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[2014] ZACC 3
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Estate Agency Affairs Board v Auction Alliance (Pty) Ltd and Others (CCT 94/13) [2014] ZACC 3; 2014 (3) SA 106 (CC); 2014 (4) BCLR 373 (CC) (27 February 2014)
Links to summary
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
94/13
In the matter between:
ESTATE AGENCY
AFFAIRS
BOARD
................................................................
Applicant
and
AUCTION ALLIANCE
(PTY)
LTD
.........................................................
First
Respondent
MINISTER OF HUMAN
SETTLEMENTS
........................................
Second
Respondent
MINISTER OF
FINANCE
......................................................................
Third
Respondent
Neutral citation:
Estate
Agency Affairs Board v Auction Alliance (Pty) Ltd and Others
[2014]
ZACC 3
Coram:
Moseneke
ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Jafta J,
Madlanga J, Mhlantla AJ, Nkabinde J and Zondo J
Heard on:
18 November 2013
Decided on:
27 February 2014
Summary:
Estate
Agency Affairs Act 112 of 1976 – constitutionality of section
32A – right to privacy – warrantless searches
–
section 32A unconstitutional
Financial Intelligence Centre Act 38 of 2001
–
constitutionality of
section 45B
– right to privacy –
warrantless searches –
section 45B
unconstitutional
Retrospectivity of orders of invalidity –
courts’ power to limit retrospective effect generally exercised
Counter-application for a warrant –
inherent jurisdiction – section 172(1)(b) of the Constitution –
courts’
power to issue a warrant limited
ORDER
Application for
confirmation of two declarations of constitutional invalidity of the
Western Cape High Court, Cape Town (Louw J).
The declarations are
confirmed, but the terms of the High Court order are varied. The full
order is at [73].
JUDGMENT
CAMERON J (Moseneke ACJ,
Skweyiya ADCJ, Dambuza AJ, Froneman J, Jafta J, Madlanga J, Mhlantla
AJ, Nkabinde J and Zondo J concurring):
[1]
These are confirmation proceedings in
respect of an order the Western Cape High Court, Cape Town (High
Court) granted declaring
section 32A of the Estate Agency Affairs
Act
[1]
(Act) and section 45B of the Financial Intelligence Centre Act
[2]
(FICA) constitutionally invalid.
[3]
Both provisions confer wide powers of search and seizure on
regulatory bodies. The applicant, the Estate Agency Affairs Board
(Board), tried to use those powers to search the business premises of
the first respondent, Auction Alliance (Pty) Ltd. Auction
Alliance
resisted. It obtained an order that the provisions under which the
Board acted were constitutionally invalid. The parties
meanwhile
agreed that the evidence the Board sought to seize under the impugned
powers should be preserved, pending the outcome
of these proceedings.
[2]
In this Court, there was no dispute on the
primary question: all parties agreed that the provisions cannot be
defended, and that
this Court should confirm the High Court’s
declaration of invalidity. So the main debate was about defining the
contours,
and managing the consequences, of invalidity. Should the
declarations of invalidity be retrospective, so as to invalidate
action
previously taken under the provisions? Should the orders be
suspended? And, if so, should the Court as an interim measure
order that words be read into the provisions?
[3]
Beyond these questions lay an even more
contested issue. This was whether the Court, if it strikes down
the authorising provisions,
may, in the exercise of its inherent
jurisdiction, grant a search warrant to the Board in respect of the
preserved items.
Parties
[4]
Under the Act, the Board regulates the
estate-agency industry. It must “maintain and promote the
standard of conduct
of estate agents” and “regulate”
their activities.
[4]
The Board is also a “supervisory body”
under FICA.
[5]
In that role, it is required to combat money laundering and financing
of terrorism and related activities.
[6]
[5]
The first respondent in this Court –
the applicant in the High Court – is Auction Alliance (Pty)
Ltd, a company doing
business as an auctioneer. Its main offices are
in Cape Town, with smaller offices in Johannesburg and Durban.
Because the definition
of “estate agent”
[7]
in the Act covers almost any person dealing in
property, Auction Alliance is an estate agent under the statute.
Further, all
estate agents are “accountable institutions”
under FICA.
[8]
The two statutes impose a range of record keeping,
reporting and other obligations on it.
[9]
To violate many of these is a crime.
[10]
[6]
Because of the statutory designations of
the Board and Auction Alliance, both section 32A of the Act and
section 45B of FICA
at present authorise the Board to conduct
searches of Auction Alliance’s premises without first obtaining
a warrant.
[11]
[7]
The second and third respondents are the
Ministers responsible for the administration of the Act and FICA
respectively.
[12]
Factual background
[8]
Mr Rael Levitt, the founder and former
chief executive of Auction Alliance, was in early 2012 the subject of
a television exposé
that, if accurate, would implicate Auction
Alliance in activities constituting gross and wide-ranging violations
of the Act and
FICA. The producers sent the information they
gathered to the Board, which commenced an investigation. While
the Board
was devising a strategy with the Financial Intelligence
Centre (Centre), the main authority responsible for FICA’s
enforcement,
to which supervisory bodies like the Board report, it
learned that Auction Alliance was destroying documents and
information.
The Board sprang into action. It set out on
an urgent search of Auction Alliance’s business premises in
Cape Town,
Johannesburg and Durban. Its inspectors arrived
unannounced and warrantless. Relying on the powers conferred by
section
32A of the Act
[13]
and section 45B of FICA,
[14]
they demanded entry.
[9]
Auction Alliance refused. Instead, it
launched an application for both interim relief, to prevent the Board
from conducting
the warrantless search and seizure operation, and for
final relief through its constitutional challenge to the two
provisions.
The Board opposed the main application. It
also brought a counter application asking the High Court to
grant it a warrant
permitting it to search Auction Alliance’s
premises.
[10]
The interim relief became redundant when
the parties agreed to allow KPMG, an independent auditing and
accounting firm, to copy
and preserve all the data on Auction
Alliance’s computer servers. It did so “pending the
judicial determination”
of Auction Alliance’s legal
challenge to the validity of the contested inspection.
[11]
The Board’s affidavits set out in
detail the evidence against Mr Levitt and Auction Alliance. The
High Court found that
this evidence strongly suggested that Auction
Alliance had, as part of its operations, committed serious breaches
of both the Act
and of FICA. In response, Auction Alliance
chose to adopt a tactical position. It tendered no explanation
or rebuttal.
Instead, it focused on the constitutional validity
of the provisions. That was its choice. But it means, as
the High
Court found, that the Board’s allegations must for
present purposes be accepted as true. The litigation must be
determined
on the basis that Auction Alliance committed grave
infractions of the laws regulating its business.
In
the High Court
[12]
The High Court (Louw J) gave two
judgments. In the first, the Court decided the narrow question
whether its inherent jurisdiction,
independent of statutory
authority, empowered it to grant the Board’s
counter-application for a warrant to search Auction
Alliance’s
premises.
[15]
Despite the prima facie evidence of serious breaches of the two
statutes by Auction Alliance, which it found established
a reasonable
suspicion of wrongdoing, the High Court held that it did not have
inherent jurisdiction to grant a warrant.
That jurisdiction, it
held, is limited to regulating the Court’s own processes in
pending or intended litigation. This
would allow the Court to
grant a warrant to preserve evidence pertinent to pending or intended
litigation. But where, as
here, the desired warrant is directed
at an objective unrelated to the High Court’s own processes and
evidence-preservation,
there had to be statutory authority for a
warrant.
[13]
The Court’s second judgment –
the one at issue in these proceedings – decided the
constitutional validity of the
two impugned provisions.
[16]
The Court noted that Auction Alliance did
not challenge “routine” inspections of its premises.
It limited its
challenge to warrantless “non-routine” (or
“targeted”) inspections – in other words, those
based
on a particularised suspicion of wrongdoing, as in the instance
it sought to resist.
[14]
On section 32A of the Act, the Court noted
that, in terms of this Court’s judgment in
Magajane
,
[17]
all statutorily authorised inspections limit the constitutional right
to privacy.
[18]
The Court considered whether the inspections were reasonable
and justifiable limitations under the Constitution.
