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[2016] ZAKZDHC 15
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Coconut Express CC v South African Revenue Service (Custome & Excise) and Others (5324/2015) [2016] ZAKZDHC 15; [2016] 2 All SA 749 (KZD); 78 SATC 297 (5 April 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
Case no:
5324/2015
DATE: 05 APRIL
2016
REPORTABLE
In the matter
between:
COCONUT EXPRESS
CC
................................................................................................
APPLICANT
And
THE SOUTH AFRICAN
REVENUE SERVICE
(CUSTOMS &
EXCISE)
........................................................................................
1ST
RESPONDENT
THE MEC FOR
HEALTH
(KZN)
.......................................................................
2ND
RESPONDENT
RUSSEL
COOTE
...................................................................................................
3RD
RESPONDENT
MEDITERANEAN
SHIPPING COMPANY
SA
................................................
4TH
RESPONDENT
THE OFFICER
COMMANDING
THE WESTVILLE
PRISON
................................................................................
5TH
RESPONDENT
THE COMMISSIONER
FOR SARS AND CUSTOMS
AND
EXCISE
.........................................................................................................
6TH
RESPONDENT
JUDGMENT
MADONDO J
[1]
In this application the applicants seeks an order in the following
terms:
“
That
the applicant’s non-compliance with the Uniform Rules of Court
be and is hereby condoned and it be given leave that the
matter be
heard as an urgent one in terms of Rule 6(12)(b).
That
the Sixth Respondent be and is hereby held to be in contempt of Court
and that:-
(a)
The commissioner for the South African
Revenue Services Customs and Excise be and is hereby committed to
prison for a period of
ten days;
(b)
That the aforesaid order is suspended for a
period of 30 days provided that the said commissioner complies with
the provisions of
the Court order dated the 5
th
November 2015 by causing the goods of container number MEDU37236 23
(the goods) to be released for onward transmission to the imported
/
manufacturer;
(c)
That the First Respondent be directed to
pay the costs of this application on an attorney and client scale.
That
the detention of the said goods by the officials of the First
Respondent be declared to be wrongful and unlawful and therefore
be
release forthwith for onward transmission out of the Republic of
South Africa.
That
the relief set forth in paragraph 3 above operate as an interim
relief pending the return day of the rule nisi.
Further,
or other or alternative relief.”
FACTUAL
BACKGROUND
[2]
The applicant carries on business as the importers and exporters of
the manufactured products and also acts as an intermediary
between
the supplier of goods and the eventual consumer thereof.
[3]
The distributor of the manufactured products (by the manufacturer in
India) is one Shalina Healthcare DMCC, carrying on business
at 30th
floor, Almas Tower, Jumairah Blake Towers, Dubai UAE (hereafter
referred to as “Shalina”).
[4]
The applicant facilitated the supply of certain pharmaceutical
products (cream) between the manufacturer in India and the eventual
consumer in Zambia, by placing an order in 730 cartons for the
required goods with Shalina. The good were shipped in a vessel
Petrohue in container number MEDU372362-3 to Durban Port the port of
loading being Nhabasheva and port of discharge Durban. Shalina
invoiced the applicant for the goods. The said container was seized
on its arrival at Durban Port, on the 9
th
of March 2015.
[5]
Pursuant to the aforesaid seizure the first respondent issued a
notice “detention of containerized goods” in terms
of
section 88(1)(a) read with section 87 and 102 of the Customs and
Excise Act 91 of 1964 (the Act). On 16 March 2015 the first
respondent issued a further notice for the removal of the aforesaid
container via the scanner depot to a licensed warehouse in
Durban.
[6]
On the 23
rd
of March 2015, acting on behalf of the Medicine Control Council (MCC)
the first respondent issued a further notice in terms of
section
113(8) of the Act. The purpose of such detention was to allow the MCC
to make a determination. The matter was referred
to MCC for
investigation by Russell Coote, the third respondent, and the goods
were stored at the MSC Durban, the fourth respondent),
to determine
whether the importer (the applicant) was licensed to import
medicines/creams/lotions of this nature. However, such
determination
was not made instead, the third respondent on the 24
th
of March 2015 issued a certificate of seizure and subsequently on
31
st
of March 2015 a further notice contending that the contents of
the container were received in contravention of section 14(1)
of the
Medicines and Related Substance Controlled Act 101 of 1965 (the
Medicines Act). The third respondent added that the container
would
not be released until after the finalization of the criminal case.
Pursuant to the a foregoing the first respondent issued
a notice in
terms of section 88(1)(c) of the Act on the 20
th
of April 2015. On the 9
th
of April 2015 Shalina had indicated that the container be returned to
the country of origin (India). The reason for so doing was
according
to applicant that Smad Cosmetics Limited in Zambia had cancelled the
order due to the delay.
[7]
In an endeavour to have the container released negotiations ensured.
The investigation was done by detective Captain Govindsamy,
the
investigating officer, of Durban Central Organised Crime who on 14
th
April 2015 after conclusion of his investigations indicated that he
had no objection to the return of the container to the country
of it
origin. This implied that there was no criminal case pending. The
contained was then detained by Customs and Excise pending
its removal
to Chemical Suppliers a Customs Bonded Warehouse and eventual to
Zambia.
[8]
The matter was then referred to the Director of Public Prosecutions
(DPP) for considerations, and the Senior State Advocate,
Naidoo, in
the Organised Crime Section, concluded on 29 April 2015 that the
container was never intended to reach South Africa
and that its final
destination was Zambia. He went on to say that the container was then
incurring unnecessary costs and that it
ought to be returned to its
port of origin.
