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2024
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[2024] ZALMPPHC 90
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Alliance Fuel (Pty) Ltd v Commissioner for the South African Revenue Service and Another (7453/2024) [2024] ZALMPPHC 90 (25 July 2024)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
LIMPOPO DIVISION,
POLOKWANE
CASE
NO:
7453/2024
(1) REPORTABLE: YES/NO
(2) OF INTEREST TO THE
JUDGES: YES/NO
(3) REVISED.
In the matter between:
ALLIANCE
FUEL (PTY) LTD
Applicant
and
COMMISSIONER FOR THE
SOUTH
AFRICAN
REVENUE SERVICE
First Respondent
ALFRED
MTHIMUNYE
Second Respondent
JUDGEMENT
GAISA AJ
INTRODUCTION
[1]
This urgent application brought by Alliance
Fuel (Pty) Ltd ("the Applicant") against the Commissioner
for the South African
Revenue Service ("SARS") and Mr
Alfred Mthimunye, a SARS official (collectively "the
Respondent"), arises from
search and seizure operations
conducted by the Respondent at the Applicant's premises in Louis
Trichardt on 10 July 2024. These
operations were executed pursuant to
warrants obtained ex parte from the Louis Trichardt Magistrates Court
on 3 and 4 July 2024.
[2]
The Applicant seeks an order compelling the
Respondent to furnish it with copies of the ex parte applications
used to obtain the
search warrants, as well as interdictory relief
preventing the Respondent from conducting further searches or using
seized materials
pending the provision of the ex parte applications
and determination of an application to reconsider the warrants.
[3]
This matter raises important questions
about the proper procedure to be followed when a party like the
Respondent obtains and executes
search warrants and the rights of
affected parties to challenge such warrants. It requires this Court
to balance the Respondent’s
statutory powers of investigation
against the constitutional rights of taxpayers to fair administrative
action and access to courts.
BACKGROUND
[4]
On 3 and 4 July 2024, the Respondent
obtained search warrants from the Louis Trichardt Magistrates Court
in terms of section 4(4)(d)
of the Customs and Excise Act 91 of 1964
("Customs Act") and sections 59 and 60 of the Tax
Administration Act 28 of 2011
("TAA"). The warrants
authorised the Respondent to search the Applicant's premises in Louis
Trichardt.
[5]
The Respondent executed the warrants on 10
July 2024, conducting a search and seizure operation at the
Applicant's premises. Various
items, including an employee's personal
cell phone, were seized and detained.
[6]
From 11 July 2024, the Applicant's
attorney, Mr Mayet, made numerous requests to the Respondent’s
officials for copies of
the ex parte applications used to obtain the
warrants. Despite these requests, the Respondent initially refused to
provide the
applications, stating that the relevant affidavits were
considered by the court that issued the warrants.
[7]
On 13 July 2024, the Respondent’s
attorneys informed the Applicant that the Respondent intended to
conduct a further operation
at the Applicant's premises on 15 July
2024, despite the warrants expressly confining execution to 10 July
2024.
[8]
The Applicant then launched this urgent
application on 15 July 2024, seeking the relief outlined above.
[9]
Notably, the Respondent eventually
furnished a copy of the ex parte application a day or two before the
hearing of this matter.
However, this late provision does not negate
the Respondent’s earlier refusal and delay in providing it,
necessitating the
urgent application.
ISSUES FOR
DETERMINATION
[10]
The critical issues for determination are:
10.1.
Whether the Respondent is obliged to
furnish the Applicant with copies of the ex parte applications used
to obtain the search warrants;
10.2.
Whether the Applicant has established
grounds for urgent interim interdictory relief pending provision of
the ex parte applications
and determination of an application to
reconsider the warrants; and
10.3.
Whether the Respondent is entitled to
conduct further searches beyond the date specified in the warrants.
LEGAL FRAMEWORK
[11]
Section 4(4)(d) of the Customs Act empowers
the Respondent to apply ex parte to a magistrate for a warrant to
enter and search any
premises. The section requires the Respondent to
set out in its application:
11.1.