[19]
The Court concluded that those engaged
in the estate-agency industry have a reduced
expectation of privacy. It found further that the search the
Board tried to conduct
was, under
Magajane
,
[20]
a search aimed at enforcement. And it concluded that
section 32A is overbroad. This was because it authorises
a warrantless search of “any place” an
inspector has reason to believe “is connected with an act
performed by
an estate agent”.
[21]
So wide is the wording here that this could include even the private
homes of estate agents’ former clients.
In addition, the
provision poses no requirement of prior notice, nor any guidance
about how a search should be conducted.
The provision was also
overbroad because it requires an estate agent to produce “any .
. . document” demanded by an
inspector, without limitation as
to relevance.
[22]
[15]
In part due to this overbreadth, the Court
found that the provision did not survive scrutiny under the “less
restrictive means”
rubric of the limitations clause.
[23]
There was little evidence that requiring a warrant for targeted
searches would hinder the Board’s work. Hence,
despite
industry participants’ reduced expectation of privacy,
non-routine warrantless searches
[24]
could not be justified when undertaken with a view to enforcing
statutory provisions that could eventually include criminal or
quasi-criminal sanctions.
[16]
The Court further held that neither a
reading down nor a reading in could salvage section 32A.
Neither option was viable,
because it would require detailed
rewriting of the provision. Not only would the reading in have
to distinguish between compliance
and enforcement searches, but it
would also have to set out the authority for issuing warrants, the
requirements for issuing warrants,
and the parameters within which
the warrants may be executed. This was best left to the
Legislature. The Court therefore
held section 32A
unconstitutional and invalid. Employing notional severance, it
declared the provision invalid to the
extent that it “permits
any inspections other than routine or random inspections aimed at
ensuring compliance” with
the Act.
[17]
The Court also found section 45B of
FICA wanting, though less so. It noted the Act’s primary
objective, which is
to ensure transparency and regulatory compliance
in the financial system for the purpose of combating money laundering
and preventing
the financing of terrorist activities. This
meant that corporate entities like Auction Alliance, operating in a
closely regulated
industry, would have a reduced expectation of
privacy. Even though the inspection the Board sought to
undertake was targeted
and non-routine, aimed at criminal
investigation, and could possibly result in penal sanction and
prosecution, the FICA provisions
were not overbroad.
[18]
Here, the Court noted that the section
requires that the inspection, whether routine or targeted, be for the
purpose of determining
compliance with FICA. It also requires
reasonable notice, and demands that searches be at reasonable times.
Inspections are also
limited to determinable business premises, and
guidance is provided to inspectors. Documents subject to inspection
are limited
to those relating to the institution’s affairs.
Though the Court noted that an inspection may be conducted at a
private home
where there is a reasonable belief that a business of
the kind contemplated is being conducted, and that the provisions
cover a
large number of industries, the Court nevertheless concluded
that the purpose of FICA requires this breadth.
[19]
The Court considered the section
well-tailored to the ends it sought to achieve, but it nevertheless
held that there were less restrictive
means available. The state
respondents had not shown that requiring a warrant for targeted
non-routine inspections would defeat
the purpose of inspections.
Section 45B of FICA, like section 32A of the Act, was therefore
unconstitutional. But, because of the
substantial public interest
considerations at issue, the declaration of unconstitutionality had
to be suspended for 18 months to
afford the Legislature an
opportunity to amend section 45B.
[20]
In the interim, the Court provided an
extensive reading in of section 45B.
[25]
This drew heavily on the High Court judgment in
Gaertner
.
[26]
After the High Court judgment in this matter, though, this
Court issued judgment in the confirmation proceedings in
Gaertner
.
[27]
There, it declined to adopt the reading in set out by the High Court
in that matter.
[21]
In addition, the High Court here extended
the consensual interim arrangement embracing KPMG’s
preservation of Auction Alliance’s computer
data, to afford
the Board an opportunity to
apply for a warrant in terms of the reading in. Neither
declaration of invalidity was to apply
retrospectively.
In
this Court
[22]
The Board accepted for the first time that
section 32A is unconstitutional because of its overbreadth. It
shifted its stance
to argue that the High Court went too far in
holding that warrantless, suspicion-based searches in regulated
industries are inevitably
unconstitutional. It attacks this
finding as a departure from South African precedent, which regards
the expectation of privacy
of actors in regulated industries as
sharply attenuated.
[28]
It contends that endorsing the High Court’s conclusion would
require a new development of constitutional law and a
drawing of
sharp lines where previously there have been none.
[23]
This development, the Board argues, would
also be inconsistent with the United States and Canadian
approaches.
[29]
Further, it would unduly constrain Parliament when it seeks to remedy
the constitutional defect while remaining in step with international
best practices. In particular, the Board urges this Court not
to foreclose the possibility of future legislation that may
authorise
warrantless searches when regulators employ a risk-based approach to
industry-level administrative oversight.
[24]
The Board accordingly requests an order
declaring section 32A unconstitutional and invalid, without
retrospective effect, suspended
for two years. It suggests
that, during the suspension, the Board be required to comply with the
warrant requirements of
the Criminal Procedure Act
[30]
(CPA) and that the Board’s inspectors be permitted to make use
of the powers conferred by its provisions.
[31]
[25]
Finally, the Board urges this Court to
reverse the High Court’s refusal to grant its
counter-application for a warrant to
conduct a search of Auction
Alliance’s premises. It argues that the Court should do
this drawing either on its inherent
powers or those conferred by
section 172(1)(b) of the Constitution.
[32]
[26]
Like the Board, the Ministers do not
dispute that the sections are invalid. But they also argue that
the High Court went too
far. Relying on the fact that
Magajane
related to unlicensed premises, they urge the Court to hold
warrantless inspections permissible depending on whether an
institution
is licensed to conduct business within a field that falls
within the scope of industries regulated by FICA. They point
out
that FICA is not intended to be used as a basis for conducting an
inspection as part of a criminal investigation. For the
purpose
of possible prosecutions for non-compliance with FICA, an
investigating authority must use the provisions of the CPA.
[27]
The High Court’s judgment, the
Ministers contend, means that the Board is able to conduct routine
compliance searches, but
is powerless to do anything when there is a
reasonable suspicion that something questionable or unlawful is
occurring at an accountable
institution. Hence they support the
Board’s approach.
[28]
Auction Alliance takes issue with how the
Board characterises its constitutional challenge. Its only
attack on the Act and
FICA is that they permit warrantless targeted
searches. It adds that the conception of the challenge will
impact the nature
of the remedy. It urges that the distinction
between licensed and unlicensed premises makes no sense in the
context of estate
agents, because they are not required to register a
place of business or conduct the business of an estate agent from
that place.
In fact, many estate agents conduct business from
home.
[29]
Hence, Auction Alliance opposes the bald
declaration of invalidity that the Board seeks. Instead, it
asks the Court to declare
both provisions invalid to the extent that
they permit any inspections “other than routine or random
inspections aimed at
ensuring compliance” with the Act.
That, it suggests, would represent less interference with the
separation of powers.
Auction Alliance further asks this Court
to make the High Court’s order in respect of section 32A
retrospective, so that
the invalidity applies with effect from the
start of the constitutional era. It submits that the only
exception should be
cases that have already been finalised.
This, it argues, is consistent with the Court’s past practice.
[30]
Auction Alliance also rejects the High
Court’s proposed reading in of section 45B of FICA.
Its argument here parallels
that of the Board. It urges that to
confirm the reading in would unduly trespass on the terrain of the
Legislature.
Instead, it argues, the Court should simply
invalidate the section, as the High Court ordered in respect of
section 32A of the
Act.
[31]
Auction Alliance strongly opposes the
Board’s appeal against the dismissal of its counter-application
for a search warrant.
It contends that for the Court to grant
the Board a warrant, without direct statutory authorisation, would
amount to a “judicial
bill of attainder” unjustly
targeting it.
Issues
[32]
These issues must be decided:
(a)
Are the impugned provisions
constitutionally invalid?
If so:
(b)
Should the declarations of invalidity be
retrospective?
(c)
Should the declarations of invalidity be
suspended, and, if so—
(i)
for how long?
(ii)
should there be a reading in?
(d)
Is the Board entitled to a court-issued
search warrant?