[9]
However, on the 20 May 2015 Shalina indicated that the goods be
shipped to its Pharmacy in South Sudan. Notwithstanding all
the
aforesaid negotiations and the decisions of Govindsamy and Advocate
Naidoo the container remained seized. The applicant then
lodged an
application for the release of the container on 26 May 2015.
According to the applicant, it was not the intention of
the first
respondent to detain the container but it acted on the instruction of
the second respondent who intended to make a determination
as to the
pharmaceutical or medicinal contents of the container.
[10]
On 20 August 2015 the second respondent issued a Government Gazette
Notice (GGN739), Annexure “AM3” to the applicant’s
founding affidavit, that it was of the opinion that it was not in the
public interest that the products listed in the notice, not
registered with the council, be made available to the public and
declared these medicines undesirable.
[11]
On 5 November 2015 the applicants’ application served before
this court for the release of the container from the warehouse
of the
fourth respondent where it then stood. The application was opposed.
However, the order was taken by consent. But, the GGN739
was not made
available to the applicant prior to the hearing of the opposed
application.
[12]
In terms of the order the container was to be uplifted from the
fourth respondents’ warehouse and delivered by the South
African Police Services (SAPS) to a state owned warehouse within the
jurisdiction of the Durban High Court. The container was to
be held
there pending the outcome of the criminal investigation. In the event
of no decision to prosecute being made within thirty
(30) days the
applicant was entitled forthwith to remove the container and ship
same to the import or manufacturer in accordance
with GGN739 at its
own expense. It was recorded in court that the first respondent had
withdrawn all its detention orders in respect
of the container and
its contents.
[13]
Pursuant to the order the second respondent issued a handing over
certificate dated 20 November 2015 and in terms of which
the said
container was handed over to the SAPS.
[14]
In a letter dated 1 December 2015 Captain Gopalsamy of the SAPS
indicated that he had completed his investigation and that
the
container should be returned to the manufacturer/wholesale in terms
of GGN739. Following such decision, on 10 December 2015
Shalina (the
importer) indicated that the container be removed to its branch
offices at an address in Democratic Republic of Congo;
Shalina
Pharmacy, No.532 Chausee. Laurent, Avenue Desire Kabila, Lu Bumbashi,
RDC.
[15]
On 22 December 2015, CJC Logistics advised that SARS Tactical Unit
seized the goods following the correspondence exchanged
between CJC
Logistics and SARS. In the letter dated 22 January 2016 the first
respondent avers that the goods were in terms of
the court order
supposed to have been kept at the state bonded warehouse within the
jurisdiction of the Durban High Court. However,
to the contrary, the
goods were kept in the applicant’s warehouse in Johannesburg.
[16]
The first respondent was then of the view that the conduct of the
applicant was in contravention of section 18(13) of the Act
and
invited the applicant to make an election to be dealt with in terms
of the provisions of 91. Further, if the applicant were
to elect to
be dealt with under section 91, it would be required to advise the
first respondent accordingly, and agree in writing
to abide by the
decision, and to deposit an amount of R5, 000 in terms of the
aforesaid section. The first respondent also placed
various
restrictions on the movement of the container, and it concluded by
saying that once all the restrictions had been complied
with it would
consider uplifting the detention placed on the goods.
[17]
Further, the applicant was in terms of sections 4(4) and 101 of the
Act requested to provide the office of the respondent with
the
following details:
(i)
The export bill of entry, full particulars of the driver, copy of his
passport and vehicle registration details;
(ii)
Date of proposed export and port of exit to be used;
(iii)
The route the truck would be utilising;
(iv)
Proof of payment to the transporter;
(vi)
Signed copy of clearing instructions.
[18]
Further, the first respondent advised the applicant that the Tactical
Interventions Unit (TIU) considered the removal of the
said goods
from the jurisdiction of the Durban High Court to be contempt of the
court order on the applicant’s part. The
applicant had
instructed Rebecca of the fourth respondent to prepare the documents
for the movement of the container from the fourth
respondent’s
premises to DRC. The same instruction was communicated to SAPS and
the attorneys of the first respondent.
The documents prepared
by the applicant’s clearing agents indicated the destination of
the goods to be DRC. No mention was
made of Zimbabwe or the border
post Beitbridge. The applicant is baffled why the officials of the
first respondent now contend
that there has been a deviation in terms
of section 18(13) of the Act.
[19]
As allegedly, there has been contravention of the provisions of
section 18(13) of the Act, the first respondent avers that
it is
therefore entitled to impose penalties in terms of section 91 of the
Act, which provides for administrative penalties. The
applicant
submits that the first respondent is creating reasons to seize the
goods which are presently still under the detention.
[20]
According to the applicant the goods were released from the state
warehouse by the police and given to the applicant for export
and at
the time of detention the goods were in the process of being
exported. The applicant alleges that it furnished the information
required for the movement of the container relating to the details of
the driver and his passport number the details of the vehicle
as well
as the route and border posts the goods would pass through. Further,
applicant’s clearing agents indicated that the
applicant was
prepared to lodge the deposit of R5 000.00 pending the
finalisation of the shipment. According to the applicant
the first
respondent is frustrating the fulfilment of the High Court order
obtained on 5 November 2015. Further, the first respondent
is in
breach of section 29 of the Medicines Control Act by failing to
comply with GGN739.
