A businessman who was unlawfully arrested at his business premises in front of patrons and subsequently linked to allegations of fraud and money laundering has been awarded more than R4.23 million by the South Gauteng High Court in Johannesburg.
Acting Judge S Van Aswegen ordered the Minister of Police, a warrant officer and the National Director of Public Prosecutions to pay a 74-year-old businessman R4.14 million for his future loss of earnings.
The defendants were also ordered to pay him R40,000 for his unlawful arrest and detention and a further R50,000 for damage to his good name, dignity and reputation.
The amounts carry interest from March 30, 2017, until payment in full. The defendants were also ordered to pay the costs of the litigation, including the costs of counsel.
Arrest in front of patrons
SD was arrested on February 10, 2016, at the premises where he operated a heritage museum, restaurant and pub west of Vanderbijlpark.
He was 64 at the time and had worked as a civil engineer and held an MBA from the University of the Witwatersrand.
His businesses included the Heritage Museum, Urban Vibes restaurant and the Cock & Bull pub.
The court heard that Warrant Officer Brijlall arrived at his office at about 4pm and informed him that he was under arrest.
Brijlall initially did not have a warrant and left the premises to obtain one. He returned at about 5pm with other uniformed police officers and arrested SD.
The businessman was escorted through the courtyard towards a police vehicle while patrons were present, including members of the Rotary Club and visitors from the United States.
SD. told the court that the arrest was humiliating and that news of it subsequently circulated on social media. He said this resulted in him being stigmatised as someone involved in criminal activity.
He spent the night at the Vanderbijlpark Police Station with seven other people before being taken to the Vanderbijlpark Magistrate’s Court.
He was released at about 1pm the following day after R20,000 bail was paid on his behalf.
The court found that he had spent approximately 14.5 hours in detention at the police station, followed by several more hours in the court cells.
Businesses collapsed following arrest
SD told the court that his businesses had been financially sound before his arrest.
However, he said the arrest and subsequent prosecution had a devastating impact on the museum, restaurant and pub.
According to his evidence, patrons stopped attending the businesses while owners of cultural artefacts housed at the museum began demanding their return.
The annual Wheels at the Vaal Motor Show was also affected. The event had previously generated about R100,000 per year, but the 2016 show became the last one held at the premises after sponsors and vendors lost interest.
His long-standing employee, Ms Callow, supported his evidence.
She told the court that the businesses had been popular and financially successful before the arrest, with vendors regularly returning to participate in the motor show.
Following the arrest, however, vendors cancelled bookings and sponsors withdrew their support.
Within about six months, people who had supplied artefacts to the museum began requesting their items back. This eventually resulted in collections being auctioned.
None of the businesses ultimately survived.
Court awards R90,000 for arrest and reputational harm
In assessing damages for the unlawful arrest and detention, the court considered SD’s age, health, social standing, the public nature of the arrest and the conditions in which he was detained.
The judge found that he had experienced considerable embarrassment and distress, although there was no evidence that he had been physically mistreated while in custody.
He was held with seven other people, provided with a mattress and two blankets and had access to a toilet. His assistant was also allowed to bring him his diabetes medication.
The court consequently awarded him R40,000 for the indignity, deprivation of freedom and liberty, and discomfort caused by the unlawful arrest and detention.
A further R50,000 was awarded for damage to his good name, dignity and reputation.
The judge found that the public nature of the arrest, which took place in front of patrons and community members, together with allegations involving fraud, theft and money laundering and the publicity surrounding the matter, had harmed SD’s reputation.
Expert links business collapse to arrest
A chartered accountant, Paul Koski, gave expert evidence regarding SD’s financial losses.
Koski examined the available financial records and concluded that the businesses experienced a substantial decline following the arrest before ultimately collapsing.
His analysis included VAT records covering the 24 months after the arrest.
The court accepted that the financial records showed the arrest was a critical turning point for businesses that had previously experienced significant growth.
Koski initially calculated SD’s future loss of earnings at R4.4 million, based on projected income over an 11-year period.
His calculation assumed that the museum and related activities would have continued until at least February 2027. It also considered the businesses’ historical growth and applied a 15.5% discount rate.
The judge described Koski’s evidence as independent, objective and credible.
However, the court found that an additional 7.5% contingency deduction should be applied to account for factors including SD’s age, possible deterioration in his health, early retirement, mortality and wider economic risks.
The adjustment reduced the future loss of earnings to R4.14 million, which the court awarded.
R1.4m past-loss claim rejected
SD had also claimed R1.4 million for past loss of earnings.
The court rejected this part of his claim.
The evidence showed that the R1.4 million represented a loan he had advanced to the Sylviavale Heritage and Preservation Trust, rather than past loss of income as alleged in his particulars of claim.
The judge found that SD had not pleaded a claim for the loss of that asset and therefore could not recover the R1.4 million under the claim before the court.
Despite rejecting the R1.4 million claim, the court upheld his claim for future loss of earnings and awarded him R4.14 million. This was in addition to the R90,000 awarded for his unlawful arrest, detention and reputational damage, bringing the total amount to R4.23 million.
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Sinenhlanhla Masilela
iol.co.za