Constitutional
validity of section 32A and section 45B
[33]
This case requires no reinvention. The
terrain has recently and closely been traversed in
Gaertner
.
[33]
There, this Court invalidated provisions of the Customs and Excise
Act.
[34]
These authorised warrantless searches of any premises at any time;
allowed inspectors to demand books, documents or things from
any
person believed to have them or control over them, and to do so at
any time and at any place; permitted them to break open
doors,
windows, walls or flooring of any premises at any time in order to
search; and authorised them to open, in any manner, any
room or safe
if it is locked and the keys were not produced on demand. The only
qualification on the exercise of these powers,
the Court noted, “if
a qualification at all”,
[35]
was that premises could be entered only “for the purposes of”
the statute.
[36]
Beyond this, the provisions gave officials far-reaching powers that
could “be exercised anywhere, at whatever time and in
relation
to whomsoever, with no need for the existence of a reasonable
suspicion, irrespective of the type of search.”
[37]
[34]
The provisions’ enormous sweep (which
extended not only to the homes and places of business of those
operating in the customs
and excise industry, but also the homes of
their clients, associates, employees and relatives), the absence of
any requirement,
as a precondition to a search, that there be
suspicion (let alone a reasonable suspicion), and the unbounded
manner in which searches
were licensed, led the Court to conclude
that the provisions unjustifiably limited the right to privacy.
Hence, even though
customs and excise controls were important,
[38]
and even though there was a rational connection between tight
regulation and the searches authorised,
[39]
the blanket authorisation of warrantless searches was not
justified.
[40]
[35]
The provisions here are less conspicuously
at odds with constitutional rights than those in
Gaertner
.
They do not license destruction of property in their execution. The
authorisations they afford are also more bounded. Section
32A of the
Act limits when searches may be conducted to “all reasonable
times”.
[41]
In addition, before premises are entered, the Board’s inspector
must have “reason to believe” that any person
there is
performing an act as an estate agent, that the place searched is
connected with an act performed by an estate agent, and
(if one were
to read sub clauses (i) to (iii) of section 32A(1)(a)
conjunctively) that there are books, records or documents
to which
the Act is applicable.
[42]
[36]
But these boundaries, though more
perceptible, are barely more adequate. The definition of estate
agent
[43]
is so broad that almost any property-related business is vulnerable
to search.
[44]
And beyond the specification as to reasonable times and reason to
believe, the search powers are almost as unlimited in scope,
performance and execution as in
Gaertner
.
As the High Court pointed out,
[45]
section 32A does not sufficiently circumscribe the discretion of an
inspector regarding the place and scope of the search. “Any
place” can include the private home, not only of an estate
agent, but of the owner of a show house who keeps a copy of an
offer
to purchase there.
[46]
[37]
The documents that inspectors may demand
are not limited to those linked to the business of estate agency.
Though the provision
should probably be read down to require that
link, in its terms it requires production of “any”
document in the possession
or under the control of an estate
agent.
[47]
Apart from requiring that inspectors produce written inspection
authority at the request of the person searched,
[48]
the statute gives no limiting guidelines as to how searches and
seizures may be carried out. FICA likewise licenses access to “any
data”.
[49]
That provision should probably also be read down.
[38]
Section 45B of FICA, a post-constitutional
enactment,
[50]
is more carefully circumscribed, and thus further from the
pre-constitutional provisions at issue in
Gaertner
.
Like section 32A, it limits searches to reasonable times.
[51]
In addition, it requires “where appropriate” that
reasonable notice of the search be given.
[52]
As the High Court pointed out, section 45B defines the premises that
may be targeted and sets out, in some detail, the powers and
obligations of inspectors during inspections.
[53]
While, again, the powers extend to “any premises”,
[54]
they may be exercised only when the Centre, or a supervisory body
like the Board,
[55]
reasonably believes that the business of an accountable institution,
reporting institution
[56]
or other person to whom FICA applies is being conducted there. In
addition, the provision requires that non routine inspections
by
a supervisory body, like the Board, may be conducted only after
consultation on that inspection with the Centre.
[57]
[39]
These features led the High Court to
conclude that, given the pressingly important objectives of FICA in
combating money laundering
and the financing of terrorism, section
45B is not overbroad.
[58]
It nevertheless concluded that its provisions failed the “less
restrictive means” component of the limitations
analysis. In
its view, a warrant was necessary for non-routine inspections.
While surprise was often crucial, that could
be attained by allowing
warrants to be issued without notice to other parties (ex parte)
and by providing limited exceptions.
[59]
[40]
Given the unpalatable aspects of both
provisions, it is not surprising that the Ministers and the Board,
after trying unavailingly
in the High Court to defend them, abandoned
that stance in this Court, and conceded their invalidity.
[60]
The conclusion is unavoidable that in their present form both
provisions fail to pass constitutional scrutiny. The
fundamental reason in each case is their initiating premise: that all
the searches they authorise require no warrant. In
this, they
afford no differentiation as to the nature of the search or the
nature of the premises searched. The result is
that they go too
far, in authorising warrantless searches in circumstances where no
justification can exist for not requiring the
Board to obtain a
warrant.
[41]
Section 32A of the Act suffers, in
addition, from many of the specific vices this Court set out in
detail in
Gaertner
.
It is overbroad in the premises to which it applies and the purposes
for which it licenses searches, and it is deficient
in failing to
guide the manner in which searches should be conducted.
[42]
In relation to the purpose and importance
of the limitation, the major policy factors at issue in
Gaertner
were that customs duties are collected at the national perimeter,
where some greater measure of rigorous scrutiny may be required,
plus
the country’s interest in the revenue that customs controls are
designed to secure.
[61]
Those factors are wholly absent in the case of section 32A.
Nevertheless, tight regulation of the estate-agency
business is
important, especially since very large sums of money pass through
estate agencies’ accounts. Indeed, it
is because of this
potential for the industry to become a conduit for illicit funds that
under FICA the Board is a supervisory
body and estate agents are
accountable institutions. FICA was enacted to secure vital
national objectives. These are
stated in its long title: to
combat money laundering activities and the financing of terrorist and
related activities.
[43]
Even so, in starting from the premise that
no searches need warrants, section 45B goes too far.
Without modulation, that
premise cannot be constitutionally
acceptable. The possibility of less restrictive means should be
considered. It follows
that the High Court’s conclusion
that the provisions must be declared incompatible with the
Constitution and therefore invalid
was correct.
[44]
More difficult are the questions that now
arise.
Should the declarations
of invalidity be prospective only?
[45]
An order of full retrospective force would
render unlawful all section 32A searches the Board undertook
after the Constitution
came into effect, and all section 45B
searches undertaken under FICA from December 2010, when Chapter Four
(sections
45A-45F) came into effect.
[62]
The High Court did not grant a fully retrospective order.
Instead, it ordered that both declarations of invalidity
would
operate prospectively only. In striking down section 32A,
it spelled out that its order would “not affect
the validity of
any criminal, civil and administrative proceedings that have relied
on documents obtained through inspections,
searches and seizures”
conducted under the provision. It did not specify that the
exemption from invalidity would apply
only to finalised cases.
[46]
Auction Alliance challenged this. It
urged this Court to narrow the section 32A order of
non-retrospectivity. It
argued that unfinalised civil,
administrative and criminal matters based on searches conducted under
the impugned provisions should
not be protected. There was no
reason, it submitted, not to allow the declaration of invalidity to
hit matters still pending
before courts or tribunals.
In
advancing this argument, Auction Alliance submitted that “the
default rule” is that orders of invalidity are retrospective
to
the date the Constitution came into effect, or the legislation was
enacted, whichever is the later. Subject to this rule,
it
contended, the Court can limit the effect of retrospectivity if it is
just and equitable to do so.
[47]
It is as well to clarify that it is
misleading to speak of a “default rule” that declarations
of invalidity operate
retrospectively. In the case of
pre-constitutional legislation, an order of invalidity takes effect,
if not otherwise specified,
with retrospective effect to the date the
Constitution came into operation. That is the default position
simply because if
a court does not make an order limiting the
retrospective effect of a declaration of invalidity, its effect
reaches back to its
constitutional roots. This flows from the
objective theory of constitutional invalidity this Court adopted in
Ferreira v Levin
[63]
and which it has endorsed many times. It means that all
pre-existing laws inconsistent with the Constitution are invalid
from
the date of the Constitution and that post-constitutional enactments
are invalid from the date they came into effect.