[21]
It is the first respondent’s contention that it was under the
impression that the applicant wanted to take the goods
out to
Zimbabwe from Beitbridge and not Grobblersburg. Secondly, on the
address of the manufacturer, it is not stated that the
manufacturer
is based in Democratic Republic of Congo. Thirdly, the applicant
failed to obtain permission from it (first respondent)
in terms of
section 18(14) of the Act to re-package the goods in another
warehouse. The first respondent subsequently issued a
detention
notice that goods are detained in terms of section 88(1)(a) and that
“the goods are kept at the applicant’s
premises”.
The section entitles an officer or magistrate or member of the police
force to detain the goods for the purpose
of establishing whether
they are liable to forfeiture.
[22]
It is argued on behalf of the applicant that the conduct of the first
respondent is in contravention of the applicant’s
right in
terms of the court order to have goods returned to its manufacturer
or importer and in this case the chosen importer or
manufacturer
being its branch offices in DRC within a period of 30 days. According
to the applicant the court order supersedes
the provisions of the
Act.
ISSUES
[23]
The question for determination in this matter are:
(a)
whether the court order dated 5 November 2015 has the effect of
superseding the provision of the Act;
(b)
whether the first and sixth respondents are in contempt of the
foresaid court order.
(c)
whether the detention of the goods by the first and sixth respondents
is lawful.
Does
the 5 November 2015 court order supersede the provisions of the Act
in that it relieves the applicant from complying with the
provisions
of the Act when dealing with the goods in question?
[24]
It is common cause between the parties that the applicant sought and
obtained the court order dated 5 November 2015 by consent
in the
following terms:-
1.
“
That container bearing reference
MEDU3723623 shall forthwith be uplifted from its present location
held in the fourth respondent’s
warehouse and then delivered by
the South African Police Service (SAPS) to a state bonded warehouse
within the jurisdiction of
the Durban High Court.
2.
The SAPS shall have all the powers
contemplated in terms of the Criminal Procedure Act in dealing with
the container during the
course of the investigation in paragraph 4
below and any subsequent prosecution, if any,
3.
That the aforesaid container shall be held
in the said state bonded warehouse, pending the investigation in
paragraph 4 below and
during any prosecution, if any.
4.
SAPS shall conduct an investigation in
terms of the Criminal Procedure Act,
5.
Should no decision to prosecute be made
within 30 (thirty) days of this order, the applicant is entitled to
forthwith remove the
said container thereafter and ship the container
to the importer or manufacturer in accordance with Government Notice
739 dated
20 August 2015 at its own expense.
6.
It is recorded that the first respondent
has withdrawn all its detention orders in respect of the container
and its contents.
7.
That the issue of costs in respect of the
second and third respondents is reserved and adjourned sine die.
8.
There is not order of costs, in respect of
the first respondent.”
[25]
It has been argued on behalf of the applicant that the detention of
the goods, which are the subject matter of this application,
is in
contravention of the order granted on 5 November 2015 as well as
section 29 of the Medicines Act by failing to comply with
GGN739.
According to the applicant the conduct of the officials of the first
respondent is aimed at frustrating the fulfilment
of the High Court
Order.
[26]
It is the applicant’s submission that in terms of paragraph 1
of the order the SAPS were to uplift the container from
the fourth
respondent and place it in a bonded warehouse for 30 days pending
their (police) investigation. It was not the obligation
of the
applicant. According to the applicant the first respondent has
misconstrued what in applicant’s submission is couched
in clear
and unambiguous terms.
[27]
The applicant contends that as there was no decision to prosecute was
made in terms of paragraph 5 of the order the applicant
was entitled
forthwith to remove the said container and thereafter ship it to the
importer or manufacturer (without specifying
an address) .Paragraph 6
of the order states that the first respondent has withdrawn all its
detention orders in respect of the
container and its contents.
[28]
To the contrary, the first respondent contends that there has been a
contravention of the provisions of section 18(13) of the
Act and
that, therefore, it intends to invoke the provisions of section 91,
which provides for administrative penalties. The applicant
contends
that in terms of the court order it is not obliged to comply with the
provisions of the Act when transporting (exporting)
goods in question
from the Republic of South Africa to a country of its final
destination. It has been argued that, in fact, according
to the
applicant the court order should be interpreted as superseding the
provisions of the Act.
[29]
Upon proper construction of the 5
th
November 2015 court
order its import is not that the container had to be handled or dealt
with in violation of the provisions of
the Act. Even if the court
order were to exempt the applicant from complying with the provisions
of the Act the court is not entitled
to countenance illegality. In
Schierhout v Minister of Justice
1926 AD 99
at 109 it was held
that our law has long recognised that any act performed contrary to
the direct and express prohibition of the
law is void and of no force
and effect. In Cool Ideas v Hubbard 2014(4) SA 474 (CC) at pp492, 498
(paras 55, 77) on this point
the Constitutional Court said the
following:-
“
It
cannot be expected of a court of law in such circumstances to
disregard a clear statutory prohibition – that would be
inimical to the principle of legality and the rule of law. To do so
would amount to undermining the purpose of the legislation.
…
.
It
is a basic principle of our laws that a court can never lend its aid
to the enforcement of an illegal act. An act that has been
performed
in violation of a statutory prohibition may, generally, have no legal
consequences.”
