Can companies privately prosecute in South Africa?
South Africa experienced its first successful private prosecution case in the recent judgment of Private Prosecutor v Hendricks 32/94/2010, heard in May 2016, in which a family succeeded in convicting an accused of murder and sentencing him to 15 years imprisonment.
Section 7 of the Criminal Procedure Act 51 of 1977 (CPA) allows a private individual to prosecute in cases where the Director of Public Prosecutions (DPP) declines to prosecute. It is interesting to note that the CPA refers to a private person, but makes no reference to other entities such as companies. More fully, the section reads as follows:
“7 Private prosecution on certificate nolle prosequi (‘will no longer prosecute’)
(1) In any case in which a Director of Public Prosecutions declines to prosecute for an alleged offence-
(a) any private person who proves some substantial and peculiar interest in the issue of the trial arising out of some injury which he individually suffered in consequence of the commission of the said offence; …”
Hence, the burning question – can companies privately prosecute?
The relief currently available to companies where a civil claim exists is that of Derivative Action as enshrined in section 165 of the Companies Act 71 of 2008. In short, this provision allows a director or interested party to litigate on behalf and in the name of the company. It is commonly used against miscreant directors.
Furthermore, section 33 of the National Environmental Management Act (NEMA) extends the right to private individuals and companies to privately prosecute in the name of public interest or in the interest of the protection of the environment where a breach of duty or statutory offence has taken place or is threatened to take place.
The case of Barclays Zimbabwe Nominees v Black
However, in Barclays Zimbabwe Nominees (Pty) Ltd v Black 1990 (4) SA 720 (A) the court held that a company is not a private person as intended by section 7 of the CPA and therefore does not have the ability to institute a private prosecution against the defendant for fraud and perjury. Therefore, the question remains – barring NEMA, can a company privately prosecute?
The argument for the appellant in the Black case were as follows:
(a) in terms of section 2(b) of the Interpretation Act 33 of 1957, the word “person” must be construed to include juristic persons unless the context indicated otherwise; and that the context in this case does not indicate otherwise;
(b) there is no good reason in principle why a company should not be able to conduct a private prosecution;
(c) the significance of the word “private” in section 7 of the CPA was to contrast a person holding public office or an official person, as defined in the Oxford English Dictionary. The phrases “substantial and peculiar interest” and “which he individually suffered” in section 7 further exclude the latter persons from the ambit of the right afforded therein.
(d) The section is not without checks and balances – section 9 provides for security by the private prosecutor, and section 10 read with section 12 determines the process and manner of private prosecution.
While the court found these arguments attractive, it could not find title for the appellant to prosecute. This is insofar as the general policy of the legislature is that all prosecutions are to be in the name and on behalf of the State.
The court also noted that if the provision were to include companies, it would only include private companies which would create an anomaly insofar as there should be no distinction between private, public or other companies.
Private prosecutions can combat corruption and serve public interest
This case was, however, decided before the Constitution. The issue arose post-democracy in the case of National Society for the Prevention of Cruelty to Animals v Minister of Justice and Constitutional Development & Another 2016 (1) SACR 308 (SCA).
Corruption Watch, which was admitted as a friend of the court (amicus curiae), commented that allowing juristic persons to bring private prosecutions would be a critical issue in combating corruption and would serve the public interest. “It also substantially reduces the incentive of those accused of corruption to seek to influence the NPA (National Prosecution Authority) in an improper manner as they will be aware that this will not preclude a prosecution from taking place.”
The appellant is a juristic person created in terms of section 2 of the Societies for the Prevention of Cruelty to Animals Act 169 of 1993 (SPCA Act). The objects of the NSPCA include inter alia instituting legal proceedings connected with its functions … by any person of a particular kind of cruelty to animals. The appellant had over several years tried to perform its functions by instituting proceedings against offenders of the SPCA Act, but was prohibited from doing so insofar as the DPP would not provide the requisite certificate in terms of section 7 upon declining to prosecute, reasoning that it was a juristic person.
Section 7(1)(a) of the CPA unconstitutional?
In the premise, the appellant sought to declare section 7(1)(a) of the CPA unconstitutional. It argued that the differentiation between different classes of persons failed to serve a legitimate governmental purpose and, therefore, is irrational and contrary to the rule of law. The differentiation further fails to see natural and juristic persons as equal before the law which is contrary to our Constitutional tenets of equality.
It considered the test as taken from Glenister v President of the Republic of South Africa & others 2011 (3) SA 347 (CC) para 55:
“… ―there must be a rational relationship between the scheme which it adopts and the achievement of a legitimate governmental purpose. Nor can Parliament act capriciously or arbitrarily. … To survive rationality review, legislation need not be reasonable or appropriate”
Therefore, legislation which differentiates between classes of persons is considered non-discriminatory if it is rationally linked to the achievement of a governmental purpose. Private prosecutions are a legitimate governmental purpose. But is section 7(1)(a) of the CPA rationally connected to this purpose? Is there an acceptable reason for the limitation of private prosecutions contained in the impugned provision?
