Unlawful arrest: businessman wins R4.2m as heritage museum, restaurant and pub fold

The South Gauteng High Court in Johannesburg has awarded a 74-year-old businessman more than R4.23m after finding that his arrest at his own premises, in full view of patrons, was unlawful and led to his name being linked to allegations of fraud and money laundering.

Acting Judge S Van Aswegen ordered the police minister, a warrant officer and the national director of public prosecutions to pay R4.14m for future loss of earnings, R40,000 for the unlawful arrest and detention, and R50,000 for damage to his good name, dignity and reputation, Sinenhlanhla Masilela reported for African News Agency.

Interest runs from 30 March 2017 until payment in full, and the defendants must also cover the costs of the case, including counsel.

The businessman, referred to as SD, was arrested on 10 February 2016 at the premises west of Vanderbijlpark where he ran a heritage museum, the Urban Vibes restaurant and the Cock & Bull pub. He was 64 at the time, a civil engineer by training with an MBA from the University of the Witwatersrand.

The court heard that Warrant Officer Brijlall arrived at his office at about 4pm and told him he was under arrest, but had no warrant and left to get one. He returned at about 5pm with uniformed officers and made the arrest. SD was led through the courtyard to a police vehicle while patrons, among them Rotary Club members and visitors from the US, looked on.

SD told the court the arrest was humiliating and that news of it spread on social media, leaving him stigmatised as someone involved in crime. He spent the night at Vanderbijlpark police station with seven other people before being taken to the magistrate's court, and was released at about 1pm the next day after bail of R20,000 was paid on his behalf. The court found he spent roughly 14.5 hours in the police cells, followed by several more in the court cells.

He testified that his businesses were financially sound before the arrest but suffered badly after it and the prosecution that followed. Patrons stayed away, and the owners of cultural artefacts housed at the museum began demanding them back. The annual Wheels at the Vaal Motor Show, which had earned about R100,000 a year, was held for the last time at the premises in 2016 after sponsors and vendors lost interest.

His long-standing employee, Callow, backed his account, telling the court the businesses had been popular and profitable, with vendors regularly returning for the motor show.

After the arrest, vendors cancelled bookings and sponsors pulled out. Within about six months, those who had supplied artefacts to the museum wanted them returned, and the collections were eventually auctioned. None of the businesses survived.

In setting the award for the arrest and detention, the court weighed SD's age, health, social standing, the public nature of the arrest and the conditions in which he was held. The judge found he had suffered considerable embarrassment and distress, but there was no evidence that he was physically mistreated. He shared the cells with seven others, was given a mattress and two blankets, and had access to a toilet, and his assistant was allowed to bring him his medication.

The R40,000 covered the indignity, loss of liberty and discomfort. The further R50,000 reflected harm to his reputation: the judge found that the public arrest, the allegations of fraud, theft and money laundering, and the publicity around the case had damaged his standing.

Chartered accountant Paul Koski gave expert evidence on the financial losses. After examining the available records, including VAT returns for the 24 months following the arrest, he concluded that the businesses declined sharply before collapsing. The court accepted that the arrest was a critical turning point for businesses that had until then been growing strongly.

Koski first put the future loss of earnings at about R4.4m, projected over 11 years on the assumption that the museum and related activities would have continued until at least February 2027. His calculation took account of the businesses' historical growth and used a discount rate of 15.5%. The judge described his evidence as independent, objective and credible, but applied a further 7.5% contingency deduction to allow for factors including SD's age, possible decline in his health, early retirement, mortality and wider economic risks. That brought the figure down to R4.14m.

SD had also claimed R1.4m for past loss of earnings, which the court rejected. The evidence showed that the sum was a loan he had advanced to the Sylviavale Heritage and Preservation Trust, not lost income as stated in his particulars of claim. Because he had not pleaded a claim for the loss of that asset, the judge held that he could not recover it. The award for future loss of earnings, together with the R90,000 for the arrest, detention and reputational harm, brought the total to R4.23m.