That there are reasonable grounds for
suspecting that an offence under the Act has been committed;
11.2.
That a search of the premises is likely to
yield information concerning such an offence and
11.3.
The search is reasonably necessary for the
purposes of the Act.
[12]
Sections 59 and 60 of the TAA contain
similar provisions empowering the Respondent to apply for and execute
search warrants.
[13]
Rule 55(3) of the Magistrates' Courts Rules
governs ex parte applications. Of relevance is Rule 55(3)(e), which
provides:
"A copy of any
order made ex parte and of the affidavit, if any, on which it was
made must be served on the respondent thereto."
[14]
This rule gives effect to the
audi
alteram partem
principle and the
constitutional right of access to courts by ensuring that a party
affected by an
ex parte
order
can challenge it.
[15]
Section 34 of the Constitution guarantees
the right of access to courts. This includes the right to challenge
orders granted in
one's absence.
ANALYSIS
[16]
Obligation to Furnish Ex Parte
Applications
16.1.
The Respondent initially contended that it
was not obliged to provide the Applicant with the
ex
parte
applications, as a competent
court issued the warrants after considering the relevant affidavits
and information. This contention
cannot be sustained.
16.2.
Rule 55(3)(e) of the Magistrates' Courts
Rules imposes an explicit and peremptory obligation on the Respondent
to serve on the Applicant
copies of the
ex
parte
applications and supporting
affidavits used to obtain the warrants. This obligation exists
independently of the magistrate's consideration
of the applications.
16.3.
This rule aims to enable a party affected
by an
ex parte
order
to exercise its right to challenge that order appropriately. Access
to the application papers is necessary for the Applicant
to assess
the lawfulness of the warrants and to exercise its right to apply for
reconsideration.
16.4.
The Respondent’s initial refusal to
provide the applications frustrated the Applicant's constitutional
right of access to
courts under section 34 of the Constitution. It
effectively denied the Applicant a fair opportunity to challenge the
warrants.
16.5.
Moreover, as an organ of the state, the
Respondent has a higher duty to respect the law, fulfil procedural
requirements and tread
carefully when dealing with rights. Its
initial stonewalling approach in this matter fell short of this
standard.
16.6.
I, therefore, find that the Respondent was
legally obliged to furnish the Applicant with copies of the
ex
parte
applications and supporting
affidavits used to obtain the search warrants. While the late
provision of these documents is commendable,
it does not fully remedy
the earlier non-compliance.
[17]
Grounds for Urgent Interim Relief
17.1.
The requirements for interim interdictory
relief are well-established:
17.1.1.
a prima facie right;
17.1.2.
a well-grounded apprehension of irreparable
harm;
17.1.3.
balance of convenience favouring the grant
of relief and
17.1.4.
no other satisfactory remedy.
17.2.
The Applicant has established a clear right
to be furnished with the
ex parte
application papers in terms of Rule
55(3)(e). This right is bolstered by its constitutional right of
access to courts.
17.3.
There is a well-grounded apprehension of
irreparable harm. The Respondent has already conducted one search
operation and has indicated
its intention to perform further
operations. Without timely access to the
ex
parte
applications, the Applicant could
not assess and challenge the lawfulness of these actions
appropriately. Each day that passes with
the Respondent possessing
seized materials potentially used for further investigations
compounds the potential prejudice to the
Applicant.
17.4.
The balance of convenience favours granting
relief. If interim relief is granted, the Respondent will merely be
prevented from conducting
further searches or using seized materials
until it complies with its legal obligations and the Applicant can
challenge the warrants.
The potential prejudice to the Applicant
outweighs this temporary limitation on the Respondent’s powers
if relief is refused.
17.5.
The Applicant had no other satisfactory
remedy available. It made numerous attempts to obtain the
ex
parte
applications from the Respondent
without success. Court-ordered relief was the only viable option to
protect its rights.
17.6.
I am satisfied that the Applicant has
established grounds for urgent interim interdictory relief pending
the provision of the ex
parte applications and the determination of
an application to reconsider the warrants.
