Commissioner for the South African Revenue Services and Others v Moresport (Pty) Ltd and Others (SCA) [2009] ZASCA 63; 2009 (6) SA 220 (SCA); [2009] 4 All SA 198 (SCA) (29 May 2009)

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[2009] ZASCA 63
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Commissioner for the South African Revenue Services and Others v Moresport (Pty) Ltd and Others (SCA) [2009] ZASCA 63; 2009 (6) SA 220 (SCA); [2009] 4 All SA 198 (SCA); 71 SATC 232 (29 May 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No.
360/08
THE
COMMISSIONER FOR THE
SOUTH
AFRICAN REVENUE SERVICE First Appellant
CHRISTINE
FOUCHE Second Appellant
CROCS
INC Third Appellant
v
MORESPORT
(PTY) LTD First Respondent
MAGISTRATE
SAMUEL MAKU NO Second Respondent
MR
MOVER CC Third Respondent
Neutral
Citation:
SARS v Moresport
(360/08)
[2009] ZASCA 63
(29 MAY 2009)
Coram:
Nugent, Ponnan,
Mlambo, Mhlantla JJA and Tshiqi AJA
Heard:
18 May 2009
Delivered:
29 May 2009
Updated:
Summary:
Customs
and Excise
─
F
ailure
to disclose a defence contained in a letter in an
ex-parte
application, not fatally defective.
ORDER
On appeal from:
High Court,
(Pretoria) (Seriti J sitting as court of first instance.)
1. The appeal is upheld.
2. The order of the Pretoria High Court is set aside and
substituted with the following order:
‘
The application is dismissed
with costs
.’
JUDGMENT
TSHIQI AJA (Concurring: NUGENT, PONNAN, MLAMBO, MHLANTLA
JJA ):
[1] One of the main purposes of the Counterfeit Goods
Act 37 of 1997 (‘the Act’) is to prevent the release of
counterfeit goods
into the channels of commerce in South Africa.
Section 15(1) of the Act entitles an owner of intellectual property
to apply to
the Commissioner for Customs and Excise (‘the
Commissioner’) for seizure and detention of counterfeit goods. The
South African
Revenue Services (‘SARS’) is empowered in terms of
Sections 15(4) and 113(A)(1)(b)(i) of the Act to seize and detain
counterfeit
goods or suspected counterfeit goods imported into or
entering South Africa (during a particular period) and calculated to
infringe
an intellectual property right. This entails securing the
goods until such time as it has been determined whether they are
counterfeit
or not. The power ought to be exercised in terms of the
Act and a customs officer may refuse to do so in circumstances where
the
request does not conform to the requirements of the Act which
requires that:
‘
15 (3) The Commissioner must
consider and deal with an application in terms of subsection (1)
without delay, and must grant the
application if satisfied on
reasonable grounds─
(a) that the goods claimed to be
protected goods are
prima
facie
protected
goods;
(b) that the intellectual
property right, the subject matter of which relates to the protected
goods,
prima facie
subsists; and
(c) that the applicant
prima
facie
is the owner of
that intellectual property right.’
[2] The continued detention of the goods is achieved by
means of a warrant obtained in terms of section 6(1), on an
ex
parte
application before a judge or a
magistrate of the court. This section deals with the provisions
regarding the issue and execution
of a warrant and provides:
‘
(1) The warrant contemplated
in section 4(2) read with section 5(1) will be issued in chambers by
any judge of the High Court or
by a magistrate who has jurisdiction
in the area where the relevant suspected act of dealing in
counterfeit goods is alleged to
have taken or to be taking place or
is likely to take place, and will be issued only if it appears to the
judge or magistrate from
information on oath or affirmation that
there are reasonable grounds for believing that an act of dealing in
counterfeit goods
has taken place . . .’
[3] This appeal concerns the issuing of such a warrant
by magistrate Samuel Maku NO (‘the second respondent’), in an
ex
parte
application in the magistrate’s
court, Cape Town on 14 September 2006. The warrant authorised the
seizure, removal, detention
and collection of 5 015 pairs of beach
sandals incorporating and embodying the Crocs copyright design to
which Crocs Inc (‘the
third appellant’) is the copyright holder.
The first respondent (applicant in the court below) brought an
application in the
North Gauteng High Court (per Seriti J) for an
order setting aside the warrant. The application succeeded. The
appeal is brought
with leave of the court below.
[4] The first respondent and the third appellant (the
third respondent in the court below) have settled the issues in this
appeal.
The first and second appellants (being the first and the
third respondents in the court below) persist with the appeal on the
basis
that the judgment of the court below has far-reaching
consequences for the officials of the first appellant in the
performance
of their duties in preventing the proliferation of
counterfeit goods into the channels of commerce in the country. This
court has
recognised the importance of similar matters to the first
appellant and a case has been made for the adoption of a similar
approach
in this instance.
1
Therefore although the dispute has since been settled, the issue is
still a ‘living issue’ for the appellants such that it