But this is
subject to the Court’s remedial power, afforded by the
Constitution, when declaring law or conduct inconsistent
with the
Constitution invalid, to make any order that is just and equitable,
including an order limiting the retrospective effect
of a declaration
of invalidity.
[64]
[48]
In fact, this Court almost invariably
exercises the power to limit the effect of retrospective
invalidity.
[65]
Where good grounds exist to limit retrospectivity, the Court
will exercise its power to do so.
[49]
Here, the High Court’s order is
purely prospective. In striking down section 32A, it
specified, for clarity, that
not only past criminal and civil
proceedings, but also administrative proceedings, are exempt from
retrospective effect.
Sound reasons underlay the breadth of
this exemption. As the Board pointed out, there is no
suggestion that it has not carried
out its functions in good faith in
accordance with the powers existing legislation afforded it.
What it has done should be
protected from retrospective invalidity,
even if any proceedings in relation to it are not yet finalised.
[50]
That was the approach this Court adopted in
Mistry
,
[66]
a case decided under the interim Constitution, but after the final
Constitution came into effect. Unlike the Constitution,
which
gives this Court a general just and equitable jurisdiction to limit
the retrospective effect of an order of invalidity, the
interim
Constitution provided that an order declaring invalid a legislative
provision that existed when the Constitution came into
force did not
invalidate anything done or permitted in terms of that provision
unless the Court, in the interests of justice and
good government,
ordered otherwise.
[67]
Even though the constitutional provisions are different, this
Court’s general approach in
Mistry
seems apposite. It found that any general declaration of
invalidity with retrospective effect—
“
would
impact negatively on good government by rendering unlawful all such
searches conducted after the retrospective date specified.
This
could create considerable uncertainty with regard to the validity of
proceedings which were conducted on the basis of evidence
obtained as
a result of such searches. It could also give rise to delictual
claims by persons subjected to searches and seizures
after that date,
and add further burdens to a health budget already under considerable
strain.”
[68]
[51]
The Court there refused an order with
retrospective effect and granted one prospectively only. It
found that there was a “general
rule favouring
prospectivity”.
[69]
Though this observation was based on the wording of the interim
Constitution, the general considerations that underlay it
apply with
equal force in this case. The proper exercise of this Court’s
just and equitable jurisdiction requires that
the retrospective
effect of the order of invalidity be limited to protect all searches
the Board has already undertaken.
In my view, the express
specification the High Court added
[70]
was overly cautious and unnecessary. A stipulation that the
orders operate prospectively only will suffice.
Suspension and reading
in
[52]
The High Court did not suspend the
declaration of invalidity of section 32A. This was
presumably because in striking
the provision down it used the device
of notional severance. This left the provision intact, except,
in the terms of the
High Court’s order, insofar as it “permits
any inspections other than routine or random inspections aimed at
ensuring
compliance” with the Act.
[53]
On the other hand, the Court suspended its
declaration of invalidity of section 45B for 18 months, to give
Parliament a chance
to fix the provision. It coupled this with
an extensive reading in during the suspension period. This was
based on
the distinction between routine and non-routine
inspections. Routine inspections could proceed. But for
non-routine
inspections, the Board has to apply for and obtain a
warrant from a judge or magistrate.
[54]
These are the questions: should the
invalidity of both provisions be suspended, and, if so, for how long?
And what regime should
apply in the interim?
[55]
It seems to me that, rather than using the
device of notional severance, the order of invalidity in respect of
section 32A should
be wholly suspended. Suspension is not an
exceptional remedy. It is an obvious use of this Court’s
remedial power
under the Constitution to ensure that just and
equitable constitutional relief is afforded to litigants, while
ensuring that there
is no disruption of the regulatory aspects of the
statutory provision that is invalidated. This was well
explained in
J
:
“
The
suspension of an order is appropriate in cases where the striking
down of a statute would, in the absence of a suspension order,
leave
a lacuna. In such cases, the Court must consider, on the one
hand, the interests of the successful litigant in obtaining
immediate
constitutional relief and, on the other, the potential disruption of
the administration of justice that would be caused
by the lacuna.
If the Court is persuaded upon a consideration of these conflicting
concerns that it is appropriate to suspend
the order made, it will do
so in order to afford the Legislature an opportunity ‘to
correct the defect’. It will
also seek to tailor relief
in the interim to provide temporary constitutional relief to
successful litigants.”
[71]
(Footnote omitted.)
[56]
The Board rightly contended that it is
important for it to be able to conduct inspections to determine
whether statutory breaches
have occurred in the period before
Parliament enacts remedial legislation. Here, not to suspend the
declaration of invalidity would
hamstring the Board in carrying out
its functions of implementing the regulatory regimes the Act and FICA
impose. Auction
Alliance complained that the Board’s
assertions here were unsupported by evidence; but it seems
self-evident that deletion
from the Board’s arsenal of all
powers of inspection would seriously hamper it in carrying out its
oversight functions.
[57]
Auction Alliance also pointed to
Magajane
,
[72]
where this Court declined to suspend the order invalidating statutory
search and seizure provisions. There, the Court found
that
inspectors and police were still able to enforce the statute without
the provisions at issue: they could investigate violations
and police
could use their powers to conduct searches without warrants.
Compliance inspections would be able to continue.
As appears
from this reasoning, the unaffected statutory provisions afforded the
regulatory authorities sufficient powers to continue
their work.
Here, inspections are the Board’s primary means of enforcing
the Act. To invalidate section 32A without
suspension would
extract the Board’s means of enforcing compliance, and leave it
toothless.
[58]
Auction Alliance suggests that in the
interim the Board must cast itself upon the National Prosecuting
Authority and the South African
Police Service to ensure compliance
with the Act and with FICA. This is unrealistic. Police
services are already thinly stretched.
The Board’s
evidence gave vivid instances where investigation was compellingly
urgent, but the police were unable to respond
with sufficient
urgency. And the Board is also responsible for inhibiting breaches of
the Act and FICA that are non-criminal. The
Board needs to do its own
supervisory work. To do so, it needs extant legislation.
[59]
A further consideration is that estate
agents’ accounts can be used for criminal activities, as the
evidence before us suggests,
and for money laundering. Though
the proceeds of illegal gambling, which were at issue in
Magajane
,
can obviously be used to fund criminal activities, the supervision of
accounts was not present in that case. In addition,
the
remedial measure in
Magajane
,
SAPS warrants, provided an adequate means of policing illegal
gambling, while requiring a warrant to search all registered estate
agents’ activities would hinder the compliance objective.
These considerations indicate that, as in the case of section
45B of FICA, the invalidity of section 32A of the Act must be
suspended.
[60]
It seems advisable to grant the Legislature
a 24-month period of suspension. This is longer than the 18
months the High Court
afforded. And it is much longer than the
six months in
Gaertner
.
There, projected new legislation was at an advanced stage of
preparation. It had already passed through Cabinet and
through
some Parliamentary Committees. By contrast, we were informed during
argument that, while amendments to the Act have passed
through
Cabinet, those to FICA have not yet progressed to that stage.
[61]
This suggests a longer period of
suspension. In my view, the most realistic period would be 24
months. But this longer
period means there must be fuller
interim arrangements than in
Gaertner
.
As pointed out in
J
,
[73]
the interim relief must be carefully tailored to afford those subject
to the invalid statutory regime temporary constitutional
relief.
The High Court did this in relation to section 45B of FICA through an
extensive reading in. This does not seem
to me to provide the
best practical course.
[62]
The main reason is that the High Court’s
reading in relies on the distinction between “routine”
and “non-routine”
searches. All non-routine
searches, without qualification, are proscribed unless a warrant is
obtained. That rests
on the premise that, apart from urgent
cases, warrantless suspicion-based searches – even where the
suspicion is based on
generalised risk factors, rather than an
individualised suspicion – in a regulated field like estate
agency are necessarily
unconstitutional. I do not think this
Court should, at this stage, endorse this assumption. It is one
that should be
tested in due course, after the Legislature has had
the chance to formulate, if it can, a statutory basis on which
warrantless
searches, triggered by suspicion, can take place without
constitutional affront.
