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Polity
Published: 14 May 2009
Shifting the Burden of Proof: The nature of director's liability
Section 12 of the Competition Amendment Bill1 contains one of the most hotly debated amendments to the existing South African competition law regime. The proposed inclusion of section 73A of the Competition Act2 will introduce personal criminal liability for managers and directors of firms found to have engaged in a prohibited practice in terms of section 4(1)(b)3 of the Competition Act. However, concern surrounding the constitutional validity of such a provision has generated considerable unease, with the effect that President Kgalema Motlanthe has refused to sign the proposed amendments into law.
In terms of section 73A(1) of the Competition Act, a manager or director who either caused or knowing acquiesced4 to his firm engaging in a prohibited practice will be found to have committed an offence. While the imposition of personal liability in itself is not considered to be problematic, it is the content of sub-section (5) which has generated appreciable concern.
Section 73A(5) provides that in any court proceeding against a manager or director of a firm found to have engaged in a prohibited practice, a consent order signed by the firm in terms of section 49D of the Competition Act, or a finding by the competition authorities that a firm has acted in contravention of Chapter 2 of the Competition Act, will constitute prima facie proof of the fact that the firm engaged in that conduct. The President, relying on the advice of his legal counsel, Adv Semenya SC, has indicated that this provision offends against a director's right to a fair trial and more specifically an accused's right to silence.
In support of its position, Adv Semenya SC submitted that section 73A(5) introduced a reverse onus on an accused inconsistent with the provisions of section 35 of the Constitution, stating that "...[i]t would be perilous for an accused person to 'remain silent' in the face of a prima facie proof introduced by [section 73A(5)]".
Presumption of innocence
The presumption of innocence enshrined in section 35(3) of the Constitution requires that the State bear the full burden of proof5 in relation to each element of the criminal offence6. It is only once the State has established each element of the crime, beyond a reasonable doubt, that the burden of proof shifts to the accused to create reasonable doubt. Where a presumption of fact has the effect of prematurely placing a burden on an accused to establish his innocence on a balance of probabilities, without the State having proved every element of an offence beyond a reasonable doubt, the presumption will be regarded as creating a reverse onus. A provision containing such a presumption will be found to violate the presumption of innocence whenever there is the possibility of a conviction despite the existence of reasonable doubt.
What falls to be considered, therefore, is whether section 73A(5) has the effect of shifting the burden of proof to the accused to establish his innocence on a balance of probabilities, prior to the State having discharged each element of the offence contained in subsection (1). If so, it will then need to be considered, where an accused exercises his right to remain silent, will he risk being found guilty, despite the existence of reasonable doubt.
Burden of proof
The South African legal system differentiates between two types of presumptions which have an appreciable effect on the burden of proof placed on an accused during criminal proceedings. The first creates a legal burden and imposes an obligation on a court to draw a conclusion from proof of a basic fact, until the contrary is proved. It will then fall to the accused to disprove the presumed fact on a balance of probabilities. Such a presumption will lead to a risk of conviction where an accused does not introduce evidence to the contrary, despite the existence of reasonable doubt8. The imposition of such a reverse onus will in such cases, offend the presumption of innocence and an accused's right to remain silent.
In contrast, an evidentiary burden obliges a court to draw a conclusion from proof of a basic fact in the absence of evidence to the contrary. Such a burden will exist where a court is required to regard the establishment of one fact as prima facie evidence of another fact. The existence of an evidentiary burden will oblige an accused, in order to escape conviction, to adduce evidence which will raise reasonable doubt as to the presumed fact.
Right to silence
The nature of an evidentiary burden requires evidence sufficient to give rise to a reasonable doubt to prevent conviction9. Unlike the imposition of a legal burden, an evidentiary burden does not create the possibility of conviction despite the existence of reasonable doubt10, and accordingly will not qualify as a true reverse onus. However, such a presumption may still face constitutional scrutiny on the basis that it violates an accused's right to silence and thereby offends the presumption of innocence.
It is clear that the intended effect of section 73A(5) is to relieve the prosecution of the burden of proving every element of the offence with which the director or manager is charged. As a general rule, where a presumption has the effect of lessening the burden of proof borne by the State, if only in respect of a single element of a composite offence, such a provision may be found to infringe the presumption of innocence. In addition, an accused's right to silence may be infringed where the presumption created by section 73A(5) obliges the accused to adduce evidence in order to escape conviction.