In
the matter of
Matthew Lester v Mdlambe Municipality
(514/12)
[2013] ZA SCA 95
(22 August 2013) at paragraph 24, with regard to the
public bodies charged with the duty of upholding the law, the Supreme
Court
of Appeal said:-
“…
the
courts have a duty to ensure that the doctrine of legality is upheld
and the to grant recourse at the instance of public bodies
charged
with the duty of upholding the law.”
[30]
It has been conceded by Mr Maharaj, the counsel for the applicant
that the applicant’s attorneys made an undertaking
in court on
5 November 2015 that in dealing with the container the applicant
would comply with the provisions of the Act. Therefore,
it is
needless to determine whether or not the applicant was obliged to
comply with the provisions of the Act when handling or
dealing with
the container in question. However, I have to determine whether the
first and sixth respondents in detaining the goods
in question acted
in violation of the provisions of the court order.
Are
the first and sixth respondents in contempt of the court order?
[31]
It has been argued on behalf of the applicant that it was recorded in
the court order that the first respondent had withdrawn
all its
detention orders in respect of the container and its contents. It is
the first and sixth respondents’ contention
that it has been
the recent cause of action or infraction that has led to the
subsequent detention of the applicant’s goods.
The goods in
question have not been seized yet but they have merely been detained
in terms of section 88(1)(a) of the Act.
[32]
Before the dealing with the alleged contraventions of the court order
by the applicant, I find it appropriate to state what
transpired
after the granting of the order of the 5
th
November 2015. Consequent to there being no decision to prosecute
made, on conclusion of the police and after the lapse of the
thirty
(30) day period, the goods were then released to be shipped to the
original manufacturer. Following the court order of 5
November 2015
granted in favour of the applicant, the container was released to the
applicant consequent to there being no decision
to prosecute was made
within thirty (30) days after the conclusion of the investigation by
SAPS. The container was then in terms
of the court order to be
shipped to the importer or manufacturer. However, the first and sixth
respondents aver that the applicant’s
subsequent dealing with
the container in question has been in contravention of the provisions
of the Act in various respects.
[33]
The first alleged contravention occurred when FBN Transport, acting
on the instruction of the applicant’s agent, CJC
Logistics,
being not a licensed remover of goods in bond as required by section
64D of the Act transported the goods from the forth
respondent’s
depot to CJC Logistics warehouse in Wadeville, Germiston, and
unpacked it on 21 December 2015. Section 64D (1)
provides:
“
no
person, except if excepted by rule, shall remove any goods in bond in
terms of section 18(1)(a) or for export in terms of section
18A, or
any other goods that may be specified by rule unless licensed as a
remover of goods in bond in terms of subsection (3).”
[34]
The goods being transported to Wadeville were destined to be
transported by road to the Democratic Republic of Congo. The route
that the vehicle would use when transporting the goods would have
been N1 to N11 to the border in Grobblersburg. It is the first
and
sixth respondents’ contention that in terms of the order the
applicant was, after the release of the container from the
SAPS,
entitled forthwith to remove the said container and ship it to the
importer or manufacturer. According to the respondents
the applicant
intended to contravene the court order by transporting the goods by
road as opposed to shipping them. It is not in
dispute that when FBN
Transport removed the goods from the bond warehouse was not in
possession of the required license to do so.
[35]
The applicant contends that the word “ship” in the court
order should be construed as including transportation
by road. In
section 1 of the Act the word “Ship” is defined as “any
ship, vessel or boat (including a flying
boat) of any kind
whatsoever. The
Longman Dictionary
Contemporary English Dictionary
defined
“ship” as to cause to be carried by ship. On proper
construction of the court order it does not authorise the
conveyance
of the container by road to Wadeville, the storage and unpacking of
the goods there. The applicant was after the release
of the container
expected to have the container shipped from Durban to the country of
its final destination that could be India
(where the manufacturer
was) or Zambia (where the importer allegedly was). Taking it to
Wadeville by road and unpackaging it there
was never contemplated. It
follows therefore that the conduct of the applicant to transport the
goods by road to Wadeville was
in contravention of the court order.
[36]
The second alleged contravention is that the FBN Transport when
removing the goods in bond it had not received the authority
of the
Controller order as section 18(1)(a) of the Act directs. Rule 18.02
of the Act provides:
“
Except
as otherwise provided in section 18 and the rules no goods shall be
removed in bond until the remover has been authorised
by the
Controller to so remove the goods.”
It
has not been disputed that the remover of the goods was not
authorised by the controller to do so.
[37]
The third alleged contravention is the diversion of the goods’
county of last destination without the approval of the
commissioner.
The goods in question were originally entered on the 9
th
March 2015 under customs purpose code “WH” for the
purpose of being stored in a customs and excise warehouse under
deferment of duty. The country of destination depicted on the bill of
entry was “ZA” (South Africa). The applicant
had
indicated via its clearing agent that the goods would be stored in a
warehouse in South Africa and would ultimately be entered
for home
consumption.
[38]
On 7 April 2015 the applicants’ clearing agent applied to enter
the goods, under the purpose code “RIT” (which
means
removal in transit) for exportation to “2M” which means
Zambia.
[39]
In the Notice of Motion of the initial application, the applicant
sought that it (the applicant) or its authorised agent /
supplier be
permitted to remove the goods so that they might be shipped to its
manufacturer in India or the new purchaser in South
Sudan. On 20 May
2015 the applicant was allegedly advised that the manufacturer (owing
to delay) managed to secure a new buyer
of the goods in South Sudan,
hence the goods were then to be shipped to South Sudan.