[63]
In
Gaertner
,
this Court held that it was “problematic” to draw the
routine versus non-routine distinction in those proceedings.
[74]
The judgment did not need to distinguish at all between the types of
searches or the types of premises to be searched.
Madlanga J
explained:
“
I
am particularly loath to do so as the lawmaker is – at this
very moment – in the process of crafting a legislative
measure
that aims to address the unconstitutionality. The Legislature,
guided by this judgment to the extent certain pronouncements
have
been made, should be given latitude to formulate the inner and outer
reaches of the search power.”
[75]
[64]
The same applies here. But I would go
further. The distinction the High Court drew between routine
and non-routine searches
seems to me to be inapposite and possibly
misleading. This is because it does not fully cohere with the
distinction
Magajane
drew
between searches undertaken for enforcement, as opposed to those
undertaken to supervise compliance. Under the
Magajane
dichotomy, a warrant may well not be necessary for compliance
searches motivated by an assessment of general risk factors. That
is the very point
Gaertner
avoided deciding, and which it is not necessary for us to decide in
these proceedings.
[65]
For all these reasons, we should refrain
from endorsing the routine versus non routine distinction now.
Instead of the notional
severance the High Court applied to section
32A, and the reading in it applied to section 45B, it seems to me
that the simplest
and fairest solution is an order like that in
Gaertner
:
one that minimally intrudes on the statute, while ensuring that
during the suspension unconstitutional searches cannot for the
most
part take place.
[66]
The Board in its written argument proposed
a more extensive reading in, which itself was premised on a
distinction between suspicion-based
investigations and others. At
the hearing, counsel for the Board disclaimed this proposal as
“messy”. Instead,
the reading in ordered below
follows that in
Gaertner
,
but with the addition that, where the Board considers that a criminal
offence has been committed by the target of the search,
it must apply
on reasonable grounds for a search warrant before conducting a
search. Though drawing this line at suspicion
of a criminal
offence, while leaving alone targeted suspicion concerning other
forms of serious civil but non-criminal infractions,
may reflect only
an approximation of the constitutional standard, this ensures the
Board will be able to perform its important
functions during the
period of suspension.
Is the Board entitled to
a court-issued search warrant?
[67]
The most hotly contested issue was the fate
of the documents and information KPMG is holding in trust. The
Board invited the
High Court, in the exercise of its inherent
jurisdiction, to issue a warrant enabling it to access the
materials. The High
Court turned the invitation down.
[76]
The Board now asks this Court the same, relying also on the Court’s
powers under section 172(1)(b) of the Constitution,
[77]
but it must likewise be declined. In doing so, it is not
necessary to consider the Board’s contentions that the
circumstances
in which it asks for a warrant are analogous to those
in which the courts have granted ex parte orders to ensure that
evidence
is preserved pending the initiation of litigation in which
the evidence will be used.
[78]
Nor is it necessary to decide whether an order to that effect
will be just and equitable under the Court’s remedial
powers.
It should however be said that the Board struggled to explain
persuasively what the basis of the power is for granting
such access.
[68]
It is not necessary to decide these
points. The reason is that the Board should be enabled to apply
for the warrant it seeks
under the provisions of the statutes as they
appear after the reading in ordered below. For its part, Auction
Alliance resisted
affording the Board this opportunity. It
strongly urged that this would be unfair. It pointed out that it had
resisted the
Board’s exercise of statutory powers, and its
challenge had shown those powers to be unconstitutional and invalid.
There must, it said, be some consequence. And the consequence is that
the evidence to which the Board seeks to gain access should
be lost
to it. That, counsel for Auction Alliance urged, was the price we pay
for living in a constitutional democracy.
[69]
But this is surely wrong.
Constitutional litigation is not a game of win-or-lose in which
winners must be identified for reward,
and losers for punishment and
rebuke. It is a process in which litigants and the courts
assert the growing power of the Constitution
by establishing its
meaning through contested cases. In practical terms, it was
unrealistic to expect of the Board that it
should understand
perfectly in advance that the powers it sought to exercise against
Auction Alliance were or would be declared
unconstitutional. It
is not liable to a penalty because it tried to use statutory
provisions this litigation has now determined
are constitutionally
invalid.
[79]
Likewise, Auction Alliance has not earned a prize or bonus by
showing the provisions it contested fall short of the Constitution.
What Auction Alliance is entitled to is effective relief.
[80]
It secures that relief when the Board’s proposed search
of its premises is adjudicated in accordance with the Constitution,
as the Court will order here.
[70]
Hence the Board should be able to try to
establish before a judge or magistrate that it is entitled to a
warrant against Auction
Alliance under the provisions as they now
will read during the suspension period. If the Board can establish
that it is entitled
to a warrant under constitutionally compliant
conditions, it should then be able to apply that warrant to the
documents and information
it sought to obtain at the time it acted
against Auction Alliance.
[71]
The Board, for its part, complained
strenuously that requiring it to apply anew for a warrant would
enable Auction Alliance to raise
myriad legal points, ensnaring it in
complex and protracted litigation. That may be. Auction
Alliance is entitled to
contest the action taken against it on
legally sound grounds. In doing so, it will be alert to the
fact that courts are not
amenable to facile and obstructive
preliminary point-taking.
[81]
The evidence is not fully before this Court, and it is
inadvisable to say more.
Costs
[72]
Auction Alliance sought its costs,
including the costs of three counsel. The Board conceded that
Auction Alliance was entitled
to costs, but said that those should be
limited to two counsel. In my view, only two counsel are
justifiable.
Order
[73]
The following order is made:
1. The
declaration of constitutional invalidity of section 32A of the Estate
Agency Affairs Act 112 of 1976, and of
section 45B
of the
Financial
Intelligence Centre Act 38 of 2001
, made by the Western Cape High
Court, Cape Town is confirmed.
2. The
declaration of invalidity is not retrospective.
3. The
declaration of invalidity is suspended for 24 months to afford the
Legislature an opportunity to cure the invalidity.
4. The order the High Court granted under which KPMG retains a mirror
image of the data on the first respondent’s computers
is
extended for 30 days beyond the date of this order to enable the
Board to apply for a warrant in respect of the data under the
statutory provisions as they will apply during the period of
suspension.
5. During the period of suspension, section 32A(1) of the Estate
Agency Affairs Act is deemed to read as follows, what is underlined
being the reading in:
“
(1)
Any inspector furnished with inspection authority in writing by the
board may conduct an investigation to determine whether
the
provisions of the Act are being or have been complied with and may,
subject to subsection (5), for that purpose, without giving
prior
notice, at all reasonable times—
(a) enter
any place
except a private residence
in respect of which he
has reason to believe that—
(i) any
person there is performing an act as an estate agent;
(ii) it
is connected with an act performed by an estate agent;
(iii)
there are books, records or documents to which the provisions of this
Act are applicable;
(b) order
any estate agent or the manager, employee or agent of any estate
agent—
(i) to
produce to him the fidelity fund certificate of that estate agent;
(ii) to
produce to him any book, record or other document in the possession
or under the control of that estate agent, manager,
employee or
agent;
(iii)
to furnish him, at such place and in such manner as he may reasonably
specify, with such information in respect of that fidelity
fund
certificate, book, record or other document as he may desire;
(c)
examine or make extracts from or copies of any such fidelity fund
certificate, book, record or other document;
(d) seize
and retain any such fidelity fund certificate, book, record or other
document to which any prosecution or charge of conduct
deserving
sanction under this Act may relate: Provided that the person from
whose possession or custody any fidelity fund certificate,
book,
record or other document was taken, shall at his request be allowed
to make, at his own expense and under the supervision
of the
inspector concerned, copies thereof or extracts therefrom.
(1A)
(a) Where the board suspects that a criminal offence has been or
is being committed by the person who is the subject of the search,
or
where it seeks to search premises that are a private residence, an
inspector in terms of subsection (1) may conduct a search
only
on the authority of a warrant issued by a magistrate or judge.
(b) A magistrate or judge may issue a warrant only on written
application by an inspector setting out under oath or affirmation the
grounds why it is necessary for an inspector to gain access to the
relevant premises or to conduct the search in question.
