Gaertner and Others v Minister of Finance and Others (12632/12) [2013] ZAWCHC 54; 2013 (6) BCLR 672 (WCC); 2013 (4) SA 87 (WCC); [2013] 3 All SA 159 (WCC) (8 April 2013)

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[2013] ZAWCHC 54
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Gaertner and Others v Minister of Finance and Others (12632/12) [2013] ZAWCHC 54; 2013 (6) BCLR 672 (WCC); 2013 (4) SA 87 (WCC); [2013] 3 All SA 159 (WCC); 75 SATC 184 (8 April 2013)

THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT)
Cases No: 12632/12
In the matter between: Reportable
PATRICK
LORENZ MARTIN GAERTNER & 2 OTHERS
APPLICANTS
And
MINISTER
OF FINANCE
FIRST
RESPONDENT
COMMISSIONER:
SARS & 9 OTHERS
SECOND
TO TENTH RESPONDENTS
Coram
: ROGERS J
Heard: 26 FEBRUARY 2013
Delivered: 8 APRIL 2013
_____________________________________________________________
JUDGMENT
______________________________________________________________
ROGERS J:
Introduction
The first and second applicants (‘Gaertner’
and ‘Klemp’) are directors of the third applicant
(‘OCS’).
OCS conducts business as an importer and
distributor of bulk frozen foodstuffs. On 30 and 31 May 2012
officials of the South
African Revenue Service (‘SARS’),
including the fourth to tenth respondents, conducted a search at
OCS’ premises
in Muizenberg. On 1 June 2012 SARS officials
conducted a search at Gaertner’s home at Silverhurst Estate in
Constantia.
These actions were taken in terms of s 4(4) of the
Customs and Excise Act 91 of 1964 (‘the Act’). In terms
of
that section no warrant was required for the searches. On 2 July
2012 the applicants launched the current proceedings in which
they
sought orders in summary [a] declaring the relevant part of s 4
to be unconstitutional to the extent that it permitted
targeted
non-routine searches to be conducted without judicial warrant; [b]
in any event declaring the searches to have been
unlawful by virtue
of the way they were conducted; [c] requiring SARS to return
everything taken or copied.
The facts are in brief as follows
(in accordance with the
Plascon-Evans
rule I shall, in
case of factual disputes, base my summary on SARS’ version).
On 21 June 2012 Sloan Valley Dairies Ltd of
Canada (‘SVD’)
instituted proceedings on motion against OCS in which SVD claimed
the return of five consignments
of skim milk powder sold to OCS,
alternatively payment of the alleged price. Annexed to SVD’s
founding papers were the
five invoices on which SVD based its claim.
SVD served a copy of the application on SARS. SARS compared the
annexed invoices
against the invoices OCS had submitted to SARS in
support of the declared value for customs duty purposes. OCS’
version
of the invoices reflected substantially lower prices. SARS
thus suspected that OCS had fraudulently manipulated the invoices so

as to pay less duty, thereby committing various offences under the
Act. SARS resolved to conduct a search of OCS’ premises
in
order to investigate its suspicions.
On 30 May 2012 a group of about 10 to 15 SARS officials
set off for OCS’ Muizenberg premises while a similarly sized
group
headed for premises at Wynberg. The latter group found that
OCS no longer conducted business at the Wynberg location. They thus

decided to join their colleagues at the Muizenberg premises. On
arrival of the first two SARS vehicles at the Muizenberg premises

the officials told the receptionist and then Gaertner that they were
there to conduct a bond inspection (ie an inspection of
OCS’
licensed customs warehouses, which formed part of the premises). To
Gaertner’s mind this suggested a routine
inspection. He
allowed them in but asked them to wait until he was finished with a
business meeting from which he had excused
himself. More SARS
officials arrived a short while later, joined not long afterwards by
the group that had originally gone to
Wynberg, so that there were
now about 30 SARS officials in OCS’ reception area. SARS
sealed the entrance to the premises.
When Gaertner asked the purpose
of the search, he was now told that SARS was investigating
under-declaration of the customs values
of certain imported goods.
SARS did not provide further detail or mention SVD. (According to
SARS their initial untrue statement
that SARS wanted to conduct a
bond inspection and the vagueness of the later statement were
attributable to SARS’ concern
that with a fuller explanation
Gaertner might cause his staff to remove or conceal files.) Gaertner
asked whether SARS had a
warrant. The officials told him that they
did not need a warrant and that they were conducting the search in
terms of s 4
of the Act, a copy of which he was shown. Gaertner
asked for time to call his attorney. When the attorney did not
arrive after
20 to 25 minutes SARS began the search. (According to
SARS there was no indication by that stage that Gaertner’s
attorney
was on his way.) SARS told Gaertner that it would be an
offence to obstruct SARS and that if necessary SARS would call the
police
to prevent obstruction or resistance. SARS controlled access
to and egress from the premises. Nobody was allowed to leave unless

they agreed to be searched and to have their vehicles searched by
SARS. OCS staff were required to stand clear of their computers
The search lasted from about
12h30 to 17h30. SARS asked to see a number of files and looked among
various papers. These included
papers relating to the pending court
proceedings between SVD and OCS. There is a factual dispute as to
whether privileged material
was examined and copied. According to
SARS, anything SARS wished to take was shown to Gaertner and copied
for SARS by Gaertner’s
secretary. SARS only took away the
copies. (Gaertner says he could not keep track of everything that
was going on, did not know
exactly what SARS was copying and had no
way of checking whether SARS also removed originals.) OCS was not
given an inventory
of the copies made. From subsequent events, when
the copied material was returned to OCS, it is apparent that the
copied documents
were not confined to the SVD matter. SARS officials
also accessed various computers. There is a dispute as to whether
SARS insisted
on being given the passwords or whether Gaertner and
Klemp entered the passwords so that SARS could explore the data on
the computers.
SARS inserted a storage device into Gaertner’s
computer and copied electronic data (according to SARS, what was
downloaded
was an email relating to the importation of skim milk
powder, Gaertner having given permission for the email to be
copied). While
some SARS officials were busy with Gaertner, other
officials were requiring assistance and explanations from other
employees
including Klemp and OCS’ head of shipping and
logistics, Ms W Jumat. Before leaving, SARS sealed OCS’
computer server
room in preparation for a visit the next day by its
forensic experts. SARS also removed from OCS’ bonded warehouse
and
took away with them the milk powder which was the subject of the
SVD dispute (SARS states that the milk powder was detained in
terms
of s 88(1)(a) of the Act, pending possible seizure and
forfeiture).
SARS returned to OCS’
premises the next day with two computer experts to make mirror
images of the data on various computers
including the OCS file
server (containing all emails sent and received by all employees on
work computers and all OCS’
operational data), Gaertner’s
personal computer and i-Pad, Klemp’s laptop and i-Pad and the
laptop of another employee
Mr Lötter. This process lasted nine
hours. OCS’ attorney requested that the search parameters be
properly defined
but this request was rejected. He also demanded
that the data be copied and sealed in Gaertner’s presence.
SARS said this
was not possible but agreed that the data would be
sealed and retained by SARS’ forensic analysis department
pending extraction
of all data in the presence of OCS and its
attorney.
On I June 2012 SARS, having allegedly not found the SVD
import documentation at OCS’ premises, decided to search
Gaertner’s
Constantia home in case the documents were there.
They arrived shortly before 11h00. They refused to sign the arrival
book at
the security booth at the entrance to Silverhurst Estate and
told the security guards that resistance would result in police

intervention. When they got to Gaertner’s house the
child-minder employed by him would not allow them inside until
Gaertner
arrived – she summoned him and he got there after 30
to 45 minutes. There were 14 officials waiting to conduct the
search.
SARS again declined to give Gaertner reasons for the search
and would not tell him what they were looking for. Gaertner was told

that SARS would wait 15 minutes for his attorney to arrive. After
that they would make forcible entry, with SAPS’ assistance
if
necessary. When Gaertner’s attorney did not arrive within this
time, the search began, lasting about two hours. The
officials
searched the whole house including bedrooms, freezers, the ceiling
space, safe, cellar, garages and storerooms. They
rifled through
personal belongings. Gaertner was allowed to be present during the
search. When his attorney arrived he negotiated
a reduction in the
number of officials inside the house (according to SARS, from 14 to
8). Among the SARS officials were two
computer experts who demanded
access to the home computers, including those of Gaertner’s
children. Apparently no data
was copied nor were any relevant
documents found.
The applicants’ attorneys, Maurice Phillips
Wisenberg (‘MPW’), wrote to SARS on 13 June 2012 stating
the applicants’
intention to bring legal proceedings and
seeking certain undertakings. A temporary undertaking was given on
19 June 2012. The
current application was launched on 2 July 2012.
The Minister of Finance (‘the Minister’), as the
Minister responsible
for the administration of the Customs Act, was
cited as the first respondent. The Commissioner for SARS was cited
as the second
respondent, the Controller of Customs in Cape Town was
cited as the third respondent, while those officials involved in the
searches
and whose names the applicants could ascertain were cited
as the third to tenth respondents. Save where a distinction is
needed
I shall refer to the second to tenth respondents collectively
as SARS.
Pursuant to an agreed order made on 19 September 2012
the respondents’ answering papers were due by 3 October 2012.
Instead
SARS on that date, through the State Attorney, tendered to
return all seized material (including copies) and the computer
mirror
images and to pay the applicants’ costs to date on a
party and party scale. SARS did not concede that s 4 was
invalid
or that the searches had been unlawful. The applicants were
requested to identify any ‘live issues’ which remained.

On 8 October 2012, and following interactions at counsel level, SARS
improved its tender by offering costs on an attorney and
client
scale. MPW replied that while the applicants accepted the tender
they persisted in the relief claimed in the notice of
motion.
On 16 October 2012 SARS through the State Attorney
returned most of the copies taken at OCS’ premises. MPW
identified missing
material, following which further documents were
returned to the applicants on 24 October 2012. The electronic data
was eventually
returned on 22 November 2012. This comprised several
hard drives and a memory stick. Because the memory stick also
contained
data concerning unrelated taxpayers, SARS insisted that
the stick be destroyed, which was done. The applicants’ expert

was first afforded the opportunity to check whether the hard drives
and memory stick had been accessed contrary to SARS’

undertaking. This was found not to have occurred in the case of the
hard drives though the memory stick had been accessed several
times,
most recently on 21 November 2012. According to SARS, this was
because data relating to the other taxpayer had to be accessed.
In the meanwhile the Minister and SARS filed their
answering affidavits on 17 October 2012 to which the applicants
replied on
14 December 2012. The Minister and SARS both asserted
that the constitutionality of s 4 and the lawfulness of the
searches
were moot in the light of the tender which the applicants
had accepted. They denied in any event that s 4 was in any
respect
invalid, asserting that any encroachment on the right to
privacy was justifiable under s 36 of the Constitution. SARS
also
denied that the searches had been conducted in an unlawful
manner (the Minister did not deal with that issue). The Minister and

SARS averred in the alternative that an order of invalidity should
not be retrospective and that the declaration should be suspended
to
allow parliament to pass remedial legislation.
Section 4 of the Customs Act
Although the notice of motion referred in general terms
to s 4, it was common cause in argument that the applicants’

attack was directed at ss 4(4) to 4(6) of the Act which read as
follows:
‘
(4)(a)
An officer may, for the purposes of this Act-
Without previous notice, at any
time enter any premises whatsoever and make such examination
and enquiry as he deems necessary;
While he is on the premises or
at any other time require from any person the production then and
there, or at a time and place
fixed by the officer, of any book,
document or thing which by this Act is required to be kept or
exhibited or which relates to
or which he has reasonable cause to
suspect of relating to matters dealt with in this Act and which is
or has been on the premises
or in the possession or custody or under
the control of any such person or his employee;
At any time and at any place
require from any person who has or is believed to have the
possession or custody or control of any
book, document or thing
relating to any matter dealt with in this Act, the production
thereof then and there, or at a time and
place fixed by the officer;
and
Examine and make extracts from
and copies of any such book or document and may require from any
person an explanation of any entry
therein and may attach any such
book, document or thing as in his opinion may afford evidence of any
matter dealt with in this
Act. [Sub-para (iv) substituted by s. 2
(b)
of Act 84 of 1987.]
(b) An officer may take with him
on to any premises an assistant or member of the police force.
(5) Any person in connection
with whose business any premises are occupied or used, and any person
employed by him shall at any
time furnish such facilities as may be
required by the officer for entering the premises and for the
exercise of his powers under
this section.
(6)(a) If an officer, after
having declared his official capacity and his purpose and having
demanded admission into any premises,
is not immediately admitted, he
and any person assisting him may at any time, but at night only on
the presence of a member of
the police force, break open any door or
window or break through any wall on the premises for the purpose of
entry and search;
(b) An officer or any person
assisting him may at any time break up any ground or flooring on any
premises for the purpose of search
and if any room, place, safe,
chest, box or package is locked and the keys thereof are not produced
on demand, may open such room,
place, safe, chest, box or package in
any manner.’
The applicants, who were represented by Mr A Katz SC,
assisted by Ms M Ioannou, contended that these provisions infringed
the
privacy right guaranteed by s 14 of the Constitution.
Section 14 provides:
‘
Every
person 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;
(d) the privacy of their
communications infringed.
It is common ground that the right to
privacy extends to juristic persons.
1
At the hearing Mr Mtshaulana SC for the Minister argued
that s 4(4) was constitutionally valid because it could be read
as
permitting a warrantless search only where the person in control
of the premises consented to the search. If this argument failed,
Mr
Mtshaulana associated himself with the submissions of Mr Trengove SC
who appeared (together with Messrs E de Villiers-Jansen,
S Budlender
and J Berger) for SARS.
Although SARS in its answering papers defended the
impugned provisions in their entirety, SARS conceded in its heads of
argument
that ss 4(4) to (6) were
constitutionally invalid. The differences between the applicants and
SARS concerned [a] the
reasons for and thus the extent of the
invalidity; [b] whether the declaration of invalidity should be
suspended and rendered
non-retrospective and whether in the
meanwhile words should be read into the impugned provisions to make
them constitutionally
acceptable.
The criterion asserted by the applicants for
distinguishing between the justified and unjustifiable parts of the
impugned provisions
was the distinction between routine searches on
the one hand and non-routine (targeted) searches on the other. Mr
Katz SC submitted
that the impugned provisions were unjustifiable to
the extent that they permitted warrantless non-routine searches.
The criterion asserted by SARS for distinguishing
between the justified and the unjustifiable parts of the impugned
provisions
was, by contrast, the distinction between premises which
receive special attention in the Act (I shall identify them later –

for the moment I refer to them collectively as ‘designated
premises’) and other premises. The impugned provisions
were
said to be justified to the extent that they authorised warrantless
searches, whether routine or targeted, of designated
premises; but
unjustified to the extent that they permitted warrantless searches,
whether routine or targeted, of non-designated
premises. SARS thus
argued for a position which gave it more intrusive powers in
relation to designated premises than the applicants’

formulation but which gave it less intrusive powers in relation to
non-designated premises than the applicants’ formulation.
(I
may mention that although SARS’ primary position in the
answering papers was that s 4(4) was valid in its entirety,

