42 CRR (2d) 1 (SCC), a
decision of the Supreme Court of Canada, Iacobucci J referred (at 17) to the fact
that the terms Aretroactivity@ and Aretrospectivity@ can be confusing and he quoted
with approval definitions of the two terms given by the well known Canadian
writer on the interpretation of statutes, Elmer A Driedger, in an article in (1978) 56

Canadian Bar Review 264 at 268-9 as follows:
AA retroactive statute is one that operates as of a time prior to its enactment.
A retrospective statute is one that operates for the future only.  It is
prospective, but it imposes new results in respect of a past event.   A
retroactive statute operates backwards.  A retrospective statute operates
forwards, but it looks backwards in that it attaches new consequences for the
future to an event that took place before the statute was enacted.  A
retroactive statute changes the law from what it was; a retrospective changes
the law from what it otherwise would be with respect to a prior event.@

[35] In terms of this  terminology the expression Aretroactivity@ is used for
retrospectivity in the Astrong@sense while the expression Aretrospectivity@ is
reserved for what is described as retrospectivity in the Aweaker@ sense.
[36] It appears clearly from the many cases on the point, both in our law and in
overseas jurisdictions, that the basis  of the presumption against retrospectivity (in
the strong and weak senses)  is what Stevens J described, when giving the opinion
of the United States Supreme Court in  Landgraf v USI Film Products et al  511
US 244 (1994) at 265 as Aelementary considerations of fairness [which] dictate that

individuals should have an opportunity to know what the law is and to conform
their conduct accordingly.@
[37] Mr Seligson pointed out that he was not contending that chapter 6 of the Act
was to be interpreted as being retrospective in the Astrong@ sense.   He submitted
that chapter 6, on a proper construction, does apply as from the date the Act came
into operation to activities  that took place before it came into operation, with the
result that property can be regarded as an instrumentality of an offence or as
proceeds of unlawful activities for the purposes of the section 38 of the Act even if
the such activities in question took place before the Act came into operation.
In other words, he argued for retrospectivity in the Aweak@ sense.
[38] Mr Seligson stated that it is obvious that, while the Act contains new
provisions which are unprecedented in a number of respects, it builds on earlier
legislation, in particular the Proceeds Act, and  provides drastic remedies to assist
the State to combat an intolerable situation, namely a large increase in organised

crime.  The main objective of the Act, he said, is to prevent criminals from
benefiting from the proceeds of crime and to discourage the use of property for
criminal purposes.
[39] Chapter 6, with which we are presently concerned, operates outside and
independently of the other chapters and on a proper analysis, so he submitted, the
provisions of chapter 5 are not relevant for the purposes of interpreting chapter 6.
He submitted further that the forfeiture provisions in chapter 6 cannot be described
as purely procedural and that the distinction between statutes regulating procedure
and those dealing with substantive rights is not helpful in this case.
[40] Mr Seligson submitted that the provisions do not involve the impairment or
infringement of any vested rights because the acquisition or use of property
acquired through the proceeds of crime would not give a criminal any rights
enforceable in law and that in any event there is no basis for assuming that
Parliament would have been reluctant or would have considered it unfair to create a

forfeiture mechanism which would strip criminals of the proceeds of their unlawful
activities even if such activities had taken place before the Act came in operation.
[41] He contended further, relying on   R v Grainger 1958 (2) SA 443 (A) and S v
Premier Wire (Pty) Ltd 1985 (2) SA 252 (E), that the respondents in the present
case cannot maintain that they had any right to expect that the law would not
change so as to remove the requirement that there be a prosecution before forfeiture
proceedings could be instituted and thereby deal more effectively with organised
crime.
[42] In dealing with the presumption against retrospectivity he relied strongly on
the decision of the House of Lords in L=Office Cherifien des Phosphates and
another v Yamashita - Shinnihon Steamship Co Ltd:  [1994] 1 AC 486.  In that case
the main opinion was delivered by Lord Mustill who (at 525 E - F) referred with
approval to the following statement by Staughton LJ in Secretary of State for
Social Security v Tunnicliffe [1991] 2 All ER 712 (CA) at 724:

AIn my judgment the true principle is that Parliament is presumed not
to have intended to alter the law applicable to past events and transactions in
a manner which is unfair to those concerned in them, unless a contrary
intention appears.  It is not simply a question of classifying an enactment as
retrospective or not retrospective.  Rather it may well be a matter of degree -
the greater the unfairness, the more it is to be expected that Parliament will
make it clear if that is intended.@

Lord Mustill continued (at 525 F - H):

