For a client under investigation for a commercial crime, the first real consequence is often not an arrest. It is a High Court order, frequently obtained without notice, placing their property beyond their control. Bank accounts stop operating. A curator takes charge of assets. Ordinary commercial life becomes very difficult, very quickly, and all of this occurs before any conviction.
This is Chapter 5 of the Prevention of Organised Crime Act 121 of 1998 in operation. Anyone advising in the commercial crime field needs to understand what it permits, because the response in the first days materially affects what can be recovered later.
Restraint is not forfeiture
The Act contains two distinct sets of asset-related powers, and conflating them causes real confusion.
Chapter 5 is conviction-based. A restraint order under section 26 preserves property so that a confiscation order under section 18 can be satisfied if the defendant is ultimately convicted. It attaches to a person and is tied to a prosecution, whether already instituted or about to be.
Chapter 6 is civil forfeiture, directed at property said to be an instrumentality of an offence or the proceeds of unlawful activities. It proceeds against the property itself and does not require anyone to be convicted, or even charged.
This article deals with the first. The practical difference is that a restraint order is a holding measure attached to a criminal case, while a Chapter 6 forfeiture is a self-standing civil claim against the asset.
When a restraint order may be made
Section 25 sets out the circumstances in which a High Court may exercise the power in section 26. In broad terms it applies where a prosecution has been instituted against the defendant, or where the court is satisfied that a prosecution is to be instituted and there are reasonable grounds to believe that a confiscation order may be made.
Two features of this do the heavy lifting in practice. First, a charge is not a precondition: an order can precede one. Second, the threshold is a belief that a confiscation order may be made, not proof that one will be.
The curator bonis
Where a restraint order is made, section 28 allows the court to appoint a curator bonis to take care of the property, subject to the court's directions. The curator's role is not neutral housekeeping from the defendant's point of view: the powers under Chapter 5 are exercised with a view to making the value of realisable property available to satisfy a confiscation order that may be made.
The Act deals with the curator's fees, and provides for the position if the restraint is later rescinded, including that the curator is discharged. Those costs are a real consideration where a business is placed under a curator for an extended period.
Why the first response matters
Restraint applications are frequently brought ex parte, on the State's papers alone, with a return day on which the respondent may oppose. That structure has consequences:
- the order takes effect before the defendant has been heard;
- the material placed before the court is the State's, which puts a premium on the duty of full disclosure owed in an application brought without notice; and
- the practical damage, to banking, to contracts, to employees, begins immediately.
The first step is therefore to obtain the full application record and the order itself, and to establish precisely which assets are covered and on what basis. Provision for reasonable living and legal expenses is a recognised part of this area and should be addressed early rather than after the fact.
Third parties and jointly held property
Restraint frequently sweeps in property in which someone other than the defendant has an interest, a spouse, a business partner, or a company with its own shareholders. An affected third party is not without remedy, but the remedy has to be pursued properly and on evidence of the interest asserted. Simply asserting that an asset "belongs to the company" achieves nothing without the material to support it.
The confiscation stage
If the defendant is convicted, the State may seek a confiscation order under section 18, directed at the benefit derived from the offence. The enquiry at that stage is about benefit, and it is a distinct exercise from sentencing. Preparation for it should not begin only after conviction, because the factual groundwork, what was actually received, what it was used for, and what is genuinely attributable to the offending, is built from the same documents that matter during the trial.
Practical points
Treat the return day as the main event and prepare for it properly. Preserve records immediately, because reconstructing the financial history of an entity under curatorship is considerably harder. Deal with living and legal expenses at the outset. Where third-party interests exist, identify and document them early rather than raising them late. And keep the two chapters of the Act distinct in your analysis, because the answer to a Chapter 6 forfeiture is not the answer to a Chapter 5 restraint.
This article is general information on South African law and not legal advice. Asset restraint is fact-specific and urgent, and anyone served with an order should obtain advice immediately.