SARS’ answering affidavit put particular emphasis on the
justification for warrantless searches of designated premises,
and
contended that at worst for SARS an order of invalidity should be
restricted to premises other than designated premises.)
Overview of the Act
Before addressing the parties’ contentions it is
necessary to say something more about the Act. It is a sprawling
piece
of legislation, with an enormous amount of detail contained in
the schedules and in the rules promulgated by the Commissioner under

s 120. Nevertheless, and at the risk of over-simplification, I
must do my best to provide a broad summary of the features
relevant
to this case.
The Act is fiscal in nature. The two
main taxes it imposes are customs duty on goods imported into South
Africa and excise duty
on goods manufactured in South Africa.
2
Customs duty is imposed on a very
wide array of imported goods. (The Act also permits export duty to
be imposed
3
but this is not commonly done.)
Excise duty, by contrast, is imposed on a more limited range of
locally manufactured goods –
principally alcoholic products,
tobacco products and petroleum products. The customs and excise
duties imposed by the Act are
set out in schedule 1 to the Act.
4
The schedule is so lengthy and is
altered so frequently that it is not reproduced in the standard
commercial publications of statutes
(the same is true of the other
schedules). The taxes imposed by the Act are self-evidently an
important source of revenue for
the fiscus. According to SARS’
answering affidavit the State collects customs duty of about R34,2
billion per year. The
affidavit does not disclose the amounts
collected as excise duty or in the form of other duties imposed by
the Act (fuel levy,
Road Accident Fund levy and environmental levy).
The imposition of customs duty on imported goods is not only a way
of raising
revenue for the government; it can be, and is sometimes,
used to protect the domestic economy – if a particular sector

of the local economy is under threat from cheap imports, that sector
can be protected by imposing or increasing the duty payable
on
competing imported goods.
Customs duty and excise duty are
payable if the goods are intended for home consumption (ie
consumption in South Africa).
5
If imported goods are passing
through South African in transit to a foreign country or if
excisable goods manufactured in South
Africa are exported to a
foreign country, duty will not be paid.
The Act contains various provisions aimed at
controlling the movement of imported and excisable goods until any
relevant duty
has been paid. The reasons for this are not hard to
discern. The duty payable on goods is determined with reference to
their
value, character and quantity. SARS may thus wish to examine
the goods to see that they accord with what it has been told.
Furthermore,
once goods are beyond SARS’ reach it may prove
difficult to recover the duty from the liable party. An important
feature
of SARS’ control is that goods may not be moved from a
particular controlled environment until ‘due entry’ has

been made of the goods, even though the goods might only be moving
from one controlled facility to another. There is a limited
number
of forms of entry permitted by the Act. The one which gives rise to
the payment of customs duty or excise duty (as the
case may be) is
entry of goods for home consumption. Entry in this context does not
refer to the physical passage of goods but
to the administrative
process in which prescribed forms and documentation are submitted to
SARS (together with payment of duty
where applicable) before the
goods may be moved from the controlled environment.
In the case of imported goods (where
customs duty is the applicable duty), the elements of the controlled
environment include
the following. When imported goods are landed in
South Africa by sea or air they are required to be placed in one or
other of
the following facilities:
6
a transit shed as referred to in
s 6(1)(g); a container terminal as referred to in s 6(1)(hA);
a container depot as
referred to in s 6(1)(hB); or a State
warehouse as referred to in s 17. Such placement occurs pending
due entry of
the goods. In terms of the rules promulgated by the
Commissioner in terms of s 120 of the Act, goods may not be
moved from
one transit shed to another without the Controller’s
written permission.
7
Air cargo which has been placed in a
transit shed may, prior to due entry, be moved to a degrouping depot
for the purposes stated
in s 6(1)(hA). All these facilities may
conveniently be styled pre-entry facilities. While goods which were
landed in South
Africa by sea or air are in a pre-entry facility
they are deemed still to be on the ship or aircraft as the case may
be, and
the master or pilot is liable for duty as if the goods had
not been removed from the ship or aircraft
8
(this liability will typically cease
when due entry is made of the goods, at which point liability passes
to others
9
).
In terms of s 1(5)(iii) of the Act goods in pre-entry
facilities fall with the expressions ‘goods under customs

control’, ‘goods subject to customs control’ and
‘goods under control of the Commissioner’.
Before goods may be moved out of a pre-entry facility,
due entry of the goods must be made. If the goods are entered for
home
consumption against payment of duty, the goods will be released
from the controlled environment and pass into domestic circulation.
Alternatively, the importer may
enter the goods for removal in bond
10
.
Goods may only be removed in bond upon the giving of such security
for duty as the Commissioner may require.
11
Imported goods may only be removed
in bond by a licensed remover in bond, and in order to obtain a
license the remover must furnish
security.
12
The remover becomes liable for duty
on the goods.
13
Unless the removed goods are duly
exported (in which case the liability for duty ceases),
14
removal in bond will be an
intermediate form of entry, since such goods will be transported to
another place of entry where they
will either be entered for home
consumption (with payment of duty) or (more commonly) for storage in
a licensed warehouse.
In this latter regard, the Act
provides for a further form of due entry (which could be made
directly from a pre-entry facility
or after removal in bond), namely
entry for storage in a licensed customs and excise warehouse
15
with deferment of duty.
16
The licensed warehouse (which I
shall for convenience refer to as a storage warehouse or simply a
warehouse) is itself a controlled
facility. Once goods are in a
storage warehouse they may only be removed upon (further) due entry
for one of three purposes:
home consumption (and payment of the
applicable customs duty);
17
rewarehousing in another warehouse
or removal in bond;
18
or export.
19
If goods in a storage warehouse are
entered for home consumption, they will after due entry and payment
of duty leave the controlled
environment. If the goods in the
warehouse are entered for export, they will be physically removed
from the controlled environment
but liability for customs duty will
remain until the prescribed proof is furnished to SARS that the
goods have left the common
customs area.
20
SARS’ right to be paid customs
duty if proof of export is not furnished is safeguarded by the
requirements that in general
removal for export may be done only by
a licensed remover in bond and that security be furnished.
21
If goods in the warehouse are
entered for rewarehousing or removal in bond, they will either be
moved to another controlled environment
or the Commissioner will
have the security of the licensed bond remover. Imported goods are
thus meant only ever to leave a controlled
environment upon due
entry for home consumption with payment of duty or (upon provision
of security) for removal in bond or export.
22
In the case of excisable goods, the
first element of control is that such goods may be manufactured only
in a customs and excise
manufacturing warehouse.
23
I shall refer to this type of
warehouse as a manufacturing warehouse. This means that a
manufacturer of excisable goods needs
to have its manufacturing
premises duly licensed as a manufacturing warehouse under s 27.
The goods will, thus, upon manufacture,
automatically be located in
a controlled facility. Removal of the excisable goods from the
manufacturing warehouse is controlled
by the same process of due
entry as applies to imported goods in a warehouse – the
manufactured goods may leave the warehouse
upon due entry for home
consumption and payment of applicable excise duty or for export (in
both of which cases they leave a
controlled environment, in the
latter case with safeguards for the potential payment of excise duty
if proof of export is not
furnished); or they may leave the
warehouse upon due entry for removal in bond or for storage with
deferment of payment of duty
or for rewarehousing (in which case,
until further due entry for home consumption or export, they will be
in another controlled
facility, namely a storage warehouse).
Excisable goods (and fuel levy goods) may only be stored in a
storage warehouse specifically
licensed to store such goods, such
warehouses being subject to additional regulation over and above
that applicable to ordinary
storage warehouses.
24
The fiscus’ interest in goods
located in storage or manufacturing warehouses is further protected
by a prohibition against
transactions involving the transfer of
ownership or hypothecation of such goods.
25
A further aspect of control is the
creation of ‘customs controlled areas’ pursuant to s 6A
of the Act. Persons
entering or leaving such areas, and the vehicles
of such persons, may be searched.
26
(These areas, and the search powers
pertaining to them, are not in issue in this case.)
In certain circumstances goods
entered for home consumption may be admitted under rebate of duty.
This is dealt with in some detail
in s 75 read with schedules 3
to 6 of the Act. To retain the benefit of the rebate the person so
entering the goods must
thereafter comply with whatever requirements
(whether as to intended use or otherwise) are set out in the
relevant rebate item
in the applicable schedule. Because SARS has an
obvious interest in the payment of the rebated duty if the
applicable requirements
are not met, s 75 and rule 75 contain
detailed provisions applicable to such goods. Security must be
furnished, and the
person’s premises or plant must be
registered.
27
The registered premises must include
a rebate store which is secure and adequate and which complies with
the Controller’s
requirements.
28
Of the pre-entry facilities
mentioned earlier, container depots and degrouping depots need to be
licensed.
29
Currently that is not the case for
transit sheds and container terminals though I was informed that the
Act will shortly be amended
to bring them within the licensing
regime.
30
The places at which transit sheds
may be established are listed in rule 200.06 (part of the schedule
to the rules).
31
These locations are mainly at
various harbours and airports in South Africa. In terms of s 6(5)
the owner or occupier of
a transit shed must, if so required by
SARS, provide accommodation for any officer whom SARS considers it
necessary to station
at the shed. Apart from s 6(5) and the
description of transit sheds in s 6(1)(g) as ‘secure
premises’,
I have not been able to locate in the Act or the
rules any provisions regulating the operation of transit sheds. The
approved
container terminals are specifically listed in rule 200.07
(there are four container terminals in Cape Town).
Storage warehouses (used for storage
of imported and excisable goods) and manufacturing warehouses (used
for manufacturing excisable
products) need to be licensed.
32
Rebate stores are not covered by the licensing regime
in Chapter VIII. However, s 75(10) read with rule 75 in essence
establishes
its own separate licensing regime for such premises.
Apart from the control and licensing
of the facilities mentioned above, s 59A provides that the
Commissioner may require
all persons or any class of persons
participating in any activities regulated by the Act to register in
terms of the Act and
the rules. Rule 59A, which contains the
Commissioner’s rules relating to this section,
inter
alia
requires in
rule 59A.03 that no person may import goods into, or export goods
from, South Africa unless that person is registered
as an importer
or exporter. A prescribed application must be made. (SARS states in
its answering papers that there are 275 000
registered
importers and 230 000 registered exporters, though presumably
there is some overlap since often a person is both
an importer and
an exporter.)
The papers do not contain much
information as to how pre-entry facilities and warehouses function
and are organised from a practical
perspective. They are not owned
and run by the State. I would expect that the pre-entry facilities
are operated by clearing agents
and other specialised operators who
make facilities available to importers at a fee. Manufacturing
warehouses are obviously operated
by the manufacturers of the
excisable goods. I was told that storage warehouses are mainly
operated by clearing agents (a class
of activity which is also
regulated and requires registration
33
)
though some importers (including OCS) operate their own storage
warehouses.
The Act and rules contain a number of (sometimes
overlapping) requirements for the keeping of books and records. The
most general
provision is s 101(1) which states that any person
carrying on any business in South Africa must keep such books,
accounts
and documents relating to his transactions as may be
prescribed. The person must produce those records on demand and
render such
returns or particulars as the Commissioner may require
(s 101(2)). Despite the general language of s 101, it
appears
from rule 101 that the Commissioner’s requirements
apply only to importers, exporters, manufacturers of excisable and
fuel
levy goods, and clearing agents. In terms of rule 101.01 the
prescribed records must be kept on the premises where the business

is conducted. The records must be retained for five years ‘for
inspection by an officer’. The prescribed records
are
‘reasonable and proper books, accounts and documents relating
to his transactions’ and including at least certain
specified
documents (in the case of an importer, for example, the records must
include bills of entry, bills of lading or other
transport
documents, supplier invoices, packing lists, bank stamped invoices,
payment advices and other documents required in
terms of s 39).
The next record-keeping provision is contained in rule
60.08, being one of the requirements imposed on persons who are
granted
licenses under Chapter VIII of the Act (sections 60 to 64G).
These requirements thus apply in general to persons licensed to