necessitates the exercise of the discretion by this Court.
2
[5] The background leading to the issue of the warrant
may be summarised as follows: On 20 June 2006 the third appellant
lodged
an application which was subsequently approved by the first
appellant for ‘a seizure of goods featuring, bearing, embodying or

incorporating the subject matter of the Intellectual Property Right
contained in the application or to which the subject matter
of that
right has been applied which was imported into or entered the
Republic during the period 1 May 2006 to 30 April 2007’
3
(‘the application’). The application covered both the Crocs
trademark and the design for what is known as Crocs Beach model

shoes.
[6] The subject matter of the warrant was a shipment of
footwear purchased by the
first
respondent
from Holey Soles Holding Ltd,
Vancouver which arrived at Cape Town harbour in July 2006. On 19 July
2006, the second appellant,
a customs officer employed by the first
appellant, examined a container and discovered that the shoes inside
were replicas of the
Crocs shoes by virtue of their shape and general
resemblance in design. After she confirmed that there had been
compliance with
section 15 (1) of the Act, by the third appellant,
she detained the consignment and advised the third appellant’s
attorneys and
the first respondent. Samples of the shoes were sent to
the third appellant and in turn the third appellant’s attorneys
sent
an affidavit confirming that the goods are indeed counterfeit.
[7] On 4 September 2006, the first respondent responded
to correspondence from the third appellant’s attorneys and disputed
the
third appellant’s right to seek protection in terms of the Act.
The letter also stated that the first respondent had a defence
to the
continued seizure of the goods. On 14 September 2006, the first
appellant obtained a warrant from the second respondent
in chambers.
The letter dated 4 September 2006, from the first respondent, was not
disclosed to the second respondent when the
ex
parte
application was made. Consequent to the
issuing of the warrant, the first appellant seized the goods on 3
October 2006.
[8] The first respondent applied for an order (amongst
others) setting aside the warrant. The learned judge in the court
below
found that the defence raised by the first respondent in the
letter was relevant and material and should have been disclosed to

the magistrate. The learned judge consequently found that this
failure was such that it rendered the warrant susceptible to be
set
aside. In coming to this conclusion the court below sought to rely on
a decision of this court in
National Director
of Public Prosecutions v Basson in
which
Nugent JA stated the following:
‘Where
an order is sought
ex
parte
it is well established that the utmost good faith must be observed.
All material facts must be disclosed which might influence
a court in
coming to its decision, and the withholding or suppression of
material facts, by itself, entitles a court to set aside
an order,
even if the non-disclosure or suppression was not wilful or
mala
fide (Schlesinger v Schlesinger
1979
(4) SA 342
(W) at 348E-349B)’
4
[9]
In
that decision and in subsequent decisions
5
the courts have frowned upon the failure by the applicants in
ex
parte
applications
to disclose relevant and material facts and not the failure to
disclose that the respondent claims to have a defence,
as was the
case in this matter. A legal representative presenting an application
before the judge or the magistrate might have
an ethical duty to
bring to the attention of the judicial officer issues of law that
might affect his or her decision, but that
is another matter. This is
clearly so, because at that stage the judge or magistrate is not
required to adjudicate on the dispute
on whether the goods are indeed
counterfeit or not but merely to make a decision on whether there are
reasonable grounds for believing
that an act of dealing in
counterfeit goods has taken or is taking or is likely to take place.
6
I therefore accept the submission that at that stage of the
proceedings the customs officer need only satisfy the judge or
magistrate
that a prima facie case exists and is not required to
prove on a preponderance of possibilities that the seized goods are
indeed
counterfeit. In this regard therefore the court below erred.
[10]
In
the result the following order is made:
(1) The appeal is upheld.
(2) The order of the Pretoria High
Court is set aside and substituted with the following order:
‘
The application is dismissed
with costs.’
________________________
Z L L TSHIQI
ACTING JUDGE OF APPEAL
APPEARANCES:
For
Appellant: C E PUCKRIN SC
T
KHATRI
Instructed
by:
1
ST
and 2
ND
Appellant: The State Attorney
P
retoria
The
State Attorney
Bloemfontein
3
RD
Appellant: Adams
and Adams
Pretoria
Honey
Attorneys
Bloemfontein
For
Respondent: NONE
1
Commissioner, South African Revenue Service v Saleem
[2008] ZASCA 19
;
2008 (3)
SA 655
(SCA) at 662 (paras C-D).
2
Coin Security Group (Pty) Ltd v SA National Union for Security
Officers
[2000] ZASCA 137
;
2001 (2) SA 872
(SCA) at 875 (para 8); s 21A of the
Supreme Court Act 59 of 1959.
3
Application to SARS to detain and/or seize
counterfeit or suspected counterfeit goods, dated 20 June 2006
(Annexure ‘ER 2’).
4
2002 (1) SA 419
(SCA) at 428 para 21.
5
Cometal-
Mometal SARL
v Corlana Enterprises (Pty) Ltd
1981
(2) SA 412
(W).
6
Shoprite Checkers (Pty) Ltd v The Commissioner
for the South African Revenue Services and 3 Others
case
no 1460/06 (CGHPD).