[18]
Further Searches Beyond Specified Date
18.1.
The search warrants expressly confined
execution to 10 July 2024. Therefore, the Respondent’s
intention to conduct further
operations on 15 July 2024 is
prima
facie
unlawful.
18.2.
While the Respondent undoubtedly has broad
investigative powers, these must be exercised within the confines of
the law and specific
court orders. To allow the Respondent to
unilaterally extend the operation of a warrant beyond its specified
terms would undermine
the rule of law and the court's supervisory
role over search and seizure operations.
18.3.
I, therefore, find that the Respondent is
not entitled to conduct further searches beyond the date specified in
the warrants without
obtaining fresh authorisation from a court.
CONCLUSION
[19]
The Applicant has established its
entitlement to urgent interim relief. Such relief is necessary to
protect its constitutional rights
and to ensure that the Respondent
acts within the bounds of the law.
[20]
This judgment should not be construed as
fettering the Respondent’s ability to conduct legitimate
investigations into tax
compliance. Instead, it affirms that such
investigations must be performed following prescribed legal
procedures that give effect
to constitutional rights.
[21]
The Respondent's late provision of the ex
parte applications, while not fully remedying the earlier
non-compliance, is acknowledged.
However, it does not negate the need
for this Court to guide the proper procedure for future cases to
prevent similar issues, even
involving other organs of state or
private parties.
[22]
This judgment underscores the importance of
transparency and procedural fairness in
ex
parte
applications, especially those
involving search and seizure powers. It serves as a reminder that
even in the pursuit of legitimate
investigative goals, organs of
state or private parties must adhere strictly to legal procedures and
respect constitutional rights.
[23]
The Respondent’s conduct in this
matter, particularly its initial refusal to provide the
ex
parte
applications, raises concerns
about the potential for abuse of ex parte procedures. Such methods
mustn’t be used to gain tactical
advantages or frustrate
affected parties' rights.
[24]
In the future, the Respondent and other
state organs should be mindful of their higher duty to act fairly and
transparently in litigation.
Withholding
ex
parte
applications from affected
parties is inconsistent with this duty and the principles of open
justice.
[25]
This judgment also highlights the need for
courts to exercise vigilant oversight over
ex
parte
applications, particularly those
involving intrusive measures like search and seizure operations.
Magistrates granting such orders
should ensure adequate safeguards to
protect the rights of affected parties.
ORDER
[26]
As the result, I make the following order:
26.1.
The application is granted as one of
urgency in terms of Rule 6(12) of the Uniform Rules of Court.
26.2.
It is noted that the First Respondent has
now furnished the Applicant with copies of the
ex
parte
applications, including all
supporting affidavits, used to obtain the search warrants issued by
the Louis Trichardt Magistrates
Court on 3 and 4 July 2024.
26.3.
Pending the final determination of an
application to be brought by the Applicant in the Louis Trichardt
Magistrates Court for reconsideration
of the warrants mentioned
above:
26.3.1.
The Respondents are interdicted from
conducting any further searches or seizures at the Applicant's
premises situated at 0 Bronn
Street, Louis Trichardt, under the
warrants mentioned above;
26.3.2.
The Respondents are interdicted from using,
for any purpose whatsoever, any materials, information or data seized
or obtained during
the search conducted on 10 July 2024.
26.4.
The Applicant is directed to launch the
application for reconsideration referred to in paragraph 3 within ten
court days of this
order.
26.5.
The Respondents are ordered to pay the
costs of this application on the attorney-client scale, jointly and
severally.
GAISA AJ
ACTING JUDGE OF THE
HIGH COURT,
POLOKWANE, LIMPOPO
DIVISION
APPEARANCES
FOR
THE PLAINTIFF:
ADV
ABO OMAR
INSTRUCTED
BY:
MAYET
ATT
FOR
THE DEFENDANT:
ADV
G DIAMOND
INSTRUCTED
BY:
DU
TOIT SWANEPOEL STEYN & SPRUYT ATT
DATE
OF HEARING:
16
JULY 2024
DATE
OF JUDGEMENT:
25
July 2024