operate container depots, degrouping depots and warehouses but would
not apply (for example) to operators of transit sheds and
container
terminals nor to importers (except to the extent that the importer
was the licensee of a warehouse). The licensee must
keep ‘proper
books, accounts and documents and any data created by means of a
computer, of all transactions relating to
the activity in respect of
which the license is issued’. The records must be retained for
five years. The licensee must
produce the records and data on demand
at any reasonable time and render such returns and particulars in
connection with the
transactions relating to the licensed activity
as the Commissioner may require.
Certain further record-keeping requirements are imposed
in respect of specific licensed activities. In the case of
degrouping
depots, for example, see rule 64G.23, which lists
additional documents that must be kept as part of the records. There
are no
further record-keeping requirements for container depot
licensees or warehouse licensees in the rules relating to Chapter
VIII
of the Act. In the case of warehouses, however, such
requirements will be found elsewhere in the rules, as appears below.
Thus, in rule 19, which deals with applications for
licenses for storage warehouses, rule 19.05 states that the licensee
‘
shall
keep at the warehouse, in a safe place accessible to the Controller,
a record in a form approved by the Controller of all
receipts into
and deliveries or removals from the warehouse of goods not exempted
from entry in terms of section 20(3), with such
particulars as will
make it possible for all such receipts and deliveries or removals to
be readily identified with the goods warehoused,
and with clear
references to the relative bills of entry passed in connection
therewith.’
In the case of warehouses in which
excisable goods and fuel levy goods are to be manufactured or
stored, further record-keeping
duties are imposed in rules 19A.04
and 19A.05, which records must be produced on demand. In addition,
rule 19A.02(a) requires
the licensee of such a warehouse to sign a
prescribed agreement. In the prescribed agreement
34
the licensee records its
understanding that its right to conduct the warehouse business is
subject to compliance with the Act;
acknowledges the statutory power
and right of SARS to inspect, for purposes of the Act, the books,
accounts, documents and other
records of the business in respect of
which the licence is issued; and agrees to and authorises the
inspection of such books,
documents and business banking accounts as
SARS may require. The licensee undertakes to keep on the business
premises (that is,
at the warehouse) books, accounts, documents and
other records relating to the transactions of the business and
comprising (where
applicable) at least the documents listed in
clause 2(e); to keep such material available for inspection by the
Commissioner
for a period of five years; to answer and to ensure
that any employee answers, fully and truthfully, any questions of
SARS relating
to its business required to be answered for purposes
of the Act; and to render such returns and submit such particulars
in connection
with its transactions and the goods to which the
transactions relate as SARS may require.
An identical agreement is prescribed
under rule 54F.04. Although this rule and the prescribed agreement
35
are formulated as being of general
application to storage and manufacturing warehouses, their location
within rule 54F means,
I assume, that the prescribed agreement is
only intended to be a requirement for warehouses in which the goods
dealt with in
rule 54F – environmental levy goods – are
manufactured or stored. It thus appears, overall, that in terms of
rules
19A and 54F the prescribed agreement is required for all
manufacturing warehouses and for those storage warehouses where
excisable
goods or fuel levy goods or environmental levy goods are
to be stored but that no such agreement has to be signed by
licensees
of ordinary storage warehouses. This is consistent with
the fact that there is no allegation by SARS that OCS signed any
agreement
in respect of its licensed storage warehouses. (In terms
of rule 64G.03 the Commissioner also requires the licensee of a
degrouping
depot to sign a similar standard agreement.
36
)
In the case of manufacturing warehouses in general,
rule 27.10 prescribes the stock record to be kept by the licensee.
Such stock
record must, when not in use, be kept in a fire-proof
safe. Rule 27.11 requires the licensee to furnish the Controller
such returns
showing such particulars and at such times and under
such conditions as he may decide.
Detailed record-keeping requirements are imposed by
rules 75.14 to 75.20 in respect of a person whose premises are
registered
for the use or storage of rebated goods. These records
must be available to the Controller on demand (rule 75.20).
The Act and the rules contain other
provisions regulating the operations at pre-entry facilities,
warehouses and rebate stores.
In the case of storage warehouses the
Controller may, for example,
cause
the warehouse to be locked with a State lock for such period as he
deems fit, and no person may (while the warehouse is
so locked)
remove or break the lock or enter the warehouse or remove any goods
without the Controller’s permission (s 19(3)).
The
Controller may at any time take stock of the goods in the warehouse
(s 19(4)). In terms of s 20(2) the licensee
must take and
record an accurate record in respect of goods transferred into the
warehouse for storage. This is further regulated
in rule 20. For
example, rule 20.06 requires all goods in the warehouse to be
arranged and marked in such a manner that they
will be easily
identifiable and accessible for inspection and that each consignment
and the particulars thereof can readily be
ascertained and checked.
Rule 20.08 states that goods deposited in the warehouse ‘may
at any time be examined by the Controller
and the licensee of such
warehouse or his representative shall be present during such
examination and assist the Controller in
the execution of such
examination’. In terms of rule 20.08 goods deposited in the
warehouse in closed trade containers
may not be examined, nor the
packages opened or altered in any way, except with the permission of
the Controller and in the presence
of an officer if he so requires.
If the warehouse is used for the storage of excisable goods or fuel
levy goods or environmental
levy goods, the additional controls in
rules 19A and 54F will apply.
In the case of manufacturing warehouses, s 27(6)
states that all operations in the warehouse are ‘subject to
the right
of supervision by officers’. In terms of s 27(7)
the Commissioner can require the licensee to provide suitable office

accommodation and board and lodging for a SARS officer stationed at
or visiting the warehouse for the purposes of the Act. Section
27(9)
provides that no business other than the manufacturing for which the
warehouse is licensed may be conducted there without
the
Controller’s written permission. The Commissioner may
prescribe hours of operation of the warehouse (s 27(11)).

Further detailed regulation is contained in rule 27. For example, in
terms of rule 27.09 no excisable goods manufactured in the
warehouse
may, without the permission of the Controller, be removed from a
receiver, vessel or other container in which they
were collected
until a count thereof has been taken by the Controller. In terms of
rule 27.12 the Controller may give instructions
in writing to the
licensee specifying in what part of the warehouse any particular
manufacturing process is to be carried on
and where any material or
manufactured goods are to be kept. The requirements contained in
rules 19A also apply to a manufacturing
warehouse.
In the case of rebate stores, the Controller may at any
time take stock and require duty to be paid on any deficiency
(s 75(5)(a)(ii)).
The Controller may require there to be
different stores, vessels etc for different rebate items (rule
75.07). The rebate store
must have separate fastenings as will
permit a SARS officer to lock the store (rule 75.08). The goods must
be arranged and marked
to facilitate easy identification and
accessibility for inspection (rule 75.09). Except with written
permission, only goods entered
under rebate may be stored in the
rebate store. Rebated goods may only be transferred to another
rebate registrant entitled to
the same rebate (rule 75.11).
SARS has established an electronic
communication system as contemplated in s 101A for the purposes
of the electronic processing
of documents and procedures under the
Act. A person may only communicate with SARS by computer if he is a
registered user (s 101A(2)(b)).
The Commissioner may by rule
require that persons, or persons of a particular class, register as
users and communicate with SARS
via the electronic communication
system. In order to register as a user a person must apply for the
status in terms of s 101A(3).
If the conditions in s 101A(8)
are complied with, retention of electronic data constitutes
satisfaction of the Act’s
requirements in regard to the
retention of documentation. In terms of rule 101A.06, s 101 and
the rules thereunder regarding
books, accounts and documents apply
mutatis mutandis
to data generated on the electronic
communication system. In order to register as a user a person must,
in terms of s 101A(3)(a),
sign a prescribed user agreement. In
this agreement
37
the user confirms
inter
alia
its awareness
of SARS’ right to audit and inspect the records of the
business in respect of which the user is registered;
agrees to and
authorises such audit and inspection at any reasonable time without
the authorisation of a warrant; and undertakes
to keep on the
registered business premises the records required by s 101A(2)(a)
and s 101A(10)(a) and the electronic
data generated pursuant to
s 101A, such records to be kept available for audit and
inspection for five years.
Sections 79 to 86 create a number of specific offences.
Any other contravention of the Act, not separately criminalised, is
an
offence in terms of s 78(1). Section 91 provides for
administrative penalties in lieu of criminal proceedings. If a
person
has contravened the Act, agrees to abide by the
Commissioner’s decision and deposits with the Commissioner the
sum required
by the latter (not exceeding the maximum criminal fine
that could be imposed) or secures the payment of such sum to the
Commissioner’s
satisfaction, the Commissioner may, after such
enquiry as he deems necessary, determine the matter summarily and
may, without
legal proceedings, order forfeiture by way of a penalty
of the whole or part of the sum deposited. The imposition of such a
penalty
does not constitute a criminal conviction but no prosecution
for the offence is thereafter competent.
Section 87(1) provides that goods dealt with
contrary to the provisions of the Act or in respect of which an
offence under
the Act has been committed shall be liable to
forfeiture ‘wheresoever and in possession of whomsoever
found’. In
terms of s 87(2) various other items
associated with goods liable to forfeiture may themselves be
forfeited. Section 88(1)
empowers a SARS officer or a magistrate or
a member of the police to detain any goods or other items liable to
forfeiture in
order to establish whether they are liable to
forfeiture. Upon so establishing, the official in question may seize
the goods
or items. Section 88(2) provides that if goods liable to
forfeiture cannot readily be found, the Commissioner may demand from
the person who dealt irregularly with the goods payment of an amount
equal to the value for duty purposes of such goods.
In
First National Bank of SA Ltd t/a Wesbank v
Commissioner, South African Revenue Service & Another
[2002] ZACC 5
;
2002
(4) SA 768
(CC) Ackermann J, writing for a unanimous court, observed
(para 14) that the Act was ‘premised on a system of
self-accounting
and self-assessment’. There was, he said, no
viable method by which the Commissioner could keep track of all
imported dutiable
goods and automatically collect the duty: ‘The
Commissioner therefore verifies compliance through routine
examinations
and inspections and through action precipitated by
suspected evasion’.
The controlled environment for which the Act makes
provision prior to payment of duty is not unique to South African
and is of
some antiquity internationally. In
R v Lyon
[1906]
HCA 17
the following words of O’Connor J concerning the
Australian Customs Act of 1901 appear to be true in a general way of
our
Act:
‘
[T]he
whole policy of the Customs Act, as indicated by a number of
sections, is that, from the time of importation until the time
of
paying duty, the customs shall not lose control of the articles
imported. This is indicated directly in sec. 30, which provides
that
imported goods shall be subject to the control of the customs from
the time of importation until delivery for home consumption
or
exportation. The object of that provision, if it were necessary to
give any reasons for its enactment, is obvious; if once goods
go into
home consumption, that is, into circulation, it becomes almost
impossible to trace them. The only security the customs
authorities
could have in such a case for the payment of duty would be in most
cases the personal security of the importer. Therefore
it is, if the
Act is to be effective, that all through the dealings with the goods,
from the time they are first imported until
duty is paid, they must
be kept under customs control.’
OCS’ status under the Act
OCS is an importer, presumably registered as such with
SARS pursuant to s 59A. Although many importers do not have
their
own licensed warehouses, OCS is the licensee of two storage
warehouses at its Muizenberg premises. The one is licensed to store

various food products while the other is licensed to store certain
kinds of equipment. They are referred to in the papers as
the cold
store and the dry store respectively.
OCS is a registered user of the electronic
communication system referred to in s 101A of the Act. On 17
June 2010 OCS executed
the user agreement prescribed under rule
101A.
Mootness of challenge to s 4
The contention in the answering
papers that the application is moot was not, insofar as the validity
of ss 4(4) to (6) is
concerned, seriously pressed in oral
argument. The contention is without merit. Section 4 has not
been repealed. The present
case is quite different from the
situation in one of the cases cited to me in argument,
JT
Publishing (Pty) Ltd & Another v Minister of Safety and Security
& Others
[1996] ZACC 23
;
1997
(3) SA 514
(CC). There the impugned provision had been repealed and
the repeal was shortly to be brought into operation. Didcott J
observed
that nothing that should be stopped was likely to occur
under the ‘rapidly waning authority’ of the repealed
legislation
(para 16). In the present matter the applicants’
locus standi
to challenge s 4’s
validity has not been questioned. OCS is an entity which engages in
the importation of products
which are subject to customs duty. It
has in the past been inspected pursuant to s 4 (though the
searches of 30-31 May 2012
are the only non-routine searches
mentioned in the papers). The respondents do not say, and could not
say, that the applicants
will not in the future be subjected to
search or inspection under the authority of s 4. The
respondents themselves assert,
in relation to questions of
retrospectivity and suspension, that it is of the utmost importance
that SARS should have the powers
contained in s 4, indicating
their intention to keep on using them. An enquiry into the validity
of s 4 is thus not
an academic matter without practical
consequence.
Mr Mtshaulana for the Minister also
relied on the so-called principle of avoidance, in terms whereof a
court should not decide
a constitutional question unless it is
necessary to reach that question to dispose of the case.
38
In my view the principle can have no
application here – the very point in issue is whether ss 4(4)
to (6) are constitutionally
valid.
The
Magajane
case
Before considering the parties’
arguments on the merits of the constitutional attack in ss 4(4)
to (6) it is necessary
to refer to the seminal authority relevant to
the enquiry, namely
Magajane
v Chairperson, North West Gambling Board
[2006] ZACC 8
;
2006
(5) SA 250
(CC).
That case concerned the
validity of a part of s 65 of the North West Gambling Act 2 of
2001 (‘the NWG Act’).
Sections 65(1) and (2) of the NWG
Act permitted warrantless searches of premises, whether licensed or
unlicensed,
39
if it was suspected that a casino or gambling
activities were being conducted at the premises or gambling
equipment was located
there. In addition, s 65(4) authorised
inspectors to make ‘administrative inspections’ to check
for compliance
with the Act by any ‘applicant, licensee,
registrant, subsidiary company or holding company’. Sections
65(6) to (12)
permitted an inspector to obtain an ‘administrative
warrant’ from a judicial officer in accordance with the
Criminal
Procedure Act. It is not clear whether these latter
provisions were intended to apply to all administrative searches (ie
to all
s 65(4) searches) or only where the inspector wished to
inspect and seize movable property. Although the provisions appear