(c) The magistrate or judge may issue the warrant if it appears
from information on oath or affirmation that—
(i) there are reasonable grounds for suspecting that a
contravention of the Act has occurred or is occurring;
(ii) a search of the premises is likely to yield information
pertaining to the contravention; and
(iii) the search is reasonably necessary for the purposes of the
Act.
(d) An
inspector otherwise required to obtain a warrant under paragraph (a)
may enter and search any place without the warrant referred
to in
paragraph (c) if the inspector on reasonable grounds believes that—
(i) a warrant would be issued in terms of paragraph (c) if
the inspector applied for it; and
(ii) the delay in obtaining the warrant is
likely to defeat the object of the search.
”
6. During the period of suspension,
section 45B(1)
of the
Financial
Intelligence Centre Act is
deemed to read as follows, what is
underlined being the reading in:
“
(1)
For the purposes of determining compliance with this Act or any
order, determination or directive made in terms of this Act,
an
inspector may at any reasonable time and on reasonable notice, where
appropriate, enter and inspect any premises
,
except a private residence,
at which
the Centre or, when acting in terms of section 45(1), the supervisory
body reasonably believes that the business of an
accountable
institution, reporting institution or other person to whom the
provisions of this Act apply, is conducted.
(1A)
(a) Where the Centre or a supervisory body acting after
consultation with the Centre suspects that a criminal offence has
been or
is being committed by the person who is the subject of the
search, or where it seeks to search premises that are a private
residence,
an inspector in terms of subsection (1) may conduct a
search only on the authority of a warrant issued by a magistrate or
judge.
(b) A magistrate or judge may issue a warrant only on written
application by an inspector setting out under oath or affirmation the
grounds why it is necessary for an inspector to gain access to the
relevant premises.
(c) The magistrate or judge may issue the warrant if it appears
from information on oath or affirmation that—
(i) there are reasonable grounds for suspecting that a
contravention of the Act has occurred;
(ii) a search of the premises is likely to yield information
pertaining to the contravention; and
(iii) the search is reasonably necessary for the purposes of the
Act.
(d) An inspector otherwise required to obtain a warrant under
paragraph (a) may enter and search any place without the warrant
referred
to in paragraph (c) if the inspector on reasonable grounds
believes that—
(i) a warrant would be issued in terms of paragraph (c) if
the inspector applied for it; and
(ii) the delay in obtaining the warrant is
likely to defeat the object of the search.
”
The applicant
and second and third respondents are ordered, jointly and severally,
to pay the first respondent’s costs,
including the costs of
two counsel.
For the Applicant:
Advocate S Budlender,
Advocate B Manentsa and Advocate N Ferreira instructed by A B
Scarrott Attorneys.
For the First Respondent:
Advocate A Katz SC,
Advocate J de Waal and Advocate M Bishop instructed by
Smiedt & Associates.
For the Second and
Third Respondents:
Advocate J Gauntlett SC and
Advocate N Pakade instructed by the State Attorney.
[1]
112 of 1976. Section 32A is set out below
at n 13.
[2]
38 of 2001. Section 45B is set out below at
n 14.
[3]
Auction Alliance (Pty) Ltd v Estate Agency
Affairs Board and Others
[2013] ZAWCHC
105
(High Court judgment).
[4]
Section 7 of the Act.
[5]
Schedule 2 of FICA provides a list of seven
supervisory bodies.
[6]
See, for example, section 36(1) of FICA.
[7]
Section 1 of the Act defines an “estate
agent”, for the purposes of section 32A, as—
“
any person
who for the acquisition of gain on his account or in partnership, in
any manner holds himself out as a person who,
or directly or
indirectly advertises that he, on the instructions of or on behalf
of any other person—
(i)
sells or purchases or publicly exhibits for sale immovable property
or any business undertaking or negotiates in connection
therewith or
canvasses or undertakes or offers to canvas a seller or purchaser
therefor; or
(ii)
lets or hires or publicly exhibits for hire immovable property or
any business undertaking or negotiates in connection therewith
or
canvasses or undertakes or offers to canvass a lessee or lessor
therefor; or
(iii)
collects or receives any moneys payable on account of a lease of
immovable property or any business undertaking; or
(iv)
renders any such other service as the Minister on the recommendation
of the board may specify from time to time by notice
in the
Gazette
”.
[8]
Schedule 1 of FICA sets out the categories of
persons and institutions that are “accountable institutions”.
Item 3 specifies estate agents as defined in the Act.
[9]
See, for example, section 29 of the Act and
Chapter 3 of FICA.
[10]
Section 34 of the Act and Chapter 4 of FICA.
[11]
See the text of these provisions below at n 13
and n 14.
[12]
The Minister of Human Settlements is responsible
for administering the Act. Before the hearing in this Court,
the Court
substituted her as second respondent in place of the
Minister of Trade and Industry.
[13]
Section 32A of the Act provides:
“
(1)
Any inspector furnished with inspection authority in writing by the
board may conduct an investigation to determine whether
the
provisions of the Act are being or have been complied with and may,
subject to subsection (5), for that purpose, without
giving prior
notice, at all reasonable times—
(a)
enter any place in respect of which he has reason to believe that—
(i)
any person there is performing an act as an estate agent;
(ii)
it is connected with an act performed by an estate agent;
(iii)
there are books, records or documents to which the provisions of
this Act are applicable;
(b)
order any estate agent or the manager, employee or agent of any
estate agent—
(i) to produce to him the fidelity fund certificate of that estate
agent;
(ii) to
produce to him any book, record or other document in the possession
or under the control of that estate agent, manager,
employee or
agent;
(iii) to
furnish him, at such place and in such manner as he may reasonably
specify, with such information in respect of that
fidelity fund
certificate, book, record or other document as he may desire;
(c)
examine or make extracts from or copies of such fidelity fund
certificate, book, record or other document;
(d)
seize and retain any such fidelity fund certificate, book, record or
other document to which any prosecution or charge of
conduct
deserving sanction under this Act may relate: Provided that the
person from whose possession or custody any fidelity
fund
certificate, book, record or other document was taken, shall at his
request be allowed to make, at his own expense and under
the
supervision of the inspector concerned, copies thereof or extracts
therefrom.
(2)
No person shall—
(a)
fail on demand to place at the disposal of any inspector anything in
his possession or under his control or on his premises
which may
relate to any inspection;
(b)
hinder or obstruct any inspector in the exercise of his powers under
this section;
(c)
falsely hold himself out to be an inspector.
(3) Any
inspector shall issue a receipt to the owner or person in control of
anything seized and retained under this section.
(4) Any
inspector who exercises any power in terms of this section shall, at
the request of any person affected by the exercise
of that power,
produce the inspection authority in writing furnished to him in
accordance with subsection (1).
(5)
Notwithstanding anything contained in this section, the provisions
thereof, excluding subsection (2)(c), shall not apply in
respect of—
(a)
any attorney, member of a professional company or articled clerk, as
defined in section 1 of the Attorneys Act, 1979 (Act
No 53 of 1979),
or any employee of any such attorney, member or company;
(b)
any premises from which such attorney or company conducts his or its
practice; and
(c)
any book, record or document on such premises or in the possession
or under the control of any person referred to in paragraph
(a).”
[14]
Section 45B of FICA provides:
“
(1)
For the purposes of determining compliance with this Act or any
order, determination or directive made in terms of this Act,
an
inspector may at any reasonable time and on reasonable notice, where
appropriate, enter and inspect any premises at which
the Centre or,
when acting in terms of
section
45
(1), the supervisory body
reasonably believes that the business of an accountable institution,
reporting institution or other
person to whom the provisions of this
Act apply, is conducted.