APrecisely how the single question of fairness will be answered in respect of
a particular statute will depend on the interaction of several factors, each of
them capable of varying from case to case.  Thus, the degree to which the
statute has retrospective effect is not a constant.  Nor is the value of the
rights  which the statute affects, or the extent to which that value is
diminished or extinguished by the retrospective effect of the statute.  Again,
the unfairness of adversely affecting the rights, and hence the degree of
unlikelihood that this is what Parliament intended, will vary from case to
case.  So also will the clarity of the language used by Parliament, and the
light shed on it by consideration of the circumstances in which the
legislation was enacted.  All these factors must be weighed together to
provide a direct answer to the question whether the consequences of reading
the statute with the suggested degree of retrospectivity are so unfair that the
words used by Parliament cannot have been intended to mean what they
might appear to say.@

[43] The statutory provision under consideration in the Cherifien case was section

102 of the Court and Legal Services Act 1990, which amended the Arbitration Act
1950 by inserting a new section, section 13 A.  This section empowered an
arbitrator, unless a contrary intention was expressed in the arbitration agreement, to
make an award dismissing a claim if there had been an inordinate and inexcusable
delay on the part of the claimant which caused the substantial risk of unfairness or
serious prejudice to the respondent .
[44] The House of Lords held that in dismissing the claim an arbitrator was
entitled to take into account a claimant=s inordinate and inexcusable delay which
occurred before section 13 A came into operation.
[45] The House was influenced in coming to this conclusion by the fact that the
right to pursue a claim before an arbitrator which had been inordinately and
inexcusably delayed was weak since, as the delay showed, the claimant had not
troubled to enforce it for a long time and it was not unfair to allow the new section
to apply to claims brought before the coming into force of the new power.

[46] In the present case, so Mr Seligson argued, the consequences in the
circumstances of holding the remedies in chapter 6 to be  applicable in respect of
past conduct and events would not be so unfair that the Legislature could not have
intended this.  The property forfeited under chapter 6 could have been realised in
satisfaction of a confiscation order under chapter 5 if the respondents had been
convicted, which was a further reason for holding that there was no unfairness in
making chapter 6 operate retrospectively.
[47] Mr Seligson also relied on two recent decisions given in the United States,
one a decision of the U.S.  Court of Appeals for the Second Circuit, viz. United
States of America v Certain Funds Contained in Account Nos 600 - 306 211 - 006,
600 - 306 211 - 011 and 600 - 306 211- 014 Located at the Hong Kong and
Shanghai Banking Corporation et al 96  F 3d 20 (2nd Cir. 1996) and the other a
decision of the U.S. Court of Appeals for the Sixth Circuit, United States of
America v Four Tracts of Property on the Waters of Leiper=s Creek 1999 WL

377773 (6 th Cir. (Tenn.)).
In what follows I shall refer to the first case as Athe Hong Kong and
Shanghai Bank case@ and to the second case as Athe Leiper=s Creek case@.
[48] In the Hong Kong and Shanghai Bank case the facts were that the US
Government sought the forfeiture of assets valued at between 1.5 and 3 million
dollars located in Hong Kong.  It alleged that the defendants in rem (i.e., the
Funds) constituted the proceeds of a conspiracy to import heroin into the United
States and to launder the proceeds of that smuggling, The Government=s Verified
Complaint in the action was filed in September 1991.  In April 1992 the claimants
to the property filed a motion for judgment on the pleadings requesting that the
court dismiss the complaint for lack of jurisdiction over the res because the res was
located outside the United States and no statute conferred jurisdiction on the
federal courts in these circumstances.  In October 1992 the statute conferring
jurisdiction on federal courts over civil forfeiture proceedings was amended to

provide district courts with in rem jurisdiction over a res located in a foreign
country.  A decision by the United States District Court for the Eastern District of
New York dismissing the action for lack of jurisdiction and  holding that the
amendment could not be applied retrospectively as there was no clear showing of
congressional intent to make the amendment retrospective was overturned on
appeal to the United States Court of Appeals, Second Circuit, which held that the
amendment could be applied retrospectively to pending proceedings. The decision
rested on two bases.  One was that as the statute in question was procedural, in that
it conferred jurisdiction, it could be applied retrospectively.  The other basis (at
24) was that the new statute did
Anot take away any rights possessed by a party, increase liability, or attach
new legal consequences to past conduct.  The claimants never had any right
to property resulting from illegal gains, and their alleged drug smuggling
and money laundering have always carried criminal penalties.  One of the