to me to have had the latter meaning (thus allowing warrantless
routine searches under s 65(4)), the Constitutional Court
seems
to have thought that the Act required there to be a warrant under
ss 65(6) for all s 65(4) searches (see para
91), and its
judgment must be read in the light of this interpretation of the NWG
Act.
The attack in
Magajane
was on the warrantless
search provisions in ss 65(1) and (2). This was because the
proceedings were precipitated by an inspection
under ss 65(1)
and (2) of unlicensed premises where it was suspected illegal
gambling was taking place. The Constitutional
Court held that
ss 65(1) and (2), in providing for inspections without a
warrant, were an unconstitutional violation of
the right to privacy.
The essential elements of the legal framework which the
court in
Magajane
laid down for analysing the
constitutionality of ss 65(1) and (2) were the following:
[a] The right to privacy extends beyond the inner
sanctum of the home. However, the legitimate expectation of privacy
weakens as
one moves away from this inviolable core. In particular,
businesses have a lower expectation of privacy in regard to the
disclosure
of information; and the more regulated a business is, the
more attenuated is its right to privacy (paras 42-50).
40
[b] Nevertheless, and in line with United States and
Canadian jurisprudence, all inspections mandated by legislation in
this country
should be viewed as limiting the right to privacy
guaranteed by s 14 of the Constitution, even though the
inspected person
is a regulated business entity and even though the
inspection is a routine inspection concerned with compliance (paras
52-59).
[c] Accordingly, whenever a statutory inspection power
is challenged, it is necessary to undertake the limitation analysis
in s 36
of the Constitution to determine whether the limitation
of the privacy right is reasonable and justifiable in an open and
democratic
society, having regard to the considerations listed in
s 36 (paras 59-61).
[d] The first factor under s 36 is the nature of
the infringed right. The right to have one’s privacy protected
against
search and seizure is an important one which ‘belongs
in the catalog of indispensable freedoms’ (paras 62-64).
41
[e] The second factor
under s 36 is the importance of the purpose of the limitation.
Regulatory statutes aim at protecting
public health, safety and
general welfare. The public interests served by the inspection
provision must be carefully weighed by
the court (para 65).
[e] The third factor
under s 36 is the nature and extent of the limitation. At least
three considerations are relevant here
(paras 66-71): (i) A
commercial property occupier has a lower expectation of privacy; and
persons who conduct certain kinds
of business know that their
businesses are regulated and may be monitored. Searches of such
business premises will involve a lesser
intrusion on the right to
privacy. (ii) Inspections aimed at uncovering evidence for use
in criminal prosecutions will involve
a greater intrusion; as will
inspections aimed at enforcement (often with quasi-penal
consequences) rather than compliance, though
not all cases will be
amenable to such a clear distinction. (iii) The broader and less
circumscribed the inspection power,
the greater the limitation. An
overbroad power fails to inform the inspected person of the limits of
the inspection and leaves
the inspector with insufficient guidelines
as to how to conduct the search in a lawful manner and with due
respect for the inspected
person’s privacy.
[f] The fourth factor
under s 36 is the relationship between the limitation of the
privacy right and the purpose of the limitation.
Legislation
providing for regulatory inspections in the public interest have a
strong relationship to the limitation of the privacy
right, because
the inspection aims at protecting the public interest (para 72).
[g] The final factor
under s 36 is whether less restrictive means exist to achieve
the purpose of the limitation. A highly
relevant question is whether
the provision could have achieved its purpose even if it required a
warrant prior to the search. In
general, exceptions to the warrant
requirement should not become the rule. It will generally be
difficult to justify warrantless
regulatory searches aimed at
criminal prosecution. Where a warrantless regulatory inspection is
justified, the legislation must
provide a constitutionally adequate
substitute for a warrant. This means that the legislation should
properly limit the discretion
of inspectors as to time, place and
scope, and should in general be sufficiently comprehensive so that
inspected entities can be
taken to be aware that their property will
be subject to periodic inspections undertaken for a specific purpose
(paras 73-77).
The above legal analysis was then applied in
Magajane
as follows:
[a] Since all regulatory inspections infringe the right
to privacy, the limitation analysis under s 36 of the
Constitution
had to be applied to ss 65(1) and (2) of the NWG
Act (para 79). The five factors listed in s 36 thus had to be
considered
and weighed.
[b] As to the first factor, the nature of the right
(privacy) did not call for further elaboration (para 80).
[c] As to the second factor, the purpose of the
limitation in s 65 of the NWG Act was to protect the public
interest through
the strict regulation of gambling. This was an
important public purpose. An effective inspection scheme was crucial
(para 81).
[d] As to the third factor, one of the main objections
to the impugned provisions concerned the nature and extent of the
limitation.
Although gambling was heavily regulated (so that licensed
operators would have a low expectation of privacy), the NWG Act not
only
regulated lawful economic activity but sought to prevent illegal
gambling. The Act created offences relating to gambling. The fact

that unlicensed
premises could be inspected under ss 65(1)
and (2) indicated that one of the statutory purposes was to collect
evidence for
prosecution of such offences – this was
enforcement rather than compliance, and weighed strongly against the
permissibility
of warrantless inspection (paras 82-86).
[e] The inspection power was also overbroad: unlicensed
premises could be entered on mere suspicion (not only reasonable
suspicion);
the ‘premises’ that could be searched were
very widely defined; the items for which a search could be conducted
were
very widely framed; and there were no statutory guidelines for
inspectors. The impugned provisions did not narrowly target only

those premises whose owners possessed a reasonably low expectation of
privacy (paras 87-88).
[f] As to the fourth factor, the statutory purpose of
regulating gambling was admittedly achieved (para 89).
[g] However, and as to the fifth factor, there were less
restrictive (ie less intrusive) means to achieve the statutory
purpose.
The purpose could have been achieved while retaining the
requirement for a warrant. A warrant was, after all, required for
routine
searches of licensed premises under ss 65(4) to (12).
The need for a warrant to inspect unlicensed premises was an
a
fortiori
case. Other provinces’ gambling legislation, while
permitting warrantless inspections of licensed premises, required
warrants
for inspections of unlicensed premises (paras 90-93).
[h] Overall, ss 65(1) and (2) could not be
justified in relation to unlicensed premises. Nor, in the court’s
view, was
it possible by severance to leave these provisions standing
in relation to licensed premises (paras 94-99).
The Constitutional Court in
Magajane
left open
the following questions:
[a] whether a provision which permitted warrantless
searches of licensed premises would have been valid (para 78 and
footnote 109);
[b] whether the provisions of ss 65(4) to (12) were
constitutionally valid (footnote 109);
[c] whether a more circumscribed power of warrantless
searches of unlicensed premises might have been valid, for example a
power
which could only be exercised where unlicensed commercial
gambling activity was being conducted publicly (para 96).
The Minister’s argument – consent
Mr Mtshaulana for the Minister submitted that s 4(4)
did not state that SARS officers could enter property without the
owner’s
consent. If the owner declined to allow SARS access
the officers would need to obtain a warrant to enter and search the
premises.
Mr Mtshaulana referred to the duty of a court to read
legislation to conform as far as reasonably possible with the
Constitution.
42
The unstated premise of Mr Mtshaulana’s argument
was that without the restrictions for which he argued s 4(4)
violated
s 14 of the Constitution.
I do not think that s 4(4) can be read as Mr
Mtshaulana proposes. The section does not state that the owner’s
consent
is needed. It gives a blunt power of entry without prior
notice. In terms of s 4(4)(b) the SARS officer may be
accompanied
by a member of the police. And s 4(6) states that
if the officer is not immediately admitted after having declared his
official
capacity and purpose and having demanded admission, he can
force his way in by breaking open doors and windows and breaking
through
walls. It is difficult to imagine anything less compatible
with an implied requirement of consent.
The Act also contains no provisions for the obtaining
of a warrant if consent is refused. On Mr Mtshaulana’s
argument the
warrant would have to be obtained under the provisions
of the
Criminal Procedure Act 51 of 1977
or the
National Prosecuting
Authority Act 32 of 1998
. This would make it impossible for SARS to
conduct routine inspections because
ex hypothesi
there would
in such cases be no reasonable grounds for believing or suspecting
an offence to have been committed.
There is the further consideration that if
s 4(4)
means that an officer may only enter with the consent of the owner,
it is entirely superfluous. Statutory authority is not needed
to
enter and search premises with the free consent of the owner.
I thus consider that
ss 4(4)
to
4
(6) empowers SARS
officers to do all the acts listed in those sections without the
owner’s consent and without a warrant.
As
noted earlier, the Minister’s counsel was content to associate
himself with the submissions of Mr Trengove for SARS if
the
Minister’s contentions failed (as they have).
Identifying the provisions which infringe privacy
The competing contentions of the applicants and SARS
assumed that
ss 4(4)
to (6) as a whole infringed the
constitutional right to privacy guaranteed by s 14 of the
Constitution and that the extent
of the invalidity of those
infringing provisions depended on the extent to which they could be
justified under s 36(1) of
the Constitution. It is necessary to
examine this assumption more closely.
For present purposes the invasion of privacy lies in
the power to enter and search premises. Sub-para (i) of s 4(4)(a)
clearly
falls into that category. Para (b) of s 4(4) as well as
ss 4(5) and 4(6) are ancillary to the power to enter and search

as conferred by sub-para (i) of s 4(4)(a) and their
justification must thus be assessed together with the said
sub-paragraph.
I pass over sub-para (ii) for the
moment. The power in sub-para (iii) of s 4(4)(a) is not a power
of entry and search. It
is a power to require a person to produce
any book, document or thing which the SARS officer believes relates
to any matter dealt
with in the Act and which he believes to be in
the possession or under the control of that person. The officer may
require production
‘then and there’ (ie at the time of
making the demand) or at a time and place fixed by the officer. In
Bernstein
43
the Constitutional Court expressed
the view that the directors, officials, auditors, creditors and
debtors of a company had no
reasonable expectation of privacy in
regard to business records and business information pertaining to
the company and that a
statutory provision requiring them to produce
such business records and to provide business information in
response to questions
does constitute an invasion of privacy calling
for justification (see paras 56-92, particularly at paras 79-89,
per
Ackermann J, and
para 129
per
Kriegler J and
para 155
per
O’Regan J).
I consider that the same applies to the production of documents and
the answering of questions relating to the
goods and business
transactions regulated by the Act. In the light of sub-para (ii) of
s 4(4)(a), which I shall consider
presently, it seems to me
that the power in sub-para (iii) is not intended as a power to be
exercised during a search under sub-para
(i). However, and even if
the power in sub-para (iii) could be used by a SARS officer during
the course of a search, the power
is a free-standing one which could
sensibly be used independently of, and thus survive a successful
attack on, the search power
in sub-para (i).
Sub-para (ii) of s 4(4)(a) is also a power to
require the production of any book, document or thing. The power can
be exercised
while the SARS officer is ‘on the premises or at
any other time’. The sub-paragraph later refers to a book,
document
or thing ‘which is or has been on the premises or in
the possession or custody or under the control of’ the person

at whom the demand is directed or of his employee. Sub-para (ii)
thus has in mind, as at least one of the cases in which a demand

under that sub-paragraph may be made, the case where the SARS
officer is or has been on premises entered in terms of sub-para
(i).
Although there are slight differences in the formulation of the
prerequisites for valid demands under sub-paras (ii) and
(iii), I
cannot envisage a case in which a demand which could lawfully be
made under sub-para (ii) could not also lawfully be
made under
sub-para (iii). I thus consider that the sub-para (ii) power should
be viewed as an adjunct to the search power conferred
by sub-para
(i) while sub-para (iii) is an independent power. It follows that if
the search power in sub-para (i) is invalid,
the power in sub-para
(ii) would fall with it.
Sub-para (iv) of s 4(4)(a) confers a power to
examine, and to make extracts from and copies of, any books or
document; a
power to call for explanations of entries contained in
the book or document; and a power to attach any such book, document
or
thing if in the officer’s opinion it may afford evidence of
any matter dealt with in the Act. This power could be used whether

the book, document or thing came to the officer’s attention
pursuant to sub-para (i), (ii) or (iii). Even if sub-paras
(i) and
(ii) were struck down, sub-para (iv) could survive as an adjunct to
sub-para (iii). As an adjunct to sub-para (iii) it
does not appear
to involve an invasion of the privacy right.
I thus consider that the provisions which infringe the
privacy right and which call for justification are sub-paras (i) and
(ii)
of s 4(4)(a), para (b) of s 4(4) and ss 4(5) and
4(6). By contrast, sub-paras (iii) and (iv) of s 4(4)(a) will

be left unscathed by any order I make.
The justification analysis in general
The first, second and fourth factors in the
justification analysis are relatively uncontroversial. As to the
first justification
factor, the nature of the right infringed
(privacy) has already been held in
Magajane
and earlier cases
to be an important one, belonging among the ‘indispensable
freedoms’. As to the second justification
factor, the purpose
of the limitation is to ensure that the Act is complied with so that
the taxes imposed by the Act are duly
declared and paid. That is a
very important purpose in the public interest – non-payment of
taxes inhibits the government’s
ability to fund its manifold
programs of action. In
Metcash Trading Ltd v CSARS & Another
2001 (1) SA 1109
(CC) the court, in the context of an attack on
certain provisions of the Value-Added Tax Act 89 of 1991, stressed
(para 60) that
there was a significant public interest in obtaining
full and speedy settlement of tax debts. And in
Mpande Foodliner
CC c CSARS & Others
2000 (4) SA 1048
(T), which also
concerned VAT, the court said that ‘in a nascent democracy
such as ours with a developing economy the fiscus
plays a vital role
in the public interest of collecting taxes because the economic
well-being of the nation is a fundamental
imperative in pursuit of
developmental goals to improve the quality of life of all citizens
and liberate the potential of all’
(para 47). These comments
apply equally to the taxes imposed under the Customs Act. As to the
fourth justification factor, there
is, as in
Magajane
, a
strong relationship between the limitation of the privacy right and
the purpose of the limitation – the purpose of the
limitation
is to facilitate the collection of information necessary for
ensuring that the taxes imposed by the Act are duly declared
and
paid. The justification factors which will ultimately be decisive in
this case are, as in
Magajane,
the third and fifth ones: the
nature and extent of the limitation, and whether less restrictive
means are available.
Sub-para (i) of s 4(4)(a), which is only valid if
it can be justified under s 36 of the Constitution, empowers an
officer
to exercise the search power without a warrant issued by a
judicial officer. There is no limit on the type of premises that may

be entered – the phrase ‘any premises whatsoever’
emphasises the lack of limitation and would include a private
home.
There is no restriction regarding the time at which the premises may
be entered – the officer could enter the premises
in the
middle of the night. No prior notice need be given. The officer is
not required to hold a reasonable belief or a reasonable
suspicion
as to any state of affairs. The draconian nature of the power is
underscored by the fact that the officer may be accompanied
by a
member of the police force (s 4(4)(b)), may use breaking force
to enter the premises if he is not immediately admitted
(s 4(6)(a))
and may use breaking force to find things once he is inside the
premises (s 4(6)(b)).
The only limits on the power are [a] that it may be
used only for the purposes of the Act; [b] and that the officer must
subjectively
consider that any examination or enquiry he makes
during the search is necessary (presumably meaning necessary for the
purposes
of the Act). Given the length and scope of the Act, the
phrase ‘for the purposes of this Act’ is extremely
broad.
The main purpose of the Act is to impose certain taxes and to
provide for the collection of those taxes. In support of this main

purpose, the Act’s further purposes are to require compliance
with a host of operational, administrative and record-keeping

