THE DIRECTOR OF PUBLIC PROSECUTIONS
HIGHLANDS WATER VENTURE
The respondent, the Highlands Water Venture, is a partnership. The appellant, the Director of Public Prosecutions, elected to indict it as such in a forthcoming criminal trial. A partnership is not a legal persona and not susceptible to criminal liability and there not indictable. Neither the Criminal Procedure and Evidence Act of 1981 nor the Partnership Proclamation, 78 of 1957 creates such liability.
The appeal facts and the declaratory order of the court a quo is confirmed.
C of A (CRI) NO.8 of 2000
IN THE LESOTHO COURT OF APPEAL
In the matter between:
THE DIRECTOR OF PUBLIC PROSECUTIONS APPELLANT
HIGHLANDS WATER VENTURE RESPONDENT
CORAM: J.H. Steyn, P.
L. v.d. Heever, J.A.
M. Kumleben, J.A.
The respondent on appeal was the applicant in the court a quo and the appellant was the respondent in that court. To avoid confusion of nomenclature I shall refer to the parties as the Highlands Water Venture ("HWV") and the Director of Public Prosecutions ("DPP").
Nineteen accused were indicted in the High Court, in various combinations and en various counts, of bribery and certain other offences. The HWV was one of their
number. It was at all relevant times a partnership at common law and registered as such in Lesotho. On receipt of the indictment the HWV applied on notice of motion directed at the DPP for an order that, being a partnership, it is not an entity susceptible to criminal liability and that is inclusion in the indictment is therefore misconceived and irregular. A declaratory order to that effect was sought. This contention was upheld in the court a quo (per CULLINAN A.J.). Its correctness is now before us on appeal. Two preliminary comments in this regard: First, it was not contended that it was out of order to raise the issue in a civil proceeding and not in limine at the start of the forthcoming criminal trial; and second, in the indictment the HWV is described as a "consortium" of companies but nothing turns on this. As I have said, we are dealing with a partnership.
At the start of his comprehensive and closely reasoned judgment, CULLINAN A.J. traces the history of the local enactments governing criminal procedure and evidence relating to corporate bodies and associations. The learned Judge further compares them with their South African counterparts, on which they were and are largely based. However, in so far as the answer to the question depends upon provisions relating to procedure and evidence, the Criminal Procedure and Evidence Act, 1981 ("1981 Code") is the current and relevant enactment. I turn to it without reference to its predecessors or counterparts. Section 338 is the one on which argument principally concentrated. It reads as follows:
"338. (1) In any criminal proceedings against a company under any law or at common law -
an act performed, with or without a particular intent, by or on instructions or with permission express or implied, given by a director or a servant of that corporate body; and
the omission, with or without a particular intent, or any act which ought to have been but was not performed by or on instructions given by a director or servant of that corporate body in the exercise of his powers or in the performance of his duties as such director or servant or in furthering or endeavouring to further the interests of that corporate body, shall be deemed to have been performed, with the same intent, if any, by that corporate body or as the case may be, to have been an omission, with the same intention, if any on the part of that corporate body.
In any criminal proceedings referred to in sub-section (1), a director or servant of a corporate body shall be cited as a representative of that corporate body, as the offender and thereupon, the person so cited may, as such a representative, be dealt with as if he were the person accused of having committed the offence in question;
if that person pleads guilty, the plea shall not be valid unless the corporate body authorised him to plead guilty;
if at any stage of the proceedings that person ceases to be a director or servant of that corporate body or absconds or is unable to attend, the court in question may, at the request of the prosecutor, from time to time substitute for that person any other person who is a director or servant of that corporate body at the
time of the substitution, and thereupon the proceedings shall continue as if no substitution had taken place.
If this person representing the corporate body is convicted, the court convicting him shall not impose upon him in his representative capacity any punishment, whether direct or alternative, other than a fine, even if the relevant law makes no provision for the imposition of a fine in respect of the offence in question, and such fine shall be payable by the body corporate and may be recorded [sic. should read "recovered"]by attachment and sale of property of the corporate body;
the citation of the director or servant of a corporate body to represent that corporate body in any criminal proceedings against it, shall not exempt that director, servant from prosecution for that offence under subsection (5).
