Gaertner & Others (including Orion Cold Storage) v the Minister of Finance & Others 75 SATC 184
21 November 2013
Posted by: Author: SAIT Technical
Author: SAIT Technical
In this proceedings, the applicants, being Gaertner
& Others, sought orders declaring the relevant part of s 4 of Act 91 of
1964 to be unconstitutional to the extent that it permitted targeted
non-routine searches to be conducted without judicial warrant, declaring the
searches to have been unlawful by virtue of the way they were conducted and
requiring SARS to return everything taken or copied.
Orion Cold Storage (Pty) Ltd (‘OCS’), the third applicant in this case,
is involved in the importation and distribution of frozen foods. When a
Canadian supplier instituted motion-proceedings against OCS, it came to SARS’s
attention that the prices according to the supplier’s invoices were
substantially higher than those on the invoices submitted to SARS for custom
duty purposes. SARS suspected that OCS fraudulently manipulated these invoices
in order to pay less duty and consequently a search was conducted on OCS’s
premises in Muizenberg.
Although SARS was not in possession of a search warrant, they took over
control of the premises, copied data on various computers and confiscated
certain documents and objects. The search was extended to the private
home of a director, Mr Gaertner (the first applicant) where SARS officials
demanded access to the personal belongings of the director and his family. Yet
again, the search was performed without a search warrant and SARS officials
refused to supply reasons for the proceedings.
OCS and its directors applied to the High Court and sought a declaration
that the searches and seizures were unlawful and that section 4 of the Customs
and Excise Act is inconsistent with the Constitution and invalid to the extent
that it permits targeted, non-routine enforcement searches to be conducted
without a warrant. The High Court concluded that warrantless non-routine or
targeted searches (as in this case) were acceptable in respect of pre-entry
facilities, licensed warehouses and rebate stores to the extent that it relates
to the business of operating these facilities. The Court held that searches
without a warrant are unjustifiable in all other instances. Consequently, the
Court made a declaration of invalidity, suspended it and read in certain
provisions to section 4 of the Customs and Excise Act.
The applicants turned
to the Constitutional Court to confirm the declaration of invalidity made by
the High Court and it opposed the following provisions of section 4 of the
Customs and Excise Act:
- The permission of
entry and search of virtually any premises that have some connection with
the persons being inspected or investigated.
- The official
invoking the search does not have to hold a belief or apprehension of a
contravention of the Customs and Excise Act to justify the search.
- No guidance is
provided regarding the manner in which a search is to be conducted.
Furthermore, the applicants contended that the High Court erred in the
finding that warrantless non-routine searches of designated premises are
justifiable in all and any circumstances. They also argued that it should be
confined to the designated premises in question and should not be extended to
any of the licensees’ other premises or offices.
The Minister of
Finance opposed the declaration of invalidity of section 4 to a certain extend.
He argued that the production of records does not violate the right to privacy
if a person is required to keep the relevant records in terms of The Act.
Furthermore he claimed that is not unconstitutional for an official to require
assistance from police if there is reasonable suspicion of resistance requiring
protection. The Minister also argued that the interim order is too detailed and
that the distinction between routine and non-routine searches is unhelpful and
The second respondent in this case, The South African Revenue Service
(SARS), submitted that the Constitution only protects reasonable expectations
of privacy and does not refer to business premises registered and licensed
under the Customs and Excise Act, or those used to conduct the business of
persons registered in terms of this Act. Furthermore, SARS argued that the
distinction between routine and non-routine searches is not a constitutional
requirement and not practical to apply. SARS also opposed the wording of the
High Court’s reading-in and stated that it was overly constraining, impractical
Firstly it had to be determined if section 4 was unconstitutional and
invalid. The court found that this section did limit the right to privacy but
that it could be justified. It was concluded that the limitation of the right
of privacy in this instance was necessitated by the loss of revenue resulting
from the evasion of payments which is experienced by SARS in the Customs and
Excise industry. It further stated that monitoring and inspection are integral
parts of this industry and it would be unreasonable for an industry participant
to expect a wholesome right to privacy. However, the right to privacy in
respect of private homes is stronger than those relating to business premises.
Although the Customs and Excise Act does not discriminate between these types
of premises, it is reasonably expected that the law will respect and protect
the privacy of participants when their private dwellings are concerned. The
Court stated that a warrant is needed to govern the time, place and scope of
the search unless there are clear and justifiable reasons for deviation from
this requirement. The Court also suggested that current legislation must be
amended to ensure common decency and limited intrusion during a search.
The Court found it to be problematic to make a distinction between
routine and non-routine searches and considered it to be the duty of the
lawmaker who should use the guidelines of this judgement to formulate the inner
and outer reaches of search power. In conclusion: the court confirmed the
constitutional invalidity of section 4 as it was made by the High Court. It
ordered that the declaration of invalidity is not retrospective, in other words
it had no effect on cases that was already finalised before the order was made.
The legislature was granted a six month period to cure the invalidity. It was
ordered that certain reading-in to the Custom and Excise Act will apply during
the period of suspension.
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