South Africa: Deneys Reitz Inc Comments On Commercial Crime, Creditors And Costs

Last Updated: 12 August 2007
Article by Andre Vos

If ever you have a claim against a debtor whose assets become the subject of an asset forfeiture order, there may still be hope for recovering what is owed to you.

Businesses are often the victims of commercial crime. The Prevention of Organised Crime Act, 1998 (POCA) was enacted mainly to combat organised crime, but it also applies to individual wrongdoing. POCA regulates asset forfeiture orders. Where a person has been charged or is about to be charged with a criminal offence, the court may grant a restraint order to preserve assets pending the criminal prosecution of the person concerned. Upon conviction, the court may grant a confiscation order, which permanently divests the defendant of the assets concerned, where the court finds that the defendant derived a benefit form the offence.

A criminal case may take years to finalise. One of the counter-balances in POCA is a section which provides that the High Court may make allowance in the restraint order for the payment of the defendant’s reasonable living and legal expenses from the restrained assets. The defendant must be able to live reasonably and pay for a defence. During the interim period, the assets are controlled by a court-appointed curator. However, the court has to be satisfied that the defendant has made full disclosure of his or her assets and cannot meet such expenses from unrestrained property.

There are three competing rights at stake, namely the right of the State to preserve the assets pending potential confiscation to divest the defendant of the proceeds of unlawful activities, the right of the defendant to living and legal expenses, and the right of creditors of the defendant to be paid.

For as long as a restraint order remains in place, the order would override any other court order, such as a money judgment in favour of a creditor. But the payment of living and legal expenses for any prolonged period could well drain the restrained assets thereby frustrating the claims of creditors.

How these competing interests are to be balanced was the subject of the Constitutional Court’s decision in the matter Fraser v ABSA Bank Limited. Mr Fraser, a businessman, was charged with offences relating to racketeering and money laundering. The Asset Forfeiture Unit was granted a restraint order over his assets. ABSA obtained default judgment against Fraser on a debt he owed to the bank. The debt was not secured and the bank enjoyed no preferent claim against the defendant. Fraser applied to court for the payment of his reasonable living and legal expenses.

ABSA sought to intervene in Fraser’s application because it believed that its interests would be negated, given that an expensive legal battle would drain the assets and frustrate its claim. The court upheld the right of a creditor, in appropriate circumstances, to intervene in a defendant’s expenses application but found that a concurrent creditor’s claim does not automatically take priority over a defendant’s legal expenses.

A defendant should not benefit unduly from the terms of the restraint order. At the same time, the defendant should not be prejudiced as far as living and legal expenses are concerned.

On the facts of the case, the court held that Fraser had not made full disclosure of his assets. He sought to hide assets from his creditors. There was no evidence that he experienced any delay in the prosecution of the criminal case as a consequence of the bank’s attempt to intervene, as was suggested by him in argument.

The Court concluded that Fraser had sought to benefit from the restraint order, as it effectively granted a stay of execution against his creditors but at the same time provided him with a means to pay legal and living expenses. It referred the matter back to the High Court to re-exercise its discretion in the light of the principles of its judgment.

A creditor with a secured claim (e.g. a mortgage bond) may well be in a different position. Such a creditor may have grounds to excise the secured property from the ambit of the restraint order by applying to have the order appropriately varied.

The judgment dealt with another important aspect, namely the right to a fair criminal trial. These rights include the right for the trial to commence and conclude without unreasonable delay and the right to legal representation. They are relevant to the exercise of the court’s discretion. The role of the defendant in causing any delay is also relevant – he or she should not be able to complain about delays if such delays are brought about by his or her own conduct. The right is not unbridled – if a defendant cannot afford a particular legal representative of choice due to financial constraints, one will be assigned at State expense.

Should there be a conviction, the court will enquire into possible confiscation of the defendant’s assets. POCA provides for a creditor at that stage to stake its claim against the restrained assets – the claims of ordinary creditors rank ahead of confiscation orders. The aim of POCA is to divest criminals of the proceeds of crime, not for the State to profit from asset forfeiture. Where there is a discharge, the restraint order falls away and creditors are free to exercise their normal execution rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions