“Dirty dozen” tactics February 2017

By ANJA HOFMEYR AND PIETER CONRADIE, Published in Litigation

"This appears to have been the first time in South Africa where the question of the admissibility of evidence rejected as inadmissible in the preceding criminal trial was raised in a subsequent civil trial such that the court hearing the civil matter would have to consider the admissibility of substantially the same evidence": Hohne judgement.

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The general rule is that a contract induced by the threat of criminal prosecution is unenforceable on the grounds of duress. To this end, the Supreme Court of Appeal (SCA) held, in Medscheme Holdings (Pty) Limited & another v Bhamjee 2005 (5) SA 339 (SCA), that "an undertaking that is extracted by an unlawful or unconscionable threat of some considerable harm, is voidable". This would also be the case if there was extortion or what is commonly known as blackmail involved.

Say your company discovers that an employee is stealing from the company. A representative of the company is instructed to deal with the issue. Although pressed by the company representative, the arrogant employee does not want to admit to the crime, despite the company being in possession of CCTV footage to prove that the employee indeed committed the crime.

How does one approach such matters?

On 30 November 2016, the SCA handed down a judgement in the matter of DL Hohne v Super Stone Mining (Pty) Ltd (case no 831/2016) where an employee (appellant) stole diamonds, as confirmed via CCTV footage. The value of the diamonds was approximately R6m.

The employee handed over R530 000 to his employer. This was money he received from selling the stolen diamonds. However, this was only a small portion of the money received by the employee. During a recorded interview with the employee, it appeared that the employee kept the stolen diamonds still in his possession in a solvent canister in a safe. When questioned by representatives of his employer about the canister, the employee did not co-operate and the employer then introduced what he referred to as "the dirty dozen" part of the interview. The "dirty dozen" included, among other threats, reporting the matter to the Hawks, SARS, publishing details of the theft in The Star newspaper, polygraph testing, and reporting the theft to the Kimberley Club, the Diamond Board and ETv. Thereafter, the employee spilled the beans and signed an acknowledgement of debt in respect of the loss suffered by the company. At no stage during the confrontation was the employee threatened with physical violence or anything unlawful.

During the criminal proceedings regarding theft and money-laundering, the state sought to rely on a statement made by the employee to the police, and subsequent pointing-out of the diamonds and the cash he received for selling the stolen diamonds. In light of the evidence regarding the confrontation which took place with the employee during which he admitted the theft, the court held that the employee's statement had not been freely and voluntarily made in terms of the requirements of the Criminal Procedure Act (51 of 1977) (CPA) and was, therefore, inadmissible. Further, the evidence of the pointing-out of stolen diamonds and cash was also inadmissible because it was "fruit of the poisoned tree". The employee was ultimately acquitted.

Thereafter, the company instituted a civil action against the employee to recover the damages it had suffered. The employer succeeded in holding the employee civilly liable in the court a quo, and the employee subsequently appealed to the SCA. The appeal turned on the admissibility of certain evidence:

  • The video recording of interviews conducted with the employee;
  • An acknowledgement of debt signed by the employee in terms of which he admitted being liable to his employer in an amount of R5m for the loss suffered by the company as a result of the theft; and in particular
  • The confession made to the police.

The SCA considered the question of admissibility of evidence in criminal as opposed to civil matters, and found that it stood on a different footing from a civil dispute, and was adjudicated according to different criteria. In a criminal matter, the might of the state is pitted against the individual. Section 35(5) of the Constitution requires that evidence "must be excluded" from a criminal trial if it would render the trial unfair or if it would otherwise be detrimental for justice. An adverse result for an accused person based on the consideration of inadmissible evidence, may result in loss of freedom. By contrast, s34 of the Constitution, which extends to civil matters as well, contains no equivalent guarantees and there is no provision regarding the exclusion of evidence.

Were the "dirty dozen" threats made by the employer's representatives contra bonos mores?

In the Hohne matter, the SCA found that both the theft and the evidence of the quantum of the employer's damages had been established in documents in which the employee had acknowledged his wrongful acts, his liability and the amount in question. The employer did not exact or extort evidence to which it was not otherwise entitled and no "unconscionable threat of some considerable harm" was levelled at the employee – although the employee claimed that the acknowledgement of debt was signed under duress, the employee chose not to give evidence to substantiate his claims. The evidence was, therefore, both admissible and enforceable against the employee as it had been obtained without duress.

The SCA further stated that an exhortation to tell the truth will not exclude a confession and a threat of the probability of arrest does not constitute undue influence. The test was whether there was "any risk of a false confession".

However, it should borne in mind that in Ilanga Wholesalers v Ebrahim and others 1974 (2) SA 292 (D), the court held that it was impermissible to threaten someone to extort an undertaking from him to pay a specific amount which the creditor does not know and will not be able to prove is owing, as this would amount to an abuse of legal rights.

Conclusion

The same evidence which may be inadmissible in criminal cases will not necessarily be excluded in civil cases. Whether, following some criminal conduct, a threat to prosecute or take further action would be contra bonos mores, is ultimately a policy consideration. For instance, one cannot threaten to lay criminal charges against someone for an act irrelevant to the damages suffered and for which one attempts to secure payment, as this would constitute blackmail. The same would apply to embarrassing but not criminal acts that have no bearing on the claim in question. It is only possible to exact or extort something to which you would in any event have been entitled.

It is important to note that an employer is not only entitled to confront an employee about alleged wrongdoing, but is obliged to do so, in order to give an employee an opportunity to respond thereto in accordance with the audi-principle.

It should further be remembered that an employer must not threaten to prosecute a debtor or employee so that the debtor undertakes to pay an amount which a company estimates in an arbitrary way to be due. Where the company does not know the exact amount stolen, it is within its legal rights to threaten to prosecute but to use the threat of prosecution to extort an undertaking to pay an amount which the company knows it cannot prove to be due, is an abuse of its legal rights.

If a company has evidence to prove the crime in question, then a threat to report the matter to SAPS is in order. However, if the company does not have evidence to prove the crime and there are only rumours and facts that point to the possibility of theft being committed by an employee, but there is no substantive proof, then caution should be exercised when the employee is interviewed. The company will act within its rights to inform the employee that it will refer the matter for investigation to the police or private forensics.

Lawful evidence obtained may be used in disciplinary hearings and in civil matters.

Hofmeyr is a Director and Conradie an Executive Consultant, Dispute Resolution Practice, Cliffe Dekker Hofmeyr.