legal consequences of drug smuggling or money laundering  is that the
resulting illegal proceeds are subject to forfeiture to the government. . . ..
The mere fact that people who commit crimes within the jurisdiction of the
United States manage to secrete proceeds of those crimes out of the country
does not mean that they enjoy any greater rights to those proceeds.
Accordingly, it cannot be said that [the new section] ever created any new
legal consequences or impaired any existing rights. . .@
[49] In the Leiper=s Creek case the United States Government instituted forfeiture
proceedings against the Leiper=s Creek property in 1992 .  The claimant had
purchased the property in 1989 using the proceeds from drug trafficking activities
which had taken place in the early 1970's.  The forfeiture provision on which the
Government relied was enacted in 1978 several years after the drug trafficking
transactions which generated the funds used by the claimant to purchase the
property.  The United States Court of Appeals, Sixth Circuit, held that the 1978

statute would be applied retrospectively so that the property could be forfeited.  Its
decision rested on two bases.  The second basis for the Court=s decision (which is
relevant here) was that the claimant never had a right to the proceeds of his illegal
behaviour and therefore forfeiture of the property as Aproceeds@ could not impair
any vested rights.  On this point the court followed the decision in the Hong Kong
and Shanghai Bank case.
[50] Mr Seligson endeavoured to deal with the point that the legislature  has
expressly made the provisions of chapter 5 retrospective, as appears from sections
12(3) and 19 (1), and has also in the definitions of Apattern of criminal activity@ and
Apattern of racketeering activity@ made it clear that  at least one of the Schedule 1
offences the commission of which is necessary in order to bring the definitions into
play may have taken place before the Act came into operation.  From these
provisions it is clear that the legislature was aware of the presumption against
retrospectivity and knew how to make it clear when it intended part of the Act to

apply retrospectively.
[51] Chapter 5, said Mr Seligson, expressly deals with the past because it
provides for  what amounts to an historical enquiry into what benefits the accused
derived from the offence or  offences of which he or  she has been convicted and
any criminal activity which the court finds to be sufficiently related to those
offences.  Secondly the forfeiture order, which is linked to a criminal conviction
for an offence committed in the past, is arguably penal in its effect because it flows
from the conviction and is an additional burden imposed on the accused who is
ordered in terms of the procedure created by chapter 5 to make a payment of
money which can be satisfied from his whole estate, including assets which are in
no way tainted by being linked to any criminal activity, which assets can be frozen
by means of restraint orders made in terms of Part 3 of Chapter 5.     Chapter 6 on
the other hand, he submitted, envisages simply an enquiry into two categories of
property at the time of the court hearing and allows preservation and forfeiture

orders only in respect of such property.  In this regard he relied on the use of the
present tense Ais@ in sections 38 (2) and 50 (1) .
[52] There is substance in some of the submissions made Mr Seligson but for the
reasons that follow I am of the view that the appeal must nevertheless fail.
[53] I do not agree that chapter 6 can be differentiated from chapter 5 because the
enquiry in the case of the former relates only to the present while the enquiry in the
case of the latter looks backwards to the past, which prompted the legislature to
make it clear in the latter case that the enquiry extends backwards to the period
preceding the coming into operation of the Proceeds Act.  I say this because it is
clear that, in order to decide whether property is tainted because it is linked to
criminal activity, so that it is to be forfeited under an order made in terms of
chapter 6, it will be necessary for the court to enquire into the question as to
whether  property is the proceeds of criminal activities, which necessarily involves
an enquiry into the past, whether the property was derived, received or retained in

connection with or as a result of any unlawful activity.  The use of the present tense
in sections 38 (2) and 50 (1) merely indicates that the property must exist at the
time the order is made.  An enquiry under chapter 6 looks as much backwards as
does one under chapter 5.  The fact that the legislature considered it necessary to
state expressly in section 12 (3) and 19 (1) and, for that matter, in the definitions of
Apattern of criminal gang activity@ and Apattern of racketeering activity@ that
offences committed before the Act came into operation can be looked at in matters
falling under chapters 2, 4 and 5 is a strong indication, as Blignault J found, that it
did not intend the provisions of chapter 6 to be applied retrospectively.
[54] In my view, therefore, the omission of the phrase Awhether before or after the
commencement of this Act@ in chapter 6
is the most formidable obstacle to the
acceptance of the contentions advanced on behalf of the appellant.  As pointed out
above, Mr Seligson was unable to advance any cogent argument which would
explain Parliament=s failure to use the same formula in chapter 6 which it used in

chapter 5 when it intended that chapter to be retrospective.
[55] There may indeed be cogent reasons why Parliament deliberately decided
not to make chapter 6 retrospective.  One such reason is the factor adverted to by
Hurt J at pp 26 - 7 of his judgment in the unreported case of National Director of
Public Prosecutions v P J Meyer, where reference is made  to sections 52 (2) and
54 (8) of the Act, which, it will be recalled, provide for the High Court, when it
makes or has made a forfeiture order, to exclude certain interests in property from
the operation of the order when it finds that the person applying for the exclusion
order acquired the interest concerned legally and neither knew nor had reasonable
grounds to suspect that the property in which the interest is held is an
instrumentality of a Schedule 1 offence or is the proceeds of unlawful activities.
[56] Before the coming into operation of section 30 of the Proceeds Act, on 16
May 1997, a person who legally acquired property which was or formed part of the
proceeds of crime acquired indefeasible title thereto even if he or she had

reasonable grounds to believe that it was or formed part of the proceeds of crime.
(Section 30 of the Proceeds Act has in essence been re-enacted as section 6 of the
Act.)  The position in regard to stolen property was different.  A person who
received into his or her possession stolen property and who had reasonable grounds
to believe that it was stolen committed a crime under section 37 of the General Law
Amendment Act 62 of 1955.  In other words although the negligent receipt of
stolen property was an offence the negligent receipt of the proceeds of crime was
not.
[57] The new principle introduced by section 30 of the Proceeds Act has very
important consequences for many persons engaged in commerce.
[58] If Mr Seligson was correct in submitting that chapter 6 is retrospective it
would create a cause of action to justify the seizure of property, which cause of
action  did not exist before the commencement of the Act.  In my view such a
result would be lead to an unfair result:  it is unlikely that that  could have been

intended by Parliament.
[59] Support for this conclusion is to be found in a case cited by Mr Arendse,
who appeared with Mr Mihalik for the respondents, namely Plewa v Chief
Adjudication Officer [1995] 1 AC 249, a decision of the House of Lords given after
its decision in the Cherifien case.  The facts of this case were that Plewa received a
retirement pension from January 1981, which contained an addition in respect of
his wife, who was in part-time paid employment, the earnings from which would
have affected the amount of Plewa=s pension.  At the time when the unadjusted
pension was received beneficiaries who received an overpayment of benefit were
not required to repay it where due care and diligence had been used to avoid the
overpayment: this was because of the provisions of section 119 (2) of the Social
Security Act, 1975, which was replaced in April 1987 by section 53 of the Social
Security Act, 1986.  This latter section removed the due care and diligence defence
to a claim for repayment and also imposed liability on third parties for innocent

misrepresentation or failure to disclose.  It was held (at 257 G - 258 D) that the new
provision did not apply retrospectively because what was described as Aa
considerable degree of unfairness@ could result to third parties who would come
under an obligation to repay which did not exist before section 53 of the 1986 Act
came into force.
AAlthough the position of the actual payee is obviously not as clear

as that of a third party@, said Lord Woolf (at 258 B - C), AI would have
been inclined to attach more importance to section 53's possible
retrospective unfair effect than the Court of Appeal did in [Secretary of State
for Social Security v Tunnicliffe supra, which was quoted with approval in
the Cherifien case and in which   it was held that section 53 was
retrospective].  This is because it removed the defence of due care and
diligence.  If recipients would not have been under a liability in fact to make
a repayment under the former machinery then from a practical point of view
they were being placed under a liability which did not previously exist by
the change in the law.  This is a situation where the presumption against
retrospectivity should apply.  It is desirable that in this situation legislation
should make it clear whether the new provision is to be retrospective or not.@

[60] In my view the cumulative effect of the unfairness, the legal culture leaning
against retrospectivity where there is unfairness, the fact that Parliament refrained

from repeating the Awhether before or after the commencement of this Act@  phrase
used in sections 12 (3) and 19 (1) and the fact that  conduct before the
commencement of the Act is specifically referred to in the definitions of Apattern of
criminal gang activity@ and Apattern of racketeering activity@ leads me to the
conclusion that on a proper interpretation of the Act chapter 6 was not intended to
be retrospective.
[61] The two American cases cited by Mr Seligson do not assist at all because the
factors enumerated  in the previous paragraph were  not applicable in those  cases.
[62] For these reasons I am satisfied that the appeal should fail.
[63] The following order is made:
The appeal is dismissed with costs, which shall include those occasioned by
the employment of two counsel.

I. G. FARLAM

ACTING JUDGE OF APPEAL

CONCUR:
MAHOMED CJ
OLIVIER JA
ZULMAN JA
MELUNSKY AJA