The risk of coercing an accused to break his silence is most likely to occur where the statutory presumption relates directly to the assumption of guilt. For example, in S v Coetzee,11 section 332(5) of the Criminal Procedure Act12 provided that where a company was found to have committed an offence, the director of such company was deemed to be guilty of the said offence, unless he adduced evidence to the contrary. Similarly, in S v Manamela13, section 37 of the General Law Amendment Act14 provided that a person found in possession of stolen property would be guilty of an offence unless he established a the existence of a reasonable belief that he received the goods from the rightful owner. Finally, in S v Scagell15, the presence of certain items on a premises, served as prima facie evidence that the person in charge of that premises permitted the playing of a gambling game in contravention of section 6 of the Gambling Act16.
In each of the abovementioned cases, proof of a basic fact directly resulted in a presumption of guilt on the part of the accused. Accordingly, where an accused exercised his right to silence in such circumstances, he would automatically be found guilty of an offence. Such a presumption clearly infringes an accused's right to silence and thereby denies an accused of his right to a fair trial.
Rational connection
Considerable analysis has been undertaken by our courts in determining whether a reverse onus provision may be reconciled with the constitutional presumption of innocence. While we have indicated that the presumption contained in subsection (5) does not amount to a true reverse onus, it falls to be considered whether the imposition of an evidentiary burden in relation to a single element of a composite offence17 will withstand constitutional scrutiny. In this regard, there is authority for the view that "since the prosecution bears the burden of establishing guilt, it may not rest its case entirely on a presumption unless the fact proved is sufficient or supports the inference of guilt beyond a reasonable doubt"18.
It is submitted that section 73A(5) of Competition Act is distinguishable from the presumptions considered in S v Coetzee, S v Manamela and S v Scagell. The presumption created by this provision relates to the conduct of the company without a corresponding inference as to any element of guilt on the part of the director. The prosecution will still be required to establish a causal link between the prohibited practice committed by the company and the unlawful conduct of the director or manager.
It remains for the Constitutional Court to decide whether in cases where the prosecution is unsuccessful in proving any other element of the offence, apart from the prohibited conduct by the firm, it is likely that the accused director will be convicted if he chooses to exercise his right to remain silent. Likewise, the courts will have to engage in the limitation analysis to determine whether the lessening of the onus on the prosecution, by relieving it of the duty to prove an element of the offence, offends against the presumption of innocence.
1Bill No. 31D of 2008 ("the Bill").
2Act No. 89 of 1998 ("the Competition Act").
3Section 4(1)(b) of the Competition Act provides that "[a]n agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship and if it involves any of the following restrictive horizontal practices: (i) directly or indirectly fixing a purchase or selling price or any other trading condition; (ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or (iii) collusive tendering."
4Section 73(2): "For the purpose of subsection (1)(b), 'knowing acquiesced' means having acquiesced while having actual knowledge of the relevant conduct by the firm."
5The burden of proof refers to the obligation placed on a party to persuade the court of certain propositions by the end of the case.
6In R v Ndhlovo 1945 AD 369 at 386, Davis AJA stated that: "In all criminal cases it is for the state to establish the guilt of the accused, not for the accused to establish his innocence. The onus is on the State to prove all averments necessary to establish the guilt of the accused...".
7I Currie and J de Waal, The Bill of Rights Handbook (5th Ed), Cape Town: Juta & Co. Ltd. 2005, p. 748.
8See for example S v Coetzee ibid, S v Zuma 1995 (1) SACR 568 (CC), S v Bhulwana; S v Gwadiso 1996 (1) SA 388 (CC); S v Manamela and another (Director-General of Justice Intervening) 2000 (3) SA 1 (CC).
9PJ Schwikkard, Presumption of Innocence, Kenwyn: Juta & Co. Ltd, 1999, pp. 116-117.
10Scagell v Attorney-General of the Western Cape 1996 (11) BCLR 1445 (CC) at para 12.
11Supra note 8.
12Act 51 of 1977.
13Supra note 8.
14Act 62 of 1955.
15Supra note 10.
16Act 51 of 1965.
17The offence is a composite one as it is constituted by the interdependent but separate conduct of two parties, namely the firm and its directors or managers.
18County Court of Ulster County, New York, et al v Allen et al 442 US 140 (1979) at 167, quoted in S v Zuma supra note 8.

By: Sima Ostrovsky and Ann Boniwell of Webber Wentzel
First published in Without Prejudice, May edition