procedures. The Act also creates a number of offences (see ss 78 to
86). Those offences have no doubt been created in further
support of
the main purpose – ie to provide a strong inducement for
people to comply with the requirements of the Act so
that ultimately
the full taxes imposed by the Act are paid.
Although one of the purposes of the
Act is to create the offences just mentioned, I do not think the
Act’s purposes include
to provide for the investigation and
prosecution of those offences as criminal contraventions. These are
matters for the South
African Police Service and the National
Prosecution Authority pursuant to ss 205(3) and 179(2)
respectively of the Constitution
read with the national legislation
regulating the functions and duties of these agencies. Since
searches directed at criminal
investigation are viewed as a
significant intrusion into the constitutionally guaranteed right of
privacy and since an interpretation
which would permit searches to
be used for that purpose might expose the relevant provision to a
finding of invalidity, a court
should prefer an interpretation which
precludes the use of the search power for this purpose if such an
interpretation is reasonably
possible. Not only is such an
interpretation possible here; it is the most natural interpretation
of the phrase ‘for the
purposes of the Act’. The Act
does not contain other provisions indicating that the investigation
of crime is a SARS function
under the Act. It is true that in terms
of s 4A of the Act the Commissioner may determine a category of
SARS officers who
have the power to carry out an arrest for the
purpose of enforcing the Act and that such an officer, in exercising
his arrest
powers, is deemed to be a peace officer as defined in
s 1
of the
Criminal Procedure Act and
is subject to the provisions of
Chapter 5 of the
Criminal Procedure Act. In
performing his duties
under the Customs Act (which, as I have said, do not in my view
include the investigation and prosecution
of crime) a SARS officer
may well conclude that circumstances justifying an arrest under
Chapter 5 of the
Criminal Procedure Act are
present. The power of
arrest is not an investigative power. SARS officers are not, for
example, given the criminal investigative
powers contained in
Chapters 2 and 3 of the
Criminal Procedure Act.
44
On
the other hand, the imposition of administrative
penalties in terms of
s 91
for contraventions of the Act is a
matter for the Commissioner, and the financial penalties he may
impose are the same as those
which are competent as fines following
a criminal conviction (in many instances the maximum fine is a
stated sum or treble the
value of the relevant goods, whichever is
greater). The investigation of contraventions for purposes of s 91
would thus
appear to be among the Act’s purposes. Although a
person will only be at risk of an administrative penalty if he
agrees
to abide the Commissioner’s decision, I am inclined to
think that for purposes of s 91 the Commissioner may
investigate
contraventions of the Act prior to the suspect’s
agreement to abide the Commissioner’s decision. In other
words,
suspected contraventions may be investigated under s 4
to determine whether the s 91 process should be initiated
(which
would occur by inviting the suspect to abide the
Commissioner’s decision on the contravention). Searches may
thus be conducted
under s 4 to determine that the correct duty
is or has been paid, to ensure that there is compliance with the Act
and to
determine whether there have been contraventions for which
administrative penalties may be imposed.
Where there has been a suspected
contravention of the Act a SARS officer who wants to conduct a
search for the purposes of the
Act (eg to ensure that the correct
duty is paid, to locate goods liable to forfeiture, even to
facilitate the application of
the administrative penalty provisions
of s 91) may be aware that he is likely simultaneously to find
evidence of a criminal
contravention. This will not render the
search unlawful provided his actual purpose is the permissible one.
Section 4(3)(i) of
the Act seems to take for granted that SARS may
disclose information to the police in regard to offences in terms of
the Customs
Act and other Acts administered by the Commissioner and
in regard to offences in respect of which the Commissioner is a
complainant,
since judicial permission to disclose information to
the police is only required in respect of offences which do not fall
into
this category. One might thus say that the purpose of obtaining
evidence of a criminal contravention is a legitimate incidental

consequence of a s 4 search. However, the search power may not
be used for the very purpose of obtaining evidence for use
in a
possible criminal prosecution.
45
In the answering affidavit filed on
behalf of the Minister the deponent referred to the important role
played by customs officials
in combatting illicit trade in
counterfeit goods. He stated that in the past financial year SARS
had confiscated over 750 000
pieces of under-declared and
illegal clothing worth R483 million. However, this is not a matter
dealt with in the Customs Act.
46
The powers of SARS customs officials
in respect of counterfeit goods are to be found in the
Counterfeit
Goods Act 37 of 1997
which contains its own provisions for
inspection and search.
47
The purpose of preventing trade in
counterfeit goods is thus not a purpose of the Customs Act and is
not relevant to ss 4(4)
to (6) of the Act.
The respondents correctly did not
contend that the impugned provisions of s 4 could be justified
to their full extent. At
very least, for example, a warrantless
targeted search of someone’s home would not pass muster,
having regard to the
Magajane
judgment.
48
Both sides’ arguments accept,
however, that the invalidity goes beyond this. The applicants use
the nature of the search
as the criterion for identifying those
searches which can validly be conducted without a warrant,
contending that s 4 is
invalid to the extent that it permits
warrantless non-routine (targeted) searches. SARS by contrast uses
the nature of the searched
premises as the criterion. The premises
which I earlier referred to for convenience as ‘designated
premises’ may,
SARS contends, validly be the subject of any
type of search (routine or targeted) while for all other premises a
warrant would
be required. Section 4 would, thus, on SARS’
argument be invalid in respect of all premises other than designated
premises.
The designated premises identified by SARS are the
pre-entry facilities mentioned in my overview of the Act (transit
sheds, container
terminals, container depots and degrouping depots)
and the various types of licensed warehouses. SARS did not include
rebate
stores in the designated premises though it seems to me that
they are subject to a degree of control not dissimilar to that
applicable
to storage warehouses, and for similar reasons (ie to
ensure that duty is paid where applicable).
In its heads of argument SARS’
counsel cited authority for the view that the privacy of a
corporation is much attenuated
when compared with that of human
beings.
49
I do not think that this
consideration has a role in the present matter. The persons whose
premises may be searched in terms of
s 4(4) are not confined to
corporations. The persons who conduct business to which the Act
applies may include natural persons,
partnerships, trusts and
corporations. Section 4(4) does not distinguish between corporations
and other persons nor would it
sensible, given the purposes of the
Act, to draw such a distinction. Neither side sought a remedy which
distinguished between
corporations and other persons.
If the appropriate remedy in this
case were a bare declaration of invalidity it might not be necessary
to determine all the issues
raised by the parties’ competing
contentions – it might be sufficient to say that ss 4(4)
to (6) are invalid
at least because they permit targeted searches of
private homes. This was essentially what occurred in
Magajane
.
However, and as will become apparent, a simple remedy of that kind
is not appropriate in the present case. It will thus be necessary,

for purposes of fashioning a suitable remedy, to decide the precise
grounds for and extent of the invalidity. It is in any event

desirable to do so in order that the lawmaker may know what needs to
be addressed in remedial legislation. If the court were
only to
identify the most obvious objection to the impugned provisions, an
amended provision might face another challenge on
grounds left
undecided in the first case. This process could repeat itself
several times.
Justification: routine and targeted searches
I shall first consider the applicants’
distinction between routine and non-routine searches. The word
‘search’
is not actually used in s 4(4)(a).
Linguistically it might be more apt to confine the word ‘search’
to targeted
searches and to refer to routine searches as
‘inspections’. However, for convenience I shall refer
simply to routine
and non-routine searches.
Magajane
recognises that routine searches and targeted searches may stand on
a different footing. The distinction was there described
as one
between compliance and enforcement (para 70), between [a] ‘random,
overarching supervision’ where particular
participants are
chosen for inspection ‘without particular regard to any
pre-existing objective save the integrity of the
scheme of
regulation in general’; and [b] ‘focused
investigation of a particular actor…, often with a
view to
quasi-penal consequences’. When Sachs J in paras 27 and 28 of
Mistry
referred to the ‘administrative inspections that
are an inseparable part of an effective regime of regulation’
and
to the relative ease with which ‘periodic inspections of
the business premises’ could be justified in the case of a

regulated activity, he was again referring in my view to routine
inspections as distinct from targeted ones. Mr Trengove for
SARS
submitted that the distinction is not clear-cut, making this an
unsatisfactory basis for determining constitutional validity.
In my
view, however, the distinction can be formulated in a way which
should enable officials to determine whether a particular
search
they wish to undertake falls on one side of the line or the other.
If in borderline cases they err on the side of caution
and seek a
warrant, that will be no bad thing and is unlikely materially to
hamper the attainment of the Act’s objects.
It is best, I think, to define a routine search by
reference to its counter-part. I would regard a non-routine search
as being
a search where the premises are selected (targeted) for
search because of a suspicion or belief that material will be found
there
showing or helping to show that there has been a contravention
of the Act. The purpose of the search will be to find material
relating specifically to the suspected contravention. A routine
search is any search other than a targeted search. There are various

ways in which premises could be selected for routine search. SARS
might have a program of periodically inspecting the premises
of all
persons who conduct business of a kind to which the Act applies or
of persons who conduct a particular class of business
to which the
Act applies. If SARS cannot feasibly inspect all such premises, it
might randomly select certain premises for search.
The knowledge
that premises can be randomly searched is an inducement for all
persons who conduct the relevant business to comply
with the Act.
The important feature of a routine inspection is that the officer
does not select the premises on the basis of
suspected
non-compliance, does not enter the premises with a specific
suspicion of non-compliance, and is thus not looking for
anything in
particular. This does not mean, of course, that the officer will not
be aware, when he enters the premises on a routine
inspection, that
he may find evidence of a contravention. In every routine inspection
that possibility exists. However, in a
routine inspection the
officer would not be entering premises which have been selected for
search because of a specific suspicion
or belief that there has been
a contravention.
In criticising the use of the distinction between
routine and non-routine searches, SARS’ counsel referred to
the judgment
of the Supreme Court of Canada in
R v Jarvis
2002 SCC 73
;
[2002]
3 SCR 757
, where the court said that there was ‘no clear
formula’ that can answer the question whether the predominant
purpose
of a search is the determination of penal liability –
one has to look at all the factors that bear upon the nature of the

search (para 88). The fact that an official has reasonable grounds
to suspect the commission of an offence does not mean that
the
predominant purpose of a search is the determination of penal
liability (para 89). However, the distinction I have in mind,
and
which the applicants propose, is not the one developed by the
Canadian courts in regulated industries between searches for
the
predominant purpose of investigating criminal liability (which
require a warrant) and other searches but between searches
prompted
by suspected non-compliance with (ie contraventions of) the Act and
other searches. The fact that a search has been
prompted by a
suspicion of non-compliance is not a difficult criterion with which
to work. I should also make clear that a non-routine
search in the
sense I am using the term does not signify a search conducted for
the purpose of determining criminal (penal) liability.
I have
already said that I do not regard the investigation of crime as
being one of the purposes of the Act; a search for that
purpose
would simply be unlawful, having regard to the introductory language
of s 4(4)(a).
In a regulated field the justification for
distinguishing between routine and non-routine searches and
permitting warrantless
routine searches is, I consider, this. By
participating in a regulated field the participant can reasonably be
assumed to accept
that he must tolerate routine random intrusions
aimed at ensuring that all participants comply with their statutory
duties. By
contrast, the participant does not, by engaging in the
regulated activity, expect to become the target of violations of his
privacy
on the grounds of what might be baseless suspicion of
non-compliance. In common with all other subjects, he is entitled to
say
that if State officials wish to enter his premises because of a
suspected contravention of the law they must not do so without

satisfying a judicial officer, by some criterion such as reasonable
suspicion or a belief on reasonable grounds, that there is

justification to invade the target’s premises.
The persons whose premises could notionally be the
subject of routine searches under the Act would, I think, be those
who are
required by s 59A to be registered with SARS, those
required by Chapter VIII to hold a license in order to conduct an
operation
of a particular kind, and those registered under s 75
to obtain goods under rebate of duty. Such persons, by applying for

registration or for a license, acknowledge that they conduct
operations to which the Act applies and can reasonably be expected

to accept the intrusion of routine searches. This would cover (among
others) registered importers and exporters, licensed clearing
agents
and removers in bond, the licensees of container depots, degrouping
depots and warehouses and registered rebate users.
On pragmatic
grounds the operators of transit sheds and container terminals would
stand on the same footing, even though at this
stage those
facilities are not part of the licensing regime. A routine search of
the premises of such persons would be a search
relating to the
business for which the person is registered or licensed.
The search of an unregistered or
unlicensed person would by its very nature be non-routine. SARS
would only have occasion to search
such a person’s premises
because of a suspected contravention. For example, SARS might
suspect that a person is conducting
business as an importer or
exporter without having registered. This would be a contravention of
s 59A read with the rules
and would also be an offence in terms
of s 78(1). A search of the person’s premises to
establish that he should be
registered would be a targeted
non-routine search. Of course, a search might not be needed. SARS
might be able to deal with the
matter non-coercively if the person
has omitted to register due to ignorance or oversight (a phone call
or informal visit might
suffice); or SARS could call for information
under other provisions of the Act. But if a search were regarded as
necessary, there
is no reason why a warrant should not then be
obtained. As another example, SARS might, in the course of
investigating a person
(A) to whom the Act applies, wish to search
the premises of a person (B) who does not conduct business to which
the Act applies
but who has had business dealings with A (for
example, where B is a local buyer of goods imported by A). Such a
search would
again by its very nature be non-routine – there
would only be a need to obtain information from B’s premises
because
of a suspicion that A had not complied with the Act.
Depending on the circumstances, SARS might be able to get the
information
it needs from B without a search; but if a search were
thought necessary (for example, because B’s
bona
fides
were
doubted), the Act’s objects would not be thwarted by requiring
SARS to obtain a warrant.
I consider that warrantless routine
searches of registered persons and licensees are justifiable. The
applicants, without specifically
conceding that routine searches may
validly take place without a warrant, contend for a striking-down
only insofar as non-routine
searches are concerned. In relation to
designated premises, the various features of the Act and the rules I
have summarised earlier
show that the operators and licensees of
such premises have only a minimal expectation of privacy. The
legislative regime governing
the licensing and functioning of those
premises is aimed at ensuring a high degree of governmental
regulation and oversight.
However, and even in respect of
non-designated premises, a person registered under s 59A
operates in a highly regulated
field. The prescribed registration
form
50
obliges the person to provide
details as to where the business is conducted, contact details,
particulars of the individuals in
charge of the business and so
forth. In terms of rule 59A.08 the registered person is obliged to
advise SARS of any changes in
the particulars provided in the
registration application. In terms of s 101 he is required to
maintain prescribed records
at the premises where he conducts the
registered activity. The registered person knows he is obliged by
rule 101.01 to have those
records available for inspection by an
officer. Compliance by registered persons will be enhanced if they
know that they can
be subjected to random routine searches to
determine that they are keeping the prescribed records and keeping
SARS informed of
changes in the particulars of their businesses.
In short, in regard to the third
justification factor (the nature and extent of the limitation),
warrantless routine searches
of registered and licensed persons do
not constitute a significant inroad into the privacy of those
persons because their reasonable
expectation of privacy in relation
to such searches is low and because such searches do not resemble
criminal investigations.
As to the fifth justification factor (less
restrictive means), there is no compelling reason to impose a
warrant requirement
for routine searches since
ex
hypothesi
there
are no particular facts which SARS would need to establish to the
satisfaction of a judicial officer in order to justify
the warrant
(beyond perhaps the mere fact that the person is registered or
licensed and that the proposed inspection is a random
non-targeted
one) and since it would not be consistent with a routine inspection
to confine the inspection to specific documents
or matters. A
warrant appears to me to be a somewhat pointless requirement for
random routine inspections.
51
Curiously enough, SARS’ approach in the present
case would have the result that not only targeted but even routine
inspections
of non-designated premises could not take place without
a warrant, even though the person whose premises are to be searched
is
registered as (for example) an importer. This would mean, from a
practical perspective, that if the warrant could only be obtained