Private prosecution only allowed where personal interests are at stake
To this the court noted that the purpose of section 7 is to allow for individuals to prosecute only where personal interests are at stake, and to prevent natural and juristic persons without this interest from doing so. To allow everyone to undertake private prosecutions would create an alternate prosecuting system of individuals arrogating to themselves the functions of a public prosecutor. Legitimate exceptions exist in sections 7 and 8 of the CPA.
Can a shareholder privately prosecute?
Here, it is prudent to diverge: can a shareholder or other affected party privately prosecute, not in the name of a company, but in his or her capacity as shareholder?
One must look to the meaning and purpose of section 7 of the CPA which has already been detailed. It is submitted that a shareholder qualifies to privately prosecute (merits dependent), insofar as they have a “substantial and peculiar interest,” and is “injur[ed]” as per the meaning and interpretation of the section. Their interests are far from “imponderable” which interests the provision seeks to discount.
In Attorney-General v Van der Merwe and Bornman 1946 OPD 197 at 201 the court states, “An action for damages may be futile against a man of straw and a private prosecution affords a way of vindicating those imponderable interests other than the violent and crude one of shooting the offender. The vindication is real: it consoles the victim of the wrong; it protects the imponderable interests involved by the deterrent effect of punishment and it sets at naught the inroad into such inalienable rights by effecting ethical retribution. Finally it effects atonement, which is a social desideratum.”
Section 8 of the CPA
“8 Private prosecution under statutory right
(1) Any body upon which or person upon whom the right to prosecute in respect of any offence is expressly conferred by law, may institute and conduct a prosecution in respect of such offence in any court competent to try that offence…”
It is submitted that private prosecutions in terms of section 8 of the CPA are not truly private insofar as the DPP may, in terms of the subsections thereunder, either not authorise the prosecution, or may at any time withdraw the right to prosecute. Section 8 is predominantly used by municipalities to prosecute individuals and companies that break municipal laws.
The Constitutional Court judgment
The Constitutional Court released its judgment in the matter on 8 December 2016 by Khampepe J. The Respondents submitted that section 8 provides enough statutory power to allow the NSPCA to privately prosecute, as read with section 6(2)(e) of the SPCA Act. Consequently, the NSPCA amended its notice of motion for a declaratory order concordant with this argument. This motion remained unopposed.
Corruption Watch argued that section 7(1)(a) is reasonably possible of having a wider interpretation with regards its terms “private person”, “some substantial and peculiar interest” and “individually suffered”. Nothing in the language of the section precludes juristic persons. Further, the State has a legal duty to actively take steps against corruption which may be achieved through allowing private prosecutions. If section 7 cannot be interpreted more broadly, it is invalid and unconstitutional.
A body may institute legal proceedings specifically connected with its functions
Section 8 of the CPA requires the power to privately prosecute to be expressly provided for. The court here recognised that this authority need not be in words but must be sufficiently clearly delineated. Whereas section 6(2)(e) of the SPCA Act provides that the NSPCA may “institute legal proceedings connected with its functions…” While both the lower courts found that this did not expressly confer powers of private prosecution, the Constitutional Court held that it did.
This of course does not apply to every piece of legislation which empowers a body to “institute legal proceedings”. It must be specifically connected to its functions. The court regarded the host of functions held by the NSPCA and found that its functions are increasingly considered important for our community. This is due to the values previously elucidated in our courts, that we need to prohibit “one legal subject from behaving so cruelly to animals that he offends the finer feelings and sensibilities of his fellow humans,” and that animals are “sentient beings who experience pain.”
Therefore it has become a Constitutional imperative to protect the moral status of humans by placing intrinsic value on animals as individuals. In this regard the court declared the NSPCA empowered to privately prosecute in terms of section 8 of the CPA and section 6(2)(e) of the SPCA Act.
As section 7 was no longer in dispute it remained unresolved (the amicus curiae was not cited as a private party).
Global analysis of private prosecutions
South Africa’s position is not a shared one in other jurisdictions – Canada, the UK, the USA and Australia amongst others, allow companies to privately prosecute. Countries like Singapore, Zimbabwe and Kenya do not expressly allow for companies to privately prosecute, but entertain the possibility.
Allowing companies to privately prosecute would not come without checks and balances. Proffered suggestions include the rights of an accused person as enshrined in section 35 of the Constitution would duly be afforded to him/her, the hearing would be public, judicial officers would be allowed to prevent abuse of the system, and frivolous or vexatious prosecuting would come with punitive consequences.
Allowing companies to privately prosecute would also save the State time and resources as companies conduct their own investigations. Crimes against companies have for some years been on the rise. Those that have fallen victim to injury should be entitled to prosecute in vindication thereof.
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