(2)
An inspector, in conducting an inspection, may—
(a) in
writing direct a person to appear for questioning before the
inspector at a time and place determined by the inspector;
(b)
order any person who has or had any document in his, her or its
possession or under his, her or its control relating
to the affairs
of the accountable institution, reporting institution or person—
(i)
to produce that document; or
(ii) to
furnish the inspector at the place and in the manner determined by
the inspector with information in respect of that document;
(c)
open any strongroom, safe or other container
,
or order any person to open any strongroom, safe or other container,
in which the inspector suspects any document relevant to
the
inspection is kept
;
(d)
use any computer system or equipment on the premises
or
require reasonable assistance from any person on the premises to use
that computer system to
—
(i)
access any data contained in or available to
that computer system; and
(ii)
reproduce any document from that data;
(e)
examine or make extracts from or copy any document in the possession
of an accountable institution, reporting institution
or person or,
against the issue of a receipt, remove that document temporarily for
that purpose; and
(f)
against the issue of a receipt, seize any document obtained in terms
of paragraphs (c) to (e), which in the opinion of the
inspector may
constitute evidence of non-compliance with a provision of this Act
or any order, determination or directive made
in terms of this Act.
(3) An
accountable institution, reporting institution or other person to
whom this Act applies, must without delay provide reasonable
assistance to an inspector acting in terms of subsection (2).
(4) The
Centre or a supervisory body may recover all expenses necessarily
incurred in conducting an inspection from an accountable
institution, reporting institution or person inspected.
(5)
(a)
Subject to section 36 and paragraph (b), an inspector may not
disclose to any person not in the service of the Centre or
supervisory body any information obtained in the performance of
functions under this Act.
(b)
An inspector may disclose information—
(i)
for the purpose of enforcing compliance with this Act or any order,
determination or directive made in terms of this Act;
(ii)
for the purpose of legal proceedings;
(iii)
when required to do so by a court; or
(iv) if
the Director or supervisory body is satisfied that it is in the
public interest.
(6)
(a) An
inspector appointed by the Director may, in respect of any
accountable institution regulated or supervised by a supervisory
body in terms of this Act or any other law, conduct an inspection
only if a supervisory body failed to conduct an inspection
despite
any recommendation of the Centre made in terms of section 44(b) or
failed to conduct an inspection within the period
recommended by the
Centre.
(b) An
inspector of a supervisory body may conduct an inspection, other
than a routine inspection in terms of this section, only
after
consultation with the Centre on that inspection.
(c) An
inspector appointed by the Director may on the request of a
supervisory body accompany and assist an inspector appointed
by the
head of a supervisory body in conducting an inspection in terms of
this section.
(7) No warrant is required
for the purposes of an inspection in terms of this section.”
[15]
Auction Alliance (Pty) Ltd v Estate Agency
Affairs Board and Others
[2013] ZAWCHC
92.
[16]
High Court judgment above n 3.
[17]
Magajane v Chairperson, North West Gambling
Board and Others
[2006] ZACC 8
;
2006
(5) SA 250
(CC);
2006 (10) BCLR 1133
(CC).
[18]
Section 14 of the Bill of Rights provides:
“
Everyone has
the right to privacy, which includes the right not to have—
(a)
their person or home searched;
(b)
their property searched;
(c)
their possessions seized; or
(d)
the privacy of their communications infringed.”
[19]
Section 36(1) of the Constitution permits the
limitation of rights only—
“
to
the extent that the limitation is reasonable and justifiable in an
open and democratic society based on human dignity, equality
and
freedom, taking into account all relevant factors, including—
(a)
the nature of the right;
(b)
the importance of the purpose of the limitation;
(c)
the nature and extent of the limitation;
(d)
the relation between the limitation and its purpose; and
(e)
less restrictive means to achieve the purpose.”
[20]
See
Magajane
above n 17 at para 70, which explains the distinction between
searches intended to ensure, at the industry level, general
compliance
with the regulatory scheme and searches aimed at
enforcement of a regulatory provision against a particular actor.
[21]
Section 32A(1)(a)(ii) of the Act.
[22]
Id section 32A(1)(b)(ii).
[23]
Section 36(1)(e) of the Constitution.
[24]
The High Court, relying on the High Court
judgment in
Gaertner and Others v
Minister of Finance and Others
[2013]
ZAWCHC 54
;
2013 (4) SA 87
(WCC);
2013 (6) BCLR 672
(WCC), defined a
“non routine inspection” as “an inspection
which an inspector has decided to conduct
because a suspicion exists
that a failure to comply with this Act or any order, determination
or directive made in terms of this
Act or that a contravention of
the Act has occurred and because the inspector suspects that
information pertaining to such failure
or contravention may be
discovered if the premises in question are subjected to an
inspection”.
[25]
In terms of this reading in, section 45B(1) of
FICA was deemed to read (the underlined portions being the reading
in):
“
For the
purposes of determining compliance with this Act or any order,
determination or directive made in terms of this Act, an
inspector
may, at any reasonable time and on reasonable notice, where
appropriate,
conduct a routine
inspection in terms of this section and the inspector may further,
subject, however, to the provisions of paragraphs
7(b) to (e) of
this section, conduct a non-routine inspection in terms of this
section, and the inspector may for purposes of
both such inspections
enter and inspect any premises at which the Centre or, when acting
in terms of section 45(1), the supervisory body reasonably
believes
that the business of an accountable institution, reporting
institution or other person to whom the provisions of this
Act
apply, is conducted.”
The existing section
45B(7) was substituted with the following:
“
(a)
No warrant is required for the purposes of a routine inspection in
terms of this section.
(b) If
an inspector wishes to enter premises to conduct a non-routine
inspection in terms of this section, the inspector shall
not do so
except on the authority of a warrant issued in terms of paragraph
(c) of this subsection.
(c) An
inspector may apply to a magistrate or judge in chambers for the
issue of a warrant contemplated in paragraph (b) of this
subsection,
and the magistrate or judge may issue such warrant if it appears
from information on oath:
(i)
That there are reasonable grounds for suspecting that a failure to
comply with this Act or any order, determination or directive
made
in terms of this Act or that a contravention of the Act has
occurred; and
(ii)
That an inspection and search of the premises is likely to yield
information pertaining to such failure to comply or contravention;
and
(iii)
That the inspection and search is reasonably necessary for the
purposes of the Act.
(d) An
inspector may enter and inspect premises without the warrant
contemplated in paragraph (b) of this subsection if:
(i)
The person in charge of the premises consents to the entry and
inspection after being informed that he is not obliged to admit
the
inspector in the absence of a warrant; or
(ii)
The inspector on reasonable grounds believes:
(aa)
That a warrant would be issued in terms of paragraph (c) of this
subsection if the inspector applied for a warrant; and
(bb)
that the delay in obtaining a warrant is likely to defeat the object
of the inspection and search.
(e) For
purposes of this sub-section the following expressions have the
meaning indicated:
(i)
‘non-routine inspection’ means an inspection which an
inspector has decided to conduct because a suspicion exists
that a
failure to comply with this Act or any order, determination or
directive made in terms of this Act or that a contravention
of the
Act has occurred and because the inspector suspects that information
pertaining to such failure or contravention may be
discovered if the
premises in question are subjected to an inspection.
(ii)
‘routine inspection’ means any inspection or examination
other than a non routine inspection.”
[26]
Above n 24.
[27]
See
Gaertner and
Others v Minister of Finance and Others
[2013] ZACC 38
;
2014 (1) SA 442
(CC);
2014 (1) BCLR 38
(CC)
(
Gaertner
).
[28]
The Board relied on the authorities cited in
Gaertner
above n 27 at paras 36 and 44.
[29]
See
New York v
Burger
[1987] USSC 125
;
482 US 691
(1987) and
R
v Jarvis
2002 SCC 73; [2002] 3 SCR
757.
[30]
51 of 1977.
[31]
Sections 20-2 and 25 of the CPA.
[32]
This section empowers a court to “make any
order that is just and equitable”.
[33]
Above n 27.
[34]
91 of 1964. The provisions invalidated were
section 4(4)(a)(i)-(ii), 4(4)(b), 4(5) and 4(6).
[35]
Gaertner
above n
27 at para 38.
[36]
Section 4(4)(a) of the Customs and Excise Act.
[37]
Gaertner
above n
27 at para 66.
[38]
Id at para 55.
[39]
Id at para 67.
[40]
Id at paras 68-70 and74.
[41]
Section 32A(1).
[42]
Section 32A(1)(a).
[43]
The definition is quoted in n 7 above.
[44]
Section 32A(5) expressly exempts attorneys,
articled clerks and members of professional companies as defined in
the Attorneys
Act 53 of 1979.