[40]
It was only recently the commissioner has become aware that the goods
were actually destined for the Democratic Republic of
Congo. This
became apparent after the commissioner had requested to be provided
with a new entry. This occurred on 23 December
2015 after the goods
were detained in terms of section 88(1)(a) of the Act. On 25 January
2016, a bill of entry was passed in which
the goods country of
destination was the republic of Congo. It is not in dispute that the
goods last country of destination is
the Democratic Republic of
Congo.
[41]
It is the contention of the first and sixth respondent’s that
it is apparent that the applicant clearly intended to divert
the
goods to the Democratic Republic of Congo and in so doing, as it had
not obtained the permission from the commissioner for
such diversion,
it contravened the provisions of the Act. The applicant has allegedly
diverted the goods as contemplated in section
18(13)(a)(i) of the Act
by removing goods in bond to a destinations other than that declared
on the bill of entry for removal in
bond. The intended destination
for the goods was first Zambia then South Sudan and now the
Democratic Republic of Congo. It is
the first and sixth respondent’s
submission that apparently the goods were never intended to reach
their intended destination
be it the manufacturer in India or new
importer in South Sudan. The respondents allege that there is a
strong suspicion that the
applicant never intended to export the
goods but rather to sell same, unlawfully, to the unwitting South
African public. Though
it has not been canvassed whether or not the
applicant intended to sell the goods unlawfully in South Africa it is
common cause
between the parties that the goods’ last country
of destination is now the Democratic Republic of Congo. However,
there is
nothing to suggest that for such diversion the applicant
obtained the approval of the commissioner.
[42]
The fourth alleged contravention is that the applicant in
contravention of section 18(13)(b)(i) read with Rule 18(14)
unpackaged
the goods in Wadeville without the knowledge of the
Controller. Section 19(13)(b)(i) of the Act provides:
“
notwithstanding
the provisions of paragraph (a) the commissioner may, in such
circumstances and subject to such conditions as the
commissioner may
prescribe by rule permit goods in transit through the Republic or any
class or kind of such goods to be delivered
to any place approved by
him for the purpose of –
(ff)
re-packaging the goods…”
It
has been admitted on behalf of the applicant that the goods were
unpackaged without the knowledge of the commissioner and in
the
absence of the officials of the commissioner. Nor is it alleged that
any application was ever made to the controller, in whose
area of
control repackaging was to be done, for the re-packaging.
[43]
The onus is on the applicant to prove beyond reasonable doubt that
the first and sixth respondents wilfully disobeyed the court
order
when the commissioner detained the goods for the second time on 23
December 2015. For an act to constitute contempt, an intention
to
defeat the course of justice must have been established. See Roberts
v Chairman, Local Road Transportation Board, and others
(1) 1980(2)
SA 472(C) at 488.
[44]
The standard of proof in cases of this nature was set in
Fakie
No v CCI Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) at 344 (paragraph
42).
The applicant has “to prove
the requisites of contempt (the order; service or notice;
non-compliance; and wilfulness and
malafides
)
beyond reasonable doubt. But, once the applicant has proved the
order, service or notice, and non-compliance, the respondent bears
an
evidential burden in relation to wilfulness and
malafides
.
Should the respondent fail to advance evidence that establishes a
reasonable doubt as to whether non-compliance was wilful and
malafide
,
contempt will have been established beyond reasonable doubt.”
[45]
In the present case, it is common cause that the order was obtained
by consent and the first and sixth respondents were fully
aware of
it. However, in my view, the applicant has failed to prove that in
detaining the goods the respondents acted in contempt
of the court
order. Instead, evidence in this regard has clearly demonstrated that
at all times relevant hereto, the respondents
have been acting in
accordance with the provisions of the Act and the court order.
Further, that the applicant has been labouring
under a mistaken
belief but not bona fide that because of the court order it is
entitled to flout the provisions of the Act in
dealing with or
handling the container in question, despite the undertaking by its
attorneys to abide with the provisions of the
Act. Also, the evidence
has demonstrated that the applicant has in various instances violated
the court order. As indicated earlier,
there is nothing contained in
the court order that relieves the applicant from the duty to comply
with the provisions of the Act
when dealing with the container in
question which could reasonably justify the applicant’s belief
and subsequent conduct.
In the premises, I am not satisfied that the
applicant has succeeded to discharge the onus resting on it to prove
non-compliance
with 5 November 2015 court order on the part of the
first and sixth respondent.
(b)
Is the first and second respondents’ detention of the goods in
question lawful?
[46]
It is common cause between the parties that the goods were once
against detained on 23 December 2015, after their release following
the court order of 5 November 2015. According to the first and sixth
respondent, on 23 December 2015 the commissioner detained
the goods
in terms of section 88(1)(a) of the Act at an unlicensed warehouse in
Wadeville, Germiston. The purpose of the detention
was to ascertain
whether the goods had been dealt with contrary to the provisions of
the Act and whether or not the goods were
liable to forfeiture.
Subsequent to such detention, the applicant caused an urgent
application to be brought on 2 February 2016.
It is the applicant’s
contention that the goods, being moved in terms of a court order
across the border must be understood
to be in transit, and as such
exempted from customs and excise duties.
[47]
Section 88(1)(a) provides:-
“
(1)(a)
An officer, magistrate or member of the police force may detain any
ship, vehicle, plant, material or goods at any place
for the purpose
of establishing whether that ship, vehicle, plant, material or goods
are liable to forfeiture under this Act.”