upon sworn evidence of a reasonably suspected contravention (which
is the usual sort or standard for a judicial warrant and is
the
standard for which SARS argued), there could never be a routine
inspection at a registered person’s non-designated
premises
because
ex hypothesi
there would be no suspicion or belief to
justify the issuing of a warrant. The only alternative would be to
require an officer
to obtain a warrant for a routine inspection by
adducing proof to a judicial officer that SARS wishes to conduct a
random inspection
for compliance purposes. While it would not be
impossible to enact such regime, the inconvenience, cost, delay and
diversion
of judicial resources would not in my opinion be justified
by the very attenuated expectation of privacy which registered and
licensed persons have in respect of routine searches.
Conversely, and leaving aside
designated premises for the moment, I do not consider that there is
justification for the warrantless
non-routine searching of the
premises of registered persons. As I have said, the act of
registering as a participant in an activity
regulated by the Act
does not carry with it the reasonable expectation that the person
will become the subject of targeted searches
based on what may be
groundless suspicion. The registered person, in common with other
participants in the economy at large,
is reasonably entitled to have
his privacy safeguarded against targeted intrusions which are not
authorised by judicial warrant.
A targeted intrusion of this kind
resembles a criminal investigation, since suspected non-compliance
with the Act will almost
invariably equate to a suspected offence
under the Act. Although I consider that a SARS officer may not
undertake a search for
the purpose of investigating crime, the
administrative penalties of s 91 do resemble criminal
penalties. Furthermore, SARS
is probably entitled to disclose the
information it obtains in a s 4 search to the police (see my
earlier remarks concerning
s 4(3)(i)). Searches of this
character were held in
Magajane
to constitute a
more extensive intrusion into the privacy of the searched person.
The respondents have not advanced facts to show
that the Act’s
objects would be thwarted if targeted searches of non-designated
premises could only be undertaken after
obtaining a judicial
warrant. Indeed, SARS’ approach would not allow warrantless
searches of any kind insofar as non-designated
premises are
concerned.
I am aware that my conclusions thus
far would require a warrant in a wider range of circumstances than
would the Canadian jurisprudence.
In respect of highly regulated
industries, the Canadian courts generally accept as constitutionally
acceptable a warrantless
search not only where the search is a
routine (ie random) one but even where it has been prompted by a
complaint or information
of non-compliance.
52
A judicial warrant is only required
where the search is investigative in the sense that an ‘adversarial
relationship’
has ‘crystalised’, which is equated
with the point where the predominant purpose of the search is to
determine penal
liability.
53
However, the relevant provisions of
the Canadian Charter are not identical to those of our Constitution.
For this and other reasons
one should not expect our law to develop
along identical lines. I also consider it unwise to lay down a
general rule applicable
to all cases in regulated industries. Under
our Constitution the justification analysis must be applied
separately to each statute
and in accordance with the guidance
afforded by cases such as
Mistry
and
Magajane.
Justification: designated premises
I turn now to the question whether warrantless
non-routine searches are constitutionally permissible in respect of
designated
premises. I shall start with ordinary storage warehouses
(ie storage warehouses other than those licensed for storing
excisable
goods, fuel levy goods or environmental levy goods). The
question whether warrantless targeted searches are permissible in
respect
of ordinary storage warehouses is of importance to the
applicants because OCS is the licensee of two such warehouses
located
at its Muizenberg premises. The searches on 30 and 31 May
2012 were conducted over the whole of the premises, including but
not
limited to the licensed warehouses.
The fact that the licensee of a storage warehouse must
keep prescribed records at the warehouse and have them available for
inspection
by SARS on demand, while relevant to the permissibility
of routine searches, does not in my view constitute such an
attenuation
of the right to privacy as to justify warrantless
targeted searches. After all, even an importer who does not have a
licensed
warehouse must in terms of s 101 read with rule 101
maintain prescribed records at its business premises and have them
available
for inspection. SARS does not argue that warrantless
targeted searches of such importers are permissible – indeed,
SARS’
approach in this case would not even permit the
warrantless
routine
searching of such premises.
The same applies in my view to the obligation imposed
on a registered user of the electronic communication system in terms
of
s 101A of the Act. The requirement to register as a user is
not an incident of being the licensee of a warehouse or of other

controlled premises. For example, in terms of rule 101A.01A, all
importers accredited in terms of s 64E and all unaccredited

importers whose declarations exceed a certain number or length must
register as users and sign the prescribed agreement. OCS
is thus a
registered user by virtue of being an active importer, not by virtue
of being a warehouse licensee. The lawmaker cannot,
by making it a
legal obligation for persons to register as users and to sign a
prescribed agreement, abridge the constitutional
rights of users. If
a warrantless targeted search is an unconstitutional violation of
privacy, it cannot be legitimised by requiring
a person to register
and sign an agreement in which he purports to agree to such
searches. The provisions of the prescribed agreement
must be read as
relating only to those searches which SARS may under the Act conduct
without a warrant.
If the dispensing of the usual requirement of a warrant
for targeted searches is to be justified in relation to ordinary
storage
warehouses, it would thus have to be because of the nature
of the business conducted in such warehouses and the other
intrusions
which the Act envisages in regard to such premises. The
storage warehouse is a controlled environment. Duty will not yet
have
been paid in respect of goods stored there. SARS thus has a
legitimate interest in knowing at all times what is contained on the

premises, because if goods taken into the warehouse are no longer
there and duty has not been paid on them, there will have been
a
contravention of the Act. Apart from the fact that the licensee (and
others) would become liable for duty, SARS would have
the right
under ss 87 and 88 to detain and seize the goods as forfeited
to the State. Prompt action may be necessary because
goods which
should be, but no longer are, at the warehouse would become more
difficult to track down with the passing of time.
The Act and the rules contain provisions reflecting
SARS’ legitimate interest in the goods and records contained
in the
warehouse. Section 19(4) states that SARS may take stock of
the goods in a warehouse at any time. The licensee must store the
goods in a particular way so as to facilitate easy inspection. SARS
is given the right to examine goods at the warehouse at any
time.
SARS may even cause the warehouse to be secured with a State lock,
in which case nobody would be entitled to enter and
remove goods
without SARS’ permission.
That these various elements of control should exist
prior to payment of duty or the exportation of the goods is
obviously in the
public interest. A person is not obliged to operate
a customs warehouse but if he seeks a license to do so he can have
very little
expectation of privacy (insofar as SARS is concerned) in
regard to the business conducted there. If SARS were obliged to
obtain
a warrant to enter the warehouse other than for routine
inspection, the objects of the Act could be jeopardised. Firstly,
speed
of action may be necessary if goods which have irregularly
left the warehouse are to be traced. Second, in order to obtain a

warrant the empowering provision would have to lay down a standard
of suspicion or belief to be established to the judicial officer’s

satisfaction. This inevitably means that certain non-routine
searches could not take place at all, because SARS’ suspicions

would not necessarily meet the threshold prescribed for a warrant.
This strikes me as inconsistent with the important objects
of the
Act in regard to a controlled environment where the reasonable
expectation of privacy is so low. SARS should, I consider,
be free
to enter and inspect even on the slightest suspicion that something
may be amiss.
Although the non-routine search may resemble a criminal
investigation (particularly if SARS has in mind to initiate the
administrative
penalty provisions of s 91), the very low
expectation of privacy in relation to storage warehouses means that
the nature
and extent of the limitation (the third justification
factor) is still modest. The use of less restrictive means (the
fifth limitation
factor), and in particular a requirement for a
warrant, could well on occasions thwart the objects of the Act. When
one adds
to these considerations the important purposes of the
limitation and the close relationship between the limitation and its
purpose
(the second and fourth justification factors), the existence
of a right to search storage warehouses without a warrant is in my

view justified under s 36 of the Constitution.
The warrantless non-routine searching of a storage
warehouse is, however, justified only insofar as it concerns the
licensed business
of the warehouse. It is quite possible that the
licensee of a storage warehouse might have other records and goods
at the same
premises. In the case of a manufacturing warehouse the
licensee may not, without the Controller’s written permission,
conduct
at the warehouse any business other than the licensed
manufacturing business. There is no like restriction in the case of
storage
warehouses. If SARS wishes to conduct a targeted search at a
licensed storage warehouse in respect of some other business
conducted
by the licensee, a warrantless search would not be
justifiable.
What I have said in regard to ordinary storage
warehouses applies
a fortiori
to manufacturing warehouses and
to storage warehouses for the storage of excisable goods, fuel levy
goods and environmental levy
goods (though since OCS is not a
licensee in respect of any such warehouses the applicants can have
little interest in this question).
The provisions of the Act and the
rules relating to manufacturing warehouses and to warehouses for the
storage of excisable goods,
fuel levy goods and environmental levy
goods give SARS extensive rights of control and supervision over the
activities conducted
at such warehouses. The expectation of privacy,
particularly in respect of manufacturing warehouses, is virtually
non-existent.
SARS officers are entitled to supervise all operations
at the warehouse. A SARS officer can even be stationed there, and
the
licensee must provide him with accommodation. The particular
attention which these warehouses receive in the Act is probably

attributable to a concern that irregularities which may result in a
diminution of duty can occur at any stage in the manufacturing

process. The degree of State interference which the licensee
voluntarily accepts by seeking the license and signing the
prescribed
agreement is such that he can in my view reasonably be
expected to tolerate all forms of search and inspection of the
premises
and its records. The Act’s purposes might well be
frustrated if SARS officers were not able, promptly and without
having
to justify any particular quality of belief or suspicion, to
enter such warehouses to examine the manufacturing process, the

goods stored there and the relevant records.
Although SARS’ contentions regarding designated
premises did not include rebate stores, I suspect that this was due
to an
oversight. The degree of control in respect of such stores is
much the same as that which applies to storage warehouses. The

reason for this control is also similar. A rebate of duty will have
been granted but this rebate is provisional in the sense that
it
will be forfeited if the relevant requirements for the rebate are
not thereafter observed. SARS thus has an ongoing interest
in the
goods until the requirements have been discharged. Although I did
not hear any argument directed to rebate stores, my
reasoning on the
other facilities dictates that rebates stores should form part of
the category of designated premises which
can be subjected to
warrantless non-routine searches.
The pre-entry facilities are regulated to differing
extents. Surprisingly there is very little legislative regulation of
transit
sheds, though it seems that this may change in the near
future when they (together with container terminals) are brought
within
the licensing regime. SARS’ answering papers contain
virtually no information as to the functions and operations of
pre-entry
facilities. On the other hand, the applicants can have no
particular interest in the question whether warrantless targeted
searches
of pre-entry facilities are constitutionally permissible
because OCS is not an operator of any such facilities.
Pre-entry facilities provide temporary storage for
goods before they are duly entered for the first time following
their landing
in South Africa. Nobody is entitled to deal with these
goods until they have been duly entered. To use a colloquial
expression,
the places where these facilities are located (harbours
and airports) are typically ‘crawling with officialdom’.

They are just the sort of environment where one would expect a SARS
officer to be free to enter, inspect and ask questions, whether

randomly or because something has caught his attention. These areas
are akin to the areas at ports of entry after a person has

disembarked from an aircraft or ship but before he has passed
through passport and customs control. It may well be justified
and
necessary that SARS officers should have the right, without the need
for a warrant, to inspect such premises, even if the
search is not a
routine matter but is made because their suspicions have been
aroused. Even if the suspicion has not risen to
a level justifying
the issue of a warrant, it is probably in the public interest that
the right of SARS officers to examine goods
in these areas and to
inspect the related documentation should be unfettered.
In summary, these are my conclusions thus far:
[a] Warrantless routine searches are justifiable under
the Act in respect of the business premises of persons registered in
terms
of s 59A, of persons licensed under Chapter VIII, of
person registered under s 75(10) and of persons who operate
pre-entry
facilities, to the extent that the search relates to the
business for which such person is registered or to the business for
which
such premises are licensed or registered or to the business of
operating the pre-entry facility.
[b] Warrantless non-routine searches are justifiable
under the Act in respect of pre-entry facilities, licensed warehouses
and rebate
stores, to the extent that the search relates to the
business of operating the pre-entry facility or to the business of
the licensed
warehouse or rebate store.
[c] Searches without judicial warrant are not
justifiable in other cases. In particular, there is no justification
for dispensing
with the requirement of a warrant in the case of
[i] searches of the premises of unregistered and unlicensed
persons; [ii] non-routine
searches of the premises of registered
persons (except to the extent, if applicable, permitted by para (b)
above).
Justification: the need for guidelines
This does not conclude the justification analysis. Even
if the distinctions discussed above were expressly drawn in s 4,