In any criminal proceeding against a company, any record which was made or kept by a director or servant or agent of that body corporate within the scope of his activities as a director, servant or agent, or any document which was at any time in the custody or under the control of any such director, servant or agent, shall be admissible in evidence against the accused.
For the purposes of sub-section (3) any record made or kept by a director, servant or agent of a corporate body or any document which was at any time under his custody or
under his control, shall be presumed to have been made or kept by him or to have been made or kept by him or to have been in his custody or under his control within the scope of his activities as director, servant or agent unless the contrary is proved.
When an offence has been committed, whether by the performance of any act or by failure to perform any act for which a corporate body is or was liable to prosecution, any person who was, at the time of commission of the offence, a director or servant of that corporate body, shall be guilty of that offence, unless it is proved that he did not take part in the commission of the offence and that he could not have prevented it, and shall be liable to prosecution therefor, either jointly with the company or apart therefrom, and shall on conviction be personally liable to punishment therefor.
In any criminal proceedings against a director of servant of a corporate body in respect of an offence -
any evidence which was or would be admissible against that company shall be admissible against the accused;
whether or not the corporate body is or was liable to prosecution for the offence, any document, memorandum, book or record which was drawn up,
entered up or kept in the ordinary course of business of that corporate body or which was at any time in the custody or under the control of any director, servant or agent of that corporate body in his capacity as director, servant or agent, shall be prima facie proof of its contents and admissible in evidence against the accused, unless he proves that at all material times he had had no knowledge of that document, memorandum, book or record, in so far as its contents are relevant to the offence charged, and was in no way a party to drawing up of such document, memorandum or the making of any relevant entries in such book or record.
Where a member of an association, not being a corporate body has in carrying on the business or affairs of that association or in furthering or endeavouring to further its interests, committed an offence whether by the performance of any act or by failure to perform any act, any person who was, at any time of the commission of that offence, a member of that association shall be guilty of that offence unless it is proved that he did not take part in the commission of that offence and that he could not have prevented it.
Provided that if the business or affairs of the association are governed or controlled by a committee or other similar governing body this sub-section shall not apply to a person who was not at the time of commission of the offence a member of that Committee or other governing body.
In any criminal proceedings against a member of an association under sub-section (7) any record which was made or kept by any member or servant or agent of that association within the scope of his activities as such member, servant or agent, or any document which was at any time in the custody or under the control of such a member, servant or agent within the scope of his activities as such a member or servant or agent shall be admissible in evidence against the accused.
For the purposes of sub-section (8) any record made or kept by a member, servant or agent of an association, or any document which was at any time in his custody or under his control, shall be presumed to have been made or kept by him or to have been in his control within the scope of his activities as such a member, servant or agent, unless the contrary is proved.
The provisions of this section are additional to and not in substitution for or in derogation from any other law which provides for the prosecution against companies or their directors or servants or against associations or persons or their members.
In this section the word 'director' in relation to a corporate body means any person who controls or governs that corporate body or who is a member of a body or group of persons which controls or governs that corporate body or, where there is no such body or group, who is a member of that corporate body."
The section, one notes, refers interchangeably - and, one may add, enigmatically - to a "corporate body" and a "company". It is agreed that for present purposes they are to be regarded as synonyms and, since a partnership is a species of the genus "association," I shall henceforth simply use the terms "company" and "partnership."
One notes that section 338 has three parts: First, it deals with the evidence and procedure "in proceedings against a company", thus acknowledging that a company can be indicted and be held liable for acts or omissions on the part of its directors or servants (subsections (1) to (4)); second, it makes a director or servant of a company vicariously liable for any act or omission "for which a corporate body [company] is or was liable to prosecution" (subsections (5) and (6)); and third, it provides for a member of an association being held liable in stated circumstances for an offence committed by another member. Thus the section taken as a whole implicitly acknowledges that a company is capable of being held criminally liable, but as plainly does not seek to place a partnership on the same footing.