Prior
to the detention of the goods the first respondent issued a section
88(1)(a) Notice to the applicant since the first respondent
believed
that the container in question had been handled contrary to the
provisions of the Act. The purpose was to establish two
things:-
whether the goods had been handled contrary to the provisions of the
Act, and whether there were liable to forfeiture.
Section 87(1) of
the Act provides that any good dealt with contrary to the provisions
of the Act are liable to forfeiture, ‘whosesoever,
and in
possession of whomsoever found’. The officials are in terms of
the Act entitled to issue a detention notice for the
purposes of
establishing whether the goods were dealt with irregularly and
whether were liable to forfeiture in terms of section
87(1) of the
Act. See
also Minister of the Interior,
Transkei, and another v City News Agency (Pty) Ltd1992 (2) SA 407
(Tka) at p 410 (ber Dumbutshena
JA); Henbase 3392(Pty) Ltd v
Commissioner, South African Revenue Service, and another 2002(2) SA
810 (T) at P187.
[48]
The applicants contention is that the goods are in transit to its
final place of destination to the manufacturer and or exporter
beyond
the common customs area, and that the authority for the goods vests
with SAPs in the person of Capt. Gopalsamy, in terms
of the court
order, In
Ammoolla Group Ltd and Others
v The Gap Inc. and Others
2005 (2) SA
412
(SCA) it was held that goods in transit or transhipped through
the Republic are not hit by the prohibition in
section 2(1)(b)
of the
Counterfeit Goods Act 37 of 1997
at p 414 E-G.
The applicant admittedly states that
the goods have not been dealt with in accordance with the provisions
of the Act.
Are
the goods in transit?
[49]
The next question for decision is whether the situation of the goods
in question is such that they can be said to be goods
in transit, and
therefore falling beyond the customs of this country. The Shorter
Oxford English Dictionary (p2347) defines the
word “transit”
as passing through or over or across, and the Longman Dictionary of
Contemporary English as “the
act of passing over, across or
through.”
In
Tieber v Commissioner for Customs and
Excise 1992(4) SA 844(A) at p849, as per Goldstone JA,
goods
in transit were defined as “goods which are landed in this
country but destined for conveyance to another county”.
Customs
and excise duties are paid on all goods which are brought into the
Republic other than goods only in transit.
[50]
In
Tieber
case,
the appellant and is girlfriend had agreed with some principals in
Zimbabwe to transport on their behalf unwrought gold, foreign
currency and travellers cheques (the consignment) from Zimbabwe to
Switzerland. They made reservations for airline flights from
Gaborone
to Zurich via Jan Smuts and Frankfort airports, intending to remain
in transit at both airports. They checked in their
baggage, including
the consignment, from Gaborone to Zurich. Upon arrival at Jan Smits
Airport, the appellant and his girlfriend
were informed that their
flight to Frankfort had been delayed by 12 hours. They therefore
decided to spend some of the time at
their home in Johannesburg.
Later that day the appellant took his girlfriend to the airport where
she alone boarded the aircraft,
it having been decided between them
that in order to save one air fare the girlfriend alone would
complete the journey to Frankfort
and Zurich. In the meantime,
however, unbeknown to appellant and his girlfriend, the two suitcases
containing the consignment had
been opened and searched by police
officers at the airport and detained there. Later that same day the
police arrived at the appellant’s
apartment with the two
suitcases and he was arrested and a charge laid against him. The
Attorney – General declined to prosecute
the appellant and the
charge was formally withdrawn. Thereafter, however, the respondent
seized the consignment, acting in terms
of the provisions of the
Customs and Excise Act 91 of 1964. The foreign currency was returned
to the appellant but not so the unwrought
gold and the travellers’
cheques, and the appellant was later informed by the respondent that
the gold had been seized in
terms of Section 83 read with s 87(1) and
88(1) of the Act.
[51]
In this case, the applicant alleges that the final destination of the
goods was Zambia. The Bill of Trading No MSCUIX598999
indicates the
shipper as M/S SHALINA HEALTH CARE DCC of 30
th
Floor,
Almas Tower, JLT Dubai and the consignee as Coconut express CC of
Gardenview, Bedfordview, South Africa. The port of loading
is NHAVA
SHEVA, and the port of discharge is Durban. Place of delivery is
Johannesburg, South Africa. Zambia does not appear at
all in the Bill
of Trading. The goods in question were consigned to a person and
place in South Africa and it had later to be delivered
at
Johannesburg. It could perhaps later be consigned to Zambia. However,
according to the Bill of Landing the goods’ county
of final
destination is South Africa. In the circumstances, it is inevitable
to conclude that the goods were imported to South
Africa to be
delivered to a particular person at a particular address. Section 1
of the Act does not define the word ‘import’
but the word
‘importer’ as follows:
“’
importer
includes any person who, at the time of importation –
(a)
own any goods imported;
(b)
carries the risk of any goods imported;
(c)
represents that or acts if he is the
importer or owner of any good imported;
(d)
actually brings any goods into the
Republic;
(e)
is beneficially interested in any way
whatever in goods imported;
(f)
acts on behalf of any person referred to in
paragraph (a), (b), (c), (d) or (e)”
The
applicant falls squarely within the definition of the importer:
Further, the goods landed in South Africa, being the country
of the
final destination and handled. The goods were by no means brought to
the Port of Durban for transit but to be later delivered
at
Johannesburg in South Africa, Durban being a port of discharge.