the section would leave SARS officers with insufficient guidance as
to how to conduct those searches for which no warrant is needed
(cf
Magajane
para 71). This is a component of the third
justification factor (the nature and extent of the limitation). The
facts of the present
case, while not directly relevant to the
assessment of the constitutional validity of s 4, are a
striking example of why
guidelines are needed. The searches at OCS’
premises and at Gaertner’s house were on any reckoning
heavy-handed.
On the applicants’ version, the searches may
well warrant the same description that Schutz JA gave to the
Competition Commission’s
raid
in Pretoria Portland Cement
Co Ltd & Another v Competition Commission & Others
2003
(2) SA 385
(SCA) – a display of ‘rampant triumphalism’
(para 66).
I consider that in order properly to balance the
searched person’s privacy with SARS’ legitimate interest
in infringing
such privacy for the Act’s purposes, the
following guidelines would need to be incorporated in the empowering
provision
in respect of warrantless searches:
[a] Entry should take place only during ordinary
business hours unless the officer reasonably considers that entry at
another time
is necessary on grounds of urgency.
[b] The officer should inform the person in charge at
the premises whether the search is routine or non-routine. If the
search is
non-routine (and a warrant is not needed), the officer
should be required to furnish to the person in charge a written
statement
of the purpose of the search unless the officer reasonably
considers that there are circumstances of urgency making it not
feasible
to furnish a written statement, in which case the purpose of
the search should be orally communicated to the person in charge.
[c] Only those officers whose presence is reasonably
necessary to conduct the search should enter the premises.
[d] The person in charge or his delegate should be
entitled to be present and observe all aspects of the search. (I have
considered
whether it is necessary that the person in charge should
be informed of a right to contact his legal representative and
whether
the officer should be required to delay the commencement of
the search if the person wishes his lawyer to be present. While I
think
this would be a healthy practice and should be carefully
considered when remedial amendments of s 4 are considered, I
cannot
say that such a rule is necessary to render a search
constitutionally acceptable. The search provisions of the
Criminal
Procedure Act and
the
National Prosecuting Authority Act do
not
contain such a requirement.)
[e] If anything is removed by an officer from the
premises, the officer should provide an inventory of removed items to
the person
in charge. If SARS copies documents, SARS should provide
the person in charge with a list of the material copied.
[f] Decency and order should be strictly observed during
the search. (A general requirement of this kind appears in several
statutes,
including in
s 61(5)
of the recently enacted
Tax
Administration Act 28 of 2011
.)
I should make clear that in those cases where a warrant
is constitutionally required, I do not mean a warrant obtained by
the
investigating authorities under the
Criminal Procedure Act or
the
National Prosecuting Authority Act. I
think the Customs Act
could permissibly contain provisions entitling SARS officers to
apply to a judicial officer for a warrant.
The non-routine searches
for which warrants would be needed would relate to the purposes of
the Customs Act, not criminal investigation.
SARS should not have to
depend on the police in order to obtain warrants for these searches.
SARS’ answering papers claim
that because of the high volume
of customs investigations and their specialised nature, dependence
on the police would ‘effectively
stymie’ searches for
the Act’s purposes.
Applicants’ attack on the searches themselves
The applicants contend that whether or not s 4 in
its current form is constitutionally valid, the searches were
conducted
in a way which rendered them unlawful. The respondents,
while denying this, argue that the question has become academic in
the
light of the settlement reached between the applicants and SARS.
I agree that the question is moot
and that it would not be in the interests of justice to decide it.
54
Even if an order declaring s 4
constitutionally invalid is not made retrospective, the terms of the
settlement are such that
no consequential advantage can flow to the
applicants from an order declaring the searches to have been
unlawful. SARS undertook
in the settlement to return, and claims
that it has returned or destroyed, all the material (hardcopies and
electronic) copied
during the searches, and tendered to pay the
applicants’ costs on the scale between attorney and client.
Although there
is a residual dispute as to whether the tender has
been fully complied with, a declaration that the searches were
unlawful would
not make the applicant’s case for the return of
any outstanding material any stronger. If there is copied material
which
has not been returned, the applicants may compel compliance
pursuant to the settlement agreement.
Furthermore, it is by no means clear
that a decision on the legal issues relating to the lawfulness of
the searches would be useful
in preventing any repetition of the
alleged abuses by SARS. The relief I intend to grant in respect of
the invalidity of ss 4(4)
to (6) should be such as to ensure
that there is appropriate prospective legislative regulation of
SARS’ search powers.
This distinguishes the present case from
Pheko & Others
v Ekurhuleni Metropolitan Municipality
2012
(2) SA 598
(CC), which Mr Katz cited in argument. That case
concerned the lawfulness of conduct (eviction without a court
order), having
regard to the proper interpretation of the relevant
legislation. There was no attack on the legislation itself. The
questions
raised in that case were of a kind which could arise again
in the future. And as it happens the declaratory order which the
appellants
obtained from the Constitutional Court was coupled with
consequential relief (see paras 6 to 9 of the order).
Mr Katz referred me to para 21 of
S
v Jordan & Others (Sex Workers, Education and Advocacy Task
Force & Others as Amicus Curiae
[2002] ZACC 22
;
2002
(6) SA 642
(CC) and para 167 of
City
of Cape Town v Premier, Western Cape & Others
2008
(6) SA 345
(C) in support of his submission that I should decide the
challenge to the lawfulness of the searches. Those cases are
distinguishable.
What the Constitutional Court said in
Jordaan
was that where the
constitutional validity of a statutory provision is challenged on
several grounds it is desirable that a court
of first instance
should determine all the grounds, even though a finding on one of
the grounds might in the court’s view
be sufficient for a
declaration of invalidity. This ensures that if, in the confirmation
proceedings, the Constitutional Court
disagrees with the lower court
on a particular ground, it has the benefit of the lower court’s
findings on the other grounds.
In
City
of Cape Town
the
court applied the same reasoning to a case where the lawfulness of
conduct was challenged on several grounds. In the present
case there
are two discrete challenges, one directed at ss 4(4) to (6) of
the Act, the other directed at the conduct of
the searches. The
matter I am declining to decide is not an additional ground for
challenging the validity of ss 4(4) to
(6) but a separate
challenge to the lawfulness of conduct. I have found the latter
challenge to be moot and that it would not
be in the interests of
justice to decide it.
I thus merely note that the applicants’ argument
that the searches were themselves unlawful created an uneasy tension
with
the argument regarding the invalidity of s 4. Ultimately a
search under a valid statutory provision can be unlawful only if
the
search is not conducted in accordance with the express and implied
terms of the empowering provision. The applicants’
submissions
on the unlawfulness of the searches amounted in substance to a
contention that s 4 as it stands is subject to
various implied
requirements such as a duty on the SARS officer to inform the
searched person of the purpose of the search, a
duty to afford
adequate opportunity to obtain legal representation and so forth. I
have already found that the absence of guidelines
in s 4(4) on
these matters is one of the features rendering the section
unconstitutional. I do not think that such guidelines
should be
matters of mere implication.
Conclusion and relief
The impugned provisions do not draw
the distinctions I consider necessary between routine and
non-routine searches and between
designated and non-designated
premises nor do they provide appropriate guidance as to how
permissible warrantless searches should
be conducted. The impugned
provisions cannot be brought into satisfactory form by actual or
notional severance
55
or by a modest reading-in. I thus
consider that sub-paras (i) and (ii) of s 4(4) and ss 4(4)(b),
4(5) and 4(6) must
be declared invalid.
SARS submits that the declaration should not be
retrospective and that its effect should be suspended for a period
of 24 months,
or at least 18 months, to allow the legislature to
pass remedial legislation. SARS proposes that in order to protect
the privacy
rights of persons who may be subjected to searches
during the period of suspension there should be a temporary
reading-in. The
applicants resist these submissions.
In view of the settlement, a
retrospective order will not achieve any particular benefit for the
applicants themselves. On the
other hand, a retrospective order
could well prejudice SARS and the public interest. Section 4(4) has
been the only search provision
available to SARS. Although I do not
have evidence of the number and nature of searches conducted by SARS
since the Constitution
came into force on 4 February 1997, one can
safely assume that many searches have been conducted on the
authority of s 4.
SARS’ answering papers refer in a
different context to the ‘high volume of customs
investigations’ conducted
by SARS. A retrospective order would
have the effect of rendering all past searches unlawful (even
routine searches). This could
jeopardise taxes collected and still
to be collected. In terms of s 172(1)(b) of the Constitution it
would not be just and
equitable to make the declaration
retrospective.
56
Whether, in addition, SARS and its
officers could, as Mr Trengove argued, face claims for damages for
wrongful invasion of property
and taking of documents and things in
respect of past searches if the order were made retrospective would
seem to me to depend
on whether knowledge of unlawfulness or
negligence in that regard is an element of delictual liability in
such cases (since if
fault was required SARS and its officers could
almost certainly contend that they genuinely and reasonably believed
they had
statutory authority to conduct the searches). Since I was
not addressed on that question and since I think non-retrospectivity

is in any event indicated, I express no view on that question.
57
Similar considerations favour a
suspension of the declaration to allow the lawmaker to make remedial
changes. Those changes cannot
be effected immediately. In the
meanwhile, the public interest which is served by allowing SARS
officers to conduct searches
would be thwarted if SARS did not have
any search powers. The Constitutional Court has frequently suspended
orders of invalidity
where there would otherwise be a lacuna in the
legislative scheme (see, eg,
Premier,
Limpopo Province v Speaker of the Limpopo Provincial Legislature &
Others
2012 (4) SA
58
(CC) paras 38-42). The search provisions in the
Criminal
Procedure Act and
National Prosecuting Authority Act are
not
sufficient. Those provisions apply to criminal investigations and
are thus not suitable for searches aimed at compliance
with and
enforcement of the non-criminal provisions of the Customs Act. They
are in any event unsuitable for routine searches
and make SARS
dependent on police officials.
58
However, I do not think the
suspension need be as long as 24 months. Indeed, I am doubtful
whether even 18 months are needed.
The lawmaker, assisted by the
National Treasury, is remarkably nimble when it comes to amending
fiscal legislation. Our taxing
statutes, including the Customs Act,
are in practice amended at least once a year, sometimes twice or
more. The required amendments
are procedural in nature – they
do not go to broad questions of substance and policy. Nevertheless,
in view of the interim
protection I propose to afford to the privacy
rights of affected persons, it should do no harm, and may be safer,
to allow a
period of 18 months.
As SARS submitted, the privacy
rights of parties who may be searched during the period of
suspension can be safeguarded by a reading-in
of terms which will
render ss 4(4) to (6) constitutionally acceptable. Ultimately
it will be for the legislature to determine
precisely how the
shortcomings in section 4 should be remedied.
59
However, a temporary reading-in
during the period of suspension would in my view strike the proper
balance between the public
interest and the privacy rights of the
individual. In
Johncom
Media Investments Ltd v M & Others
2009
(4) SA 7
(CC) the Constitutional Court held that such a temporary
reading-in is permissible (para 40). It is so that the reading-in
will
need to be quite elaborate. Mr Trengove pointed out that in
C
v Department of Health and Social Development, Gauteng, & Others
2012 (2) SA 208
(CC) the court, in granting a final and not merely a temporary
remedy, engaged in quite an extensive re-writing (see paras 4
to 6
of the order in that case). The alternatives to a temporary
reading-in in the present case are either to order invalidity

without suspension (which I would regard as plainly prejudicial to
the fiscus and the public interest) or to suspend the order
of
invalidity with no interim protection for the privacy rights of
affected persons (which would mean that SARS can continue
to employ
a power which is admittedly unconstitutional, which I find equally
unacceptable). As in
C
v Department of Health
,
I consider that the only feasible
way forward is a reading-in (see para 89). Even where there is a
final reading-in, the court’s
remedy is not cast in stone
because Parliament can always amend the statute. The remedy thus
does not intrude unduly into the
lawmaker’s sphere. In the
case of an interim reading-in, this recognition of Parliament’s
ultimate responsibility
for amending the law is explicit; the
reading-in is temporary precisely because the court recognises that
there may be other
legislative solutions. There is the further
consideration that SARS itself has argued that a reading-in is
required in order
to protect the privacy rights of affected persons
during the period of suspension, and the Minister through counsel
has associated
himself with this position. The respondents thus
accept that a fairly elaborate reading-in is appropriate.
Because my judgement accepts each of the parties’
submissions only in part, and because I also consider that the
empowering
provision should contain adequate guidelines as to the
conduct of searches, the temporary reading-in I intend to order
differs
substantially from the one proposed by SARS. The reading-in
proposed by SARS also errs, in my view, in linking the obtaining of

a warrant to suspected offences under the Act and to the collection
of evidence of such offences. I repeat my view that the criminal

investigation of offences is not one of the purposes of the Act. In
SARS’ formulation of the reading-in for cases where
a warrant
would as a general rule be required there was a proposed exception
inter alia
for case where the public has access to the
premises to be searched and the premises are entered while the
public has access to
the premises. I do not think this exception is
needed. A SARS officer does not need the authority of law to enter a
place which
is open to the public and to do no more than the public
may do (look around, observe). If the SARS officer wants to do more
than
any member of the public could do (eg if he wants to go behind
a counter, enter back offices and so forth) he should obtain a
warrant.
The applicants are entitled to their costs, including
the costs of two counsel. They have succeeded in their application
to have
the impugned provisions declared unconstitutional though I
have not accepted their submissions in full. In the answering papers

the respondents sought to defend ss 4(4) to (6) in their
entirety, and this remained the Ministers position at the hearing.