The reason for this is not far to seek. A company is a legal persona capable of owning assets or property in its own name distinct from its members, its shareholders,
(DADOO. LTD AND OTHERS v KRUGERSDORP MUNICIPAL COUNCIL 1920 AD 530 at 536). As such, on conviction it is capable of being sentenced to a fine (subsection (2)(c)) and no doubt of being the subject of a confiscatory order. If necessary, the property of the company can be attached to implement the sentence (subsection (2) (c)). The same cannot be said of a partnership. It is not a legal persona. (R v LEVY AND OTHERS 1929 AD 312 at 322). And, as it is put in SACKS v COMMISSIONER FOR INLAND REVENUE 1946 AD 31 at 40, "[I]t is clear that during the subsistence of a partnership agreement the partnership property is owned in common in undivided shares". (I shall comment on the meaning of "partnership property" later in this judgment.) For this reason the conviction of a partnership, after being indicted eo nomine would not be efficacious. On conviction no more could be achieved than by the citation and conviction of the individual partner criminally liable and any other partner vicariously liable in terms of subsection (7). It is therefore not surprising that the provisions of section 338 do not envisage a partnership being indicted.
In the light of the above, Mr. Penzhorn, who appeared for the appellant, conceded that he had to rest his argument on, as he contended, the applicability of the definition a ''company" in section 3 of the 1981 Code. It reads as follows:
" 'company' means a company incorporated or registered under any law generally governing companies, or under any special law or under letters patent or Royal Charter, and includes a partnership, a firm, an association of persons, local government body, or any other association of persons."
But to apply this definition to section 338, as pointed out by CULLINAN A.J., would make no sense of it. Two illustrations will suffice. There is no concomitant definition of a ''director" to include a "member", and the former term is foreign to a partnership -or an association for the matter. The opening words of sub-section (7) read "where a member of an association, not being a corporate body has etc.". If the definition is applicable, it must be taken to say "where a member of an association, not being an association...". The word "company" appears in two sections of the 1981 Code. They are sections 338 and 134. As regards the latter section, it is agreed all round, as stated in the judgment of the court a quo, that "section 3 is not accommodated in the provisions of section 134." Mr. Penzhorn argues that for this reason it must apply to section 338. Logically this is not so : it is as feasible that it applies to neither - as would plainly appear to be the case. This being so, no reason for the existence of this definition could be suggested by Mr. Farber, who appeared for the HWV, nor does one even speculatively come to mind. But this is largely by the way, whatever its purpose, if any, it cannot for the reasons already given be made to apply to section 338 and thus distort its clear and explicit meaning and effect. (Cf: Commissioner for Inland Revenue v Simpson 1949 (4) 678 (A) 692 and Brown v Cape Divisional Council and Another 1979(l)SA589(A)601E-H.)
But the argument on behalf of the DDP is fundamentally flawed whether or not the definition can be said to apply. The 1981 Code, as its title states, is concerned with procedure and evidence NOT with substantive law. It does not create or confer legal status on a company and a fortiori not on a company as defined. It correctly presupposes in the case of a company that a justiciable entity exists, a legal persona, to which liability can attach. One cannot, with or without the aid of the definition,
This brings one to the final submission on behalf of the DPP. It is that the provisions of the Partnership Proclamation, 78 of 1957, quoted in full in the judgment, justify the inclusion of the partnership in the indictment. Not so. On the contrary, it explicitly states that nothing in it shall confer upon a partnership "the status of a body corporate." (Cf: RAND MOTOR TRANSPORT CO AND ANOTHER 1930 AD 353 at 357 and 358.) What follows in the proclamation has a twofold practical purpose in the interests of the partners inter sese and creditors. (Similar provisions are to be found in other jurisdictions cf MULLER EN'N ANDER 1968 (3) SA195(A) 202H - 203B). First, "partnership assets" or "partnership property" is recognised as distinguishable from, but not distinct from, that of the individual partners. (Cf. MICHALOW, N.O. v PREMIER MILLING CO. LTD 1960 (2) SA 59(a) 61D-H.). Second, as the proclamation states, in civil proceedings, and in certain other instances, a partnership is to be dealt with "as though it were an entity distinct from the identity of the individual partners."
To sum up: a partnership is not a legal persona; it cannot therefore be held criminally liable; the 1981 Code does not purport to create such liability; nor does the Partnership Proclamation do so.
The appeal is dismissed and the declaratory order of the court a quo is confirmed.
JUDGE OF APPEAL
L. v.d. Heever
JUDGE OF APPEAL
Delivered on this 13th day October 2000.