Therefore, the applicant’s contention that the goods were
on
transit could not be sustained.
See also
section 10(1)(a) of the Act.
Is
the detention of goods in question lawful?
[52]
I now turn to deal with the question whether the detention of the
container by the first and sixth respondents in terms of
section
88(1)(a) is lawful.
The Supreme Court of South Africa in
Commissioner, South African Revenue Service v Trend Finance (Pty) Ltd
and Another
2007(6) 117 (SCA) at 130 (paragraph 29) held:
“
In
terms of the words of section 88(1)(a) of the Act, such detention is
‘for the purpose of establishing whether …
goods are
liable to forfeiture under this Act: A limitation must be read into
that section to the effect that the right to detain
goods only
endures for a period of time reasonable for the investigation which
the section contemplates to be made, but no longer.
There is no
sufficient reason for the continued deprivation of the property once
the purpose for the deprivation (to investigate
whether the property
is liable to forfeiture under the Act) is no longer justified, and
the continued deprivation would accordingly
be arbitrary as meant by
section 25 of the Constitution. See FNB case 7…. I therefore
conclude that once a reasonable period
of time for the necessary
investigation has elapsed, the commissioner has no further right to
retain either the goods or provisional
payments made to secure their
release.”
[53]
The goods in this case are detained for the purpose of establishing,
firstly, whether they have been dealt with contrary to
the provisions
of the Act and whether they are liable to forfeiture. The applicant
has confessedly stated that it dealt with the
container contrary to
the provisions of the Act in various respects: In contravention of
section 64D (1) the remover of the goods
from Durban to Wadeville,
Germiston, was not licensed to do so in terms of the Act. Secondly,
the applicant in contravention of
section 18(13)(a)(i) diverted the
goods in bond to a destination other than the destination declared on
entry without the permission
of the commissioner. The officials of
the first and sixth respondents, have been under the impression that
the goods would be exported
to Zambia through, Zimbabwe, Beitbridge
route not Grobblersbrug. Thirdly, the country of the goods final
destination has been changed
without the approval of the commissioner
from Zambia to Democratic Republic of Congo on 25 January 2016.
Fourthly, the applicant
has in contravention of section 18(12) of the
Act determined the roads and routes and the means of carriage of the
goods from Durban
to Gauteng and from Gauteng to Democratic Republic
of Congo without the concurrence of the commissioner. The goods were
in terms
of the court order to be shipped but the applicant has
attempted to export them by road. Lastly, in contravention of section
18(13)(b)(i)
of the Act where it has been unpackaged without the
approval of the commissioner, and it has been conceded on behalf of
the applicant
that such unpackaging has taken place in the absence of
the officials of the first and sixth respondents. Section 83(a) makes
it
a criminal offence to deal with goods contrary to the provisions
of the Act punishable on conviction by a fine not exceeding R20,
000
or treble the value of the goods in respect of which such offence
committed or to five (5) years’ imprisonment. The goods
in
respect of which such offence has been committed shall be liable to
forfeiture. In the premises, the respondents are fully entitled
to
investigate the alleged contraventions of the provisions of the Act,
and this has been established.
[54]
With regards to the second reason for the detention of the goods
section 88(1)(a) allows for detention for a very specific
purpose,
namely, to establish whether goods are liable to forfeiture. Whereas,
section 88(1)(c) deals with seizure, which seems
to be a step between
detention and forfeiture.
[55]
The commissioner can establish whether the goods are liable to
forfeiture in terms of section 88(a)(a) by physical examination
of
the goods or of certain samples of the goods. In order to do so, the
goods have to be detained by the commissioner. If such
physical
examination reveals that the goods are not liable to forfeiture, the
goods will have to be released immediately. If the
examination on the
other hand establishes that the goods are liable to forfeiture, the
commissioner has to proceed with the further
steps of seizure and
forfeiture. See
section 88(1)(e);
Henbase 3392 (Pty) Ltd case, supra at
p195I
– 196A-C.
[56]
In the present case neither the first respondent nor the sixth
respondent has indicated that any immediate steps have been
taken to
establish whether the respondent’s concerns are valid, and
whether the goods are in fact liable to forfeiture. The
transgressions by the applicant will regard to the irregularly
handling of the container are accurately documented in the
correspondence
between the parties even prior to the granting of the
court order on 5 November 2015 were so documented. It could not
therefore
be a hassle to establish such infractions by the applicant
within thirty (30) days of the detention. More so, the applicant has
admittedly said that it did not comply with the provisions of the Act
in dealing with the goods since it believes that the authority
relating to the control of the goods lies with the SAPS in terms of
the court order.
[57]
Once the relevant breach of the statutory provisions has been proved
the goods are liable to forfeiture and are seized “are
deemed
to be condemned and forfeited”. See section 88(1)(c) and (d).
Section 87(1) of the Act provides that goods exported
or otherwise
dealt with contrary to the provisions of the Act or in respect of
which an offence has been committed or liable to
forfeiture
“wheresoever or in possession of whomsoever found.”
[58]
Section 88(1)(a) provides that any officer may detain any goods at
any place for the purpose of establishing whether are liable
to
forfeiture. In the present case the goods are detained at the
applicants place. The respondents have not taken any steps yet
to
seize the goods let alone declaring them liable to forfeiture and
forfeited. In
Commissioner South African
Revenue Service v Trend Finance (Pty) Ltd and Another, supra
at p130 D-G it was held that under section 88(1)(a) of the Act,
detention is for the purpose of establishing whether goods are
liable
to forfeiture under the Act, a limitation has to be read into that
section to the effect that the rights to detain goods
endured only
for a period of time reasonable for the investigation which are
section contemplates is to be made, but no longer.