[45]
High Court judgment above n 3 at para 21.
[46]
Id at para 21.1.
[47]
Section 32A(1)(b)(ii) of the Act.
[48]
Id section 32A(4).
[49]
Section 45B(2)(d)(i) of FICA.
[50]
FICA was enacted in 2001, and section 45B was
inserted by section 16(b) of the Financial Intelligence Centre
Amendment Act 11
of 2008.
[51]
Section 45B(1) of FICA.
[52]
Id.
[53]
High Court judgment above n 3 at para 50.
[54]
Section 45B(1) of FICA.
[55]
Section 45(1) of FICA provides:
“
Every
supervisory body is responsible for supervising and enforcing
compliance with this Act or any order, determination or directive
made in terms of this Act by all accountable institutions regulated
or supervised by it.”
As already indicated, the
Board is a “supervisory body”.
[56]
Section 1 of FICA defines a “reporting
institution” as “a person referred to in Schedule 3”.
Schedule
3 has two items: persons who carry on the business of
dealing in motor vehicles, and persons who carry on the business of
dealing
in Kruger rands.
[57]
Section 45B(6)(b) provides that an inspector of a
supervisory body may conduct an inspection, other than a routine
inspection
in terms of section 45B, only after consultation with the
Centre on that inspection.
[58]
High Court judgment above n 3 at paras 48-9.
[59]
Id at para 52.
[60]
In addition, this Court’s judgment in
Gaertner
above n 27 was delivered on 14 November 2013, days before argument
in this case.
[61]
Gaertner
above n
27 at paras 51-6 emphasises the importance to a developmental state
like South Africa of rigorous and efficient collection
of customs
duties.
[62]
Parliament enacted Chapter Four in 2008, but the
Minister brought it into operation only in December 2010.
[63]
Ferreira v Levin NO and Others; Vryenhoek and
Others v Powell NO and Others
[1995]
ZACC 13
;
1996 (1) SA 984
(CC);
1996 (1) BCLR 1
(CC) at paras 25-30.
[64]
Section 172(1) of the Constitution provides:
“
When deciding
a constitutional matter within its power, a court—
(a) must
declare that any law or conduct that is inconsistent with the
Constitution is invalid to the extent of its inconsistency;
and
(b)
may make any order that is just and equitable, including—
(i)
an order limiting the retrospective effect of the declaration of
invalidity; and
(ii)
an order suspending the declaration of invalidity for any period and
on any conditions, to allow the competent authority
to correct the
defect.”
For a fuller explanation
of objective invalidity and its effect on retrospectivity see
Ex
parte Women’s Legal Centre: In re Moise v Greater Germiston
Transitional Local Council
[2001] ZACC 2; 2001 (4) SA 1288 (CC);
2001 (8) BCLR 765 (CC).
[65]
In
S v Zuma and
Others
[1995] ZACC 1
;
1995 (2) SA 642
(CC);
1995 (4) BCLR 401
(CC) at para 43 the Court said its power to
allow an invalidation to take retrospective effect should be used
“circumspectly”,
so as to avoid unnecessary dislocation
and uncertainty in the administration of justice. To the same effect
is
S v Bhulwana; S v Gwadiso
[1995] ZACC 11
;
1996 (1) SA 388
(CC);
1995 (12) BCLR 1579
(CC) at
para 32, where it was held that, as a general principle, an order of
invalidity should have no effect on criminal cases
that have been
finalised before the date of the order. In
National
Coalition for Gay and Lesbian Equality and Another v Minister of
Justice and Others
[1998] ZACC 15
;
1999 (1) SA 6
(CC);
1998 (12) BCLR 1517
(CC) at paras 96-7 this
Court struck down the common-law offence of sodomy, retroactive to
the adoption of the interim Constitution
in 1994, but nevertheless
declined to grant an order of unqualified retrospectivity: those
unjustly convicted after 1994 still
had to lodge appeals, if
necessary by applying for condonation. See too
Engelbrecht
v Road Accident Fund and Another
[2007] ZACC 1
;
2007 (6) SA 96
(CC);
2007 (5) BCLR 457
(CC) at para
45.
[66]
Mistry v Interim Medical and Dental Council of
South Africa and Others
[1998] ZACC
10; 1998 (4) SA 1127 (CC); 1998 (7) BCLR 880 (CC).
[67]
Section 98(6) of the Constitution of the Republic
of South Africa Act 200 of 1993 provided:
“
Unless the
Constitutional Court in the interests of justice and good government
orders otherwise, and save to the extent that
it so orders, the
declaration of invalidity of a law or a provision thereof—
(a)
existing at the commencement of this Constitution, shall not
invalidate anything done or permitted in terms thereof before
the
coming into effect of such declaration of invalidity; or
(b)
passed after such commencement, shall invalidate everything done or
permitted in terms thereof.”
[68]
Mistry
above n
66 at para 41.
[69]
Id.
[70]
The High Court specified that its declaration of
invalidity “shall not be retrospective and shall not affect
the validity
of any criminal, civil and administrative proceedings
that have relied on documents obtained through inspections, searches
and
seizures” under section 32A.
[71]
J and Another v Director General, Department
of Home Affairs and Others
[2003] ZACC
3
;
2003 (5) SA 621
(CC);
2003 (5) BCLR 463
(CC) at para 21.
[72]
Above n 17 at para 99.
[73]
Above n 71.
[74]
Gaertner
above n
27 at para 75.
[75]
Id.
[76]
This was in the first judgment the High Court
delivered, on 21 June 2013. See above n 15.
[77]
Section 172(1)(b) of the Constitution provides
that, in deciding a constitutional matter within its power, a court
“may
make any order that is just and equitable”.
[78]
Here the Board relied upon
Shoba
v Officer Commanding, Temporary Police Camp, Wagendrift Dam, and
Another; Maphanga v Officer Commanding, South African Police
Murder
and Robbery Unit, Pietermaritzburg, and Others
[1995] ZASCA 49
;
1995 (4) SA 1
(A) and
Universal
City Studios Inc and Others v Network Video (Pty) Ltd
[1986] ZASCA 3; 1986 (2) SA 734 (A).
[79]
Compare
Illinois v
Krull
[1987] USSC 31
;
480 US 340
(1987) at 349-50,
where it was deemed unnecessary to exclude evidence obtained under a
statute authorising warrantless administrative
searches where the
search was performed in objectively reasonable reliance on the
statute and the statute was only later declared
unconstitutional.
[80]
In terms of section 38 of the Constitution, a
court may grant “appropriate relief” to a person who
establishes an
infringement of a constitutional right. The
relief that is granted should be effective. See, for example,
Mvumvu and Others v Minister for
Transport and Another
[2011] ZACC 1
;
2011 (2) SA 473
(CC);
2011 (5) BCLR 488
(CC) at paras 46 and 48 and
Fose v Minister of Safety and Security
[1997] ZACC 6
;
1997 (3) SA 786
(CC);
1997 (7) BCLR 851
(CC) at para 69.
[81]
In
National Director
of Public Prosecutions v King
[2010]
ZASCA 8
;
2010 (2) SACR 146
(SCA);
2010 (7) BCLR 656
(SCA) at para 5,
the Supreme Court of Appeal said:
“
There is no
such thing as perfect justice. . . . Fairness is not a one-way
street conferring an unlimited right on an accused
to demand the
most favourable possible treatment, but also requires fairness to
the public as represented by the State. This
does not mean that the
accused’s right should be subordinated to the public’s
interest in the protection and suppression
of crime; however, the
purpose of the fair trial provision is not to make it impracticable
to conduct a prosecution. The fair
trial right does not mean a
predilection for technical niceties and ingenious legal stratagems,
or to encourage preliminary litigation
– a pervasive feature
of white collar crime cases in this country. To the contrary: courts
should within the confines of
fairness actively discourage
preliminary litigation. Courts should further be aware that persons
facing serious charges –
and especially minimum sentences –
have little inclination to co-operate in a process that may lead to
their conviction
and ‘any new procedure can offer
opportunities capable of exploitation to obstruct and delay’.
One can add the tendency
of such accused, instead of confronting the
charge, of attacking the prosecution.” (Footnotes omitted.)