Only in argument did SARS concede that these provisions were
constitutionally objectionable.
I make the following order:
(a) Sub-paras (i) and (ii) of s 4(4)(a) of the
Customs and Excise Act 91 of 1964 (‘the Act’) and
ss 4(4)(b),
4(5) and 4(6) are declared to be inconsistent with
the Constitution and invalid.
(b) The declaration in para (a) shall not be
retrospective and its effect shall be suspended for 18 months to
afford the legislature
an opportunity to amend the offending
provisions so as to make them constitutionally valid.
(c) During the period of suspension or until such sooner
date as any amendments as contemplated in para (b) come into force,
ss 4(4)
to 4(6) (inclusive of sub-paras (iii) and (iv) of
s 4(4)(a), which remain constitutionally valid) will be deemed
to read as
follows (the words inserted into the existing text by this
order are underlined for convenience):
‘
(4)(a)
An officer may, for purposes of this Act –
enter premises and make such
examination and enquiry as he deems necessary,
subject to the
provisions of paragraphs (c) to (h) of this sub-section
;
while he is on the premises or
at any other time require from any person the production then and
there, or at a time and place
fixed by the officer, of any book,
document or thing which by this Act is required to be kept or
exhibited or which relates to
or which he has reasonable cause to
suspect of relating to matters dealt with in this Act and which is
or has been on the premises
or in the possession or custody or under
the control of any such person or his employee;
at any time and at any place
require from any person who has or is believed to have the
possession or custody or control of any
book, document or thing
relating to any matter dealt with in this Act, the production
thereof then and there, or at a time and
place fixed by the officer;
and
examine and make extracts from
and copies of any such book or document and may require from any
person an explanation of any entry
therein and may attach any such
book, document or thing as in his opinion may afford evidence of any
matter dealt with in this
Act.
(b) An officer may take with him
on to any premises an assistant or a member of the police force,
provided that only those assistants and members of the police
force whose presence, in the officer’s reasonable opinion, is

strictly necessary for purposes of conducting the inspection, search
or examination on the premises may enter the premises
.
(c)
The power of entry in
terms of sub-paragraph (i) of paragraph (a) of this sub-section shall
be subject to the further provisions
of paragraphs (d) to (g), in
regard to which the definitions in paragraph (h) shall apply.
(d)
Subject to paragraph (e),
if an officer wishes to enter premises to conduct a non-routine
search, the officer shall not do so except
on the authority of a
warrant issued in terms of paragraph (g) of this sub-section;
provided that this paragraph shall not apply
to the non-routine
search of designated premises to the extent that the search pertains
to the business of operating the designated
premises or to the
business in respect of which the designated premises have been
licensed or registered
.
(e)
An officer may enter and
search premises without the warrant contemplated in paragraph (d) if:
(i)
the person in charge of
the premises consents to the entry and search after being informed
that he is not obliged to admit the officer
in the absence of a
warrant; or
(ii)
the officer on
reasonable grounds believes-
(aa)
that a warrant would be
issued in terms of paragraph (g) if the officer applied for a
warrant;
(bb)
that the delay in
obtaining the warrant is likely to defeat the object of the search.
(f)
If the officer wishes to
enter premises in circumstances where a warrant is not required in
terms of this sub-section, he shall
comply with the following
requirements:
(i)
The officer may enter the
premises only during ordinary business hours unless in his reasonable
opinion he considers that entry
at any other time is necessary for
purposes of the Act.
(ii)
The officer shall, upon
seeking admission to the premises, inform the person in charge of the
premises whether the purpose of entry
is to conduct a routine
inspection or to conduct a non-routine search.
(iii)
If the purpose of entry
is to conduct a non-routine search, the officer shall hand to the
person in charge a written statement signed
by him stating the
purpose of the search; provided that if, in the officer’s
reasonable opinion, there are circumstances
of urgency which may
result in the purpose of the search being frustrated if its
commencement is delayed until such a statement
can be prepared, the
officer shall orally inform the person in charge of the purpose of
the search; provided further that the search
shall be confined to
such searching, inspection and examination as are reasonable
necessary for the stated purpose; and provided
further that if in the
officer’s reasonable opinion there are grounds for believing
that the object of the search may be
frustrated if the person in
charge is informed of the purpose of the search, the officer may,
before complying with this sub-paragraph
(iii), take such steps as he
considers necessary to prevent persons present on the premises from
concealing, destroying or tampering
with any document, data or thing
located at the premises
(iv)
The person in charge
shall have the right to be present, or to appoint a delegate to be
present, during and to observe the search.
(v)
If the officer removes
anything from the premises pursuant to the search, he shall compile
an inventory of such items and shall,
prior to leaving the premises,
sign the inventory and hand a copy thereof to the person in charge.
(vi)
If the officer makes any
copies or extracts during the course of the search, he shall compile
a schedule of such material and shall,
prior to leaving the premises,
sign and hand a copy thereof to the person in charge.
(vii)
The officer must
conduct the search with strict regard for decency and order
.
(g)
An officer may apply to a
magistrate or judge in chambers for the issue of a warrant
contemplated in paragraph (d) of this sub-section,
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 contravention of the Act has occurred;
and
(ii)
that a search of the
premises is likely to yield information pertaining to such
contravention; and
(iii)
that the search is
reasonably necessary for the purposes of the Act.
(h)
For purposes of this
sub-section the following expressions have the meaning indicated:
(i)
‘designated
premises’ means any transit shed or container terminal as
contemplated in s 6(1) of the Act, any premises
in respect of
which a license has been issued in terms of Chapter VIII of the Act,
and any rebate store as contemplated in rule
75.08 of the rules
promulgated in terms of s 120;
(ii) ‘
non-routine
search’ means a search which an officer has decided to conduct
because a suspicion exists that a contravention
of the Act has
occurred and because the officer suspects that information pertaining
to such contravention may be discovered if
the premises in question
are searched;
(iii)
‘
routine
search’ means any search, inspection or examination other than
a non-routine search.
(5) Any person in connection
with whose business any premises are occupied or used, and any person
employed by him shall at any
time furnish such facilities as may be
required by the officer for entering the premises and for the
exercise of his powers under
this section.
(6)(a) If an officer, after
having declared his official capacity and his purpose and having
demanded admission into any premises
and
having complied with any applicable requirements of sub-section (4)
,
is not immediately admitted, he and any person assisting him may at
any time, but at night only on the presence of a member of
the police
force, break open any door or window or break through any wall on the
premises for the purpose of
entry and search;
(b) An officer or any person
assisting him may at any time break up any ground or flooring on any
premises for the purpose of search
if
the officer in his reasonable opinion considers such breaking up to
be necessary for the purposes of the Act
;
and if any room, place, safe, chest, box or package is locked and the
keys thereof are not produced on demand, the officer may
open such
room, place, safe, chest, box or package in any manner.’
(d) The respondents shall jointly and
severally be liable to pay the applicants’ costs, such costs to
include the costs of
two counsel.
______________________
ROGERS J
APPEARANCES
For Applicants:
A KATZ SC
(with M IOANNOU)
Instructed
by:
Maurice
Philips Wisenberg
Cape
Town
For
First Respondent:
PM
MTSHAULANA SC
Instructed
by:
The
State Attorney
Pretoria
For Second to Tenth Respondents:
W
TRENGOVE SC (with E DE VILLIERS JANSEN, S BUDLENDER & J
BERGER)
Instructed
by:
The
State Attorney
Cape Town
1
See
Investigating Directorate: Serious
Economic Offences & Others v Hyundai Motor Distributors (Pty)
Ltd & Others: In re Hyundai
Motor Distributors (Pty) Ltd v Smit
NO & Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC)
para 17.
2
Section
47(1).
3
Section
48(4).
4
Part
1 and Part 2 respectively of schedule 1.
5
Section
47(1).
6
See
s 11(1). The controls in respect of goods arriving in South
Africa overland are contained in s 12. These control
measures
to do not involve facilities of a kind relevant to this case.
7
Rule
11.01.
8
Section
11(2).
9
See
s 44(3).
10
Section
18.
11
Section
18(6).
12
See
s 64D.
13
Section
18(2).
14
Section
18(3).
15
Section
19.
16
Section
20(1).
17
Section
20(4)(a).
18
Section
20(4)(b).
19
Section
20(4)(d) read with s 18A.
20
Section
18A(2)(a). If the prescribed proof is not furnished the exporter
must pay duty as if the goods had been entered for home
consumption
(s 18A(2)(iv)).
21
Sections
18A(4) and (5).
22
An
interesting
insight into the historical
development of the customs warehousing system is given in
Collector
of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd
[1979] FCA 21
at para 33 of the
judgment of Smithers J, where the judge quotes a passage from
Stephen
the Principles of Commerce and
Commercial Law
(1853). In essence,
unless customs duty on imported goods could be deferred through a
controlled warehousing system, imports into
a country would be
discouraged, since an importer would then only import goods for
which he had an immediate market. See also
para 12 of the
Brian
Lawlor
judgment.
23
Section
27.
24
Section
19A.
25
Section
26.
26
Section
6A(3)(a).
27
Section
75(10) read with rule 75.
28
Rule
75.08.
29
Sections
60, 60A and 64G of the Act read with schedule 8 and the rules
relating to these sections.
30
The
statutory amendments were passed some years ago: see
ss 23
and
28
of the
Revenue Laws Second Amendment Act 21 of 2006
, inserting
ss 64H
and
64M
into the Customs Act. There is no explanation as
to why they have not already been brought into operation.
31
In
paragraph 21.1 of their heads of argument SARS’ counsel
identified the specific transit sheds established in Cape Town.

Although this paragraph was referenced to rule 200.06, the detail
contained in the heads is not to be found in the rules (or
at least
not in the version of the rules published in LexisNexis
Customs
and Excise Service
).
32
Sections
19, 19A and 27 read with sections 60 and 61 and schedule 8 and
rules 19, 19A, 60 and 61.
33
Section
64B.
34
At
pp 84-88 of the set of rules submitted to me.
35
At
pp 492-496 of the rules.
36
For
the standard degrouping depot licensee agreement, see pp 631-636
of the rules.
37
At
pp 686-699 of the rules.
38
See,
eg,
Zantsi v Council for State, Ciskei,
& Others
[1995] ZACC 9
;
1995 (4) SA 615
(CC)
paras 4-5.
39
The
term ‘licensed premises’ was defined as premises
specified in a license authorising gambling activities at such

premises.
40
The
court in
Magajane
referred in this regard to its
earlier decisions in
Ferreira
v Levin NO & Others
1996
(1) SA 984
(CC),
Bernstein & Others v Bester & Others NNO
[1996] ZACC 2
;
1996 (2) SA 751
(CC),
Mistry v Interim Medical and Dental
Council of South Africa & Others
1998 (4) SA 1127
(CC) and
Hyundai Motor Distributors supra
.
41
The
italicized words come from Jackson J’s dissent in
Brinegar
v United States
[1949] USSC 103
;
338 US 160
(1949) at
180-181, and were quoted in
Mistry
and again in
Magajane
.
42
There
are many cases to this effect. Mr Mtshaulana cited
Saleem
v Minister of Finance & Another
[2007]
4 All SA 1040
(T) para 12, being a case specifically concerned with
the Customs Act.
43
See
footnote 40
supra
.
44
I
n
Magajane
the
court, in assessing the constitutionality of the impugned sections,
treated one of their purposes as being to facilitate the
collection
of evidence for criminal prosecution (paras 84-86). This appears to
have been taken for granted. Whether the assumption
was correct in
the light of the specific provisions of the North West Gambling Act
2 of 2001 is not an issue relevant to the
present case.
45
T
he
impermissibility of using administrative search powers for the
predominant purpose of collecting evidence for a criminal

prosecution is well established in the Canadian cases (see
Jarvis
v R
[2002] 3 SCR). In
Jarvis
,
which concerned powers of inspection and entry under income tax
legislation, the court seems to have based its conclusion, as
do I,
on a proper interpretation of the stated purposes for which the
powers could be exercised. In
Jarvis
the powers could be exercised ‘for
any purpose related to the administration or enforcement of the
Act’. This was
held not to include the prosecution and
investigation of the offences created by the Act (see paras 77-81).
46
This
will change if and when Chapter XB (ss 77Q to 77Y), introduced
into the Act by s 17(1) of Act 36 of 2007, is brought
into
force.
47
See
sections 4 to 6. It is of interest to note that in general a
judicial warrant is required for the searches mandated by the
Counterfeit Goods Act.
>
48
It
is of interest to note that in
s 6
the Customs Management Act 9
of 1903, passed 100 years ago, a distinction was drawn between
stores, shops and other structures
for the reception of goods on the
one hand, and other premises. For entry into the latter class of
premises a judicial warrant
was required. In
Katz
v Commissioner of Customs & Another
1934
NPD 108
Landsdown J remarked on this distinction (at p 113):
‘The reason for this is apparent; it was clearly the intention

of the Legislature that any breach by the customs authorities of the
privacy of dwelling houses or other places not ordinarily
used for
the reception of goods should not be permitted save under the
safeguard of judicial authority.’
49
Thint
(Pty) Ltd v National Director of Public Prosecutions & Others
2009 (1) SA 1
(CC) para 77;
Hyundai
supra
para 18.
50
Form
DA185.
51
Cf
Mistry
para
29 and footnote 52 where Sachs J refers to conflicting opinions on
this question in the United States. Later United States
cases are
discussed in footnote 58 of the
Magajane
case. See also
McKinley
Transport Ltd & Another v R
[1990]
1 SCR 627
para 36
per
Wilson
J: ‘The need for random monitoring is incompatible with the
requirement in
Hunter
that
the person seeking authorization for a search or seizure have
reasonable and probable grounds, established under oath, to
believe
that an offence has been committed… [T[here is no need for an
impartial arbiter capable of acting judicially since
his central
role under
Hunter
is
to ensure that the person seeking authorization has reasonable and
probable grounds to believe that a
particular
offence has been committed, that there
are reasonable and probable grounds to believe that the
authorization will turn up something
relating to the
particular
offence, and that the authorization only goes so
far as to allow the seizure of documents relevant to the
particular
offence’ (emphasis in the
original). In the same case L’Heureux-dubé J said, with
reference to the United States
cases, that the administrative
warrant was now ‘in almost complete disfavour’(paras
82-87).
52
See
le Comité Paritaire de
L’industrie de la Chemise & Another v Potash
[1994]
2 SCR 406
para 13 (
per
La
Forest J) and paras 91-93 (
per
L’Heureux-dubé J).
53
I
have found useful the summary of the Canadian case law in para 157
of
R v Canada Bricks Ltd
[2005]
CanLII 24925
(ONSC), which refers to the leading decisions of the
Canadian Supreme Court.
54
For
the test in this regard, see
Van Wyk v Unitas Hospital &
Another (Open Democratic Advice Centre as Amicus Curiae)
[2007] ZACC 24
;
2008
(2) SA 472
(CC) para 29; see also
MEC for Local Government,
Housing and Traditional Affairs, KwaZulu-Natal v Yengwa & Others
2010 (5) SA 494
(CC) para 11.
55
For
the concept of notional severance, see
National
Coalition for Gay and Lesbian Equality v Minister of Home Affairs
2000 (2) SA 1
(CC) paras 63-64.
56
The
Constitutional Court reached a similar conclusion in
Mistry
paras 41-44.
57
Cf
Minister of Trade & Others V EBN Trading
(Pty) Ltd
1998 (2) SA 319
(N) which
suggests with reference to authority that knowledge of unlawfulness
may not be required in cases involving wrongful
imprisonment and
wrongful detention of goods. The possibility of delictual claims was
mentioned in
Mistry
para
41 without any specific finding on the point.
58
In
Mistry
the
order of invalidity was not suspended (paras 36-39). However, that
aspect was decided with reference to s 98(5) of the
interim
Constitution, which differs materially from s 172(1)(b) of the
final Constitution. Also, the main infringing provision
had already
been amended though the amendment had not yet been brought into
effect (para 39). In
Magajane
there
was likewise no suspension (para 99) but the reasons given by the
court indicate a view that the immediate striking down
of ss 65(2)
and (2) of the North West Gambling Act would not leave a lacuna
since ss 65(4) to (12) would still be available
for searches
(routine or targeted) of licensed premises while the provisions of
the
Criminal Procedure Act sufficed
to deal with unlicensed
operators.
59
Dawood
& Another v Minister of Home Affairs & Others
[2000] ZACC 8
;
2000
(3) SA 936
(CC) paras 64-65.