Also, the
commissioner’s right to retain provisional payment made
pursuant to a condition for the release of the goods imposed
by him
in terms of section 93(1)(c) has to be subject to the same
limitation. Once a reasonable period of time for investigation
has
elapsed, the commissioner has no further right to retain either goods
or provisional payments made to secure their release.
[59]
In the letter dated 22 January 2016 (addressed to the applicant) the
first respondent indicated in which respects it alleged
that the
applicant had acted contrary to the provisions of the Act , as
outlined above, and it expressed its opinion that the applicant
had
contravened seciton18(3). Therefore, the applicant was requested to
advise the first respondent’s offices in writing
whether it
elected to be dealt with in terms of section 91, and that it agreed
to abide by the first respondent’s decision,
and to deposit the
sum of R5000 in terms of section 91. Also, in terms of section 4(4)
and section 101 of the Act to provide the
first respondent with
documentation and information as set out in the said letter (DM10).
The first respondent concluded by saying:
“
Once
the above have been complied with TIU will be in a position to
consider uplifting the detention currently place on goods.”
[60]
The applicant avers that the required documentation and information
have since been furnished to the first respondent. Also,
the
applicant has deposited the required amount of R5, 000. But, since
then the respondents have not taken any action. Nor has
the
respondent as yet acted in terms of section 89(1) in respect of the
goods in question and seized them. Section 90(1) provides:
“
Any…
goods which have been seized under this Act shall be deemed to be
condemned and forfeited and maybe disposed of in terms
of section 90
unless the person from whom such goods have been seized or the owner
thereof or his authorised agent gives notice
in writing, within one
month after the date of seizure to the person seizing or to the
controller in the area where the seizure
was made, that he claims or
intends to claim the said …goods under the provisions of this
section.”
[61]
Since the detention of the goods the respondents have not taken any
steps towards the seizure and ultimate forfeiture of the
goods in
question. In
Secretary for Customs and
Excise and Another v Tiffany’s Jewellers (Pty) Ltd 1975(3) SA
578(a)
it was held that the phase
“liable to forfeiture as used in 587(1) was said to bear
ordinary and plain grammatical meaning
of those words namely ;
subject to forfeiture” see also
Concise
Oxford Dictionary,
1973 ed. The court
held that the context in which the phrase is used in the section does
not indicate that the goods are
ipso
facto
forfeited, confiscated, or
condemned when they are seized. Section 113(8) does not postulate
automatic forfeiture.
[62]
In terms of section 91(1)(a)(i)(ii) the applicant after receipt of
the letter of Intention to Raise Debt by the commissioner
agreed to
abide by the commissioner’s decision and deposited with the
commissioner the amount of R5000, pending the finalisation
of the
shipment of goods. The commissioner in terms of this section is
required to determine the matter summarily and he might,
without
legal proceedings, order forfeiture by way of penalty of the whole or
any part of the amount so deposited or secured. In
their papers the
respondents have not disclosed what steps they have so far taken in
this regards. Nor is there anything to demonstrate
that the
commissioner has acted in terms of section 91 and imposed any
administrative penalties as contained in the section. What
is more
apparent from the papers is that the respondents now detain the goods
in order to force the applicant to comply with their
demands which
are not related to either seizure or forfeiture of goods in question.
[63]
Detention may only take place for the purposes of establishing
whether the goods are liable to forfeiture or not. If the physical
examination establishes that the goods are indeed liable to
forfeiture, there would be no further ground for further detention.
In the present case, what has to be established has after all been
established. It has been established that the applicant has
irregularly dealt with the goods, and which conduct in terms of
section 87(1) renders the goods liable to forfeiture. The respondents
have to proceed with seizure and forfeiture or the finalization of
section 91 process. Section 88(1)(a) does not allow detention
for the
purposes of security, as it seems to be the case in this case.
The goods must have by now been released or dealt
with in terms of
section 91. In the circumstances, I am not satisfied that the
respondents have on their papers justified the further
detention of
the goods in question. As a consequence, the respondents` continued
detention of the goods in question is unlawful.
ORDER
[64]
In the result I make the following order:
(a)
Application for the relief sought in prayers 2(a) (b) and (c) of the
Notice of Motion is dismissed with costs, and such costs
to include
the costs of senior counsel;
(b)
The continued detention of the goods by the first and sixth
respondents is hereby declared unlawful;
(c)
The respondents are directed to release the goods referred to in
prayer 3 of the Notice of motion forthwith for onward transmission
out of the Republic of South Africa;
(d)
Such release and subsequent handling or dealing with the aforesaid
goods shall be in accordance with the provisions of the Act.
(e)
The respondents are ordered to pay the costs with regard to prayer 3
of the Notice of motion jointly and severally, the one
paying the
other to be absolved.
Judgment
reserved on: 25 February 2016
Judgment
handed down on: 5 April 2016
Counsel
for the applicant: Adv Maharaj
Instructed
by: Abdul Shaikjee Attorneys
Ref:
Mr Shaikjee/C289
Counsel
for the respondent: Adv Pammenter SC/ Adv Ngqanda
Instructed
by : Lomas Walker Attorneys
Ref:
S Padayachee/hj/MAT480