The Customs and Excise Act (Act 91 of 1964) (“the Act”) requires registration and licencing of persons and/or premises for conducting certain activities in terms the Act.
In the matter of Patrick Lorenz Martin Gaertner vs the South African Revenue Service (“SARS”) (12632/12 in the Western Cape High Court of 26 February 2013), SARS suspected that Orion Cold Storage (“OCS”) had fraudulently manipulated invoices so as to pay less duty, thereby committing various offences under the Act.
SARS resolved to conduct a search of OCS’ premises and the managing director’s residence in order to investigate its suspicions. SARS had no warrant for its searches and conducted its searches in terms of section 4 of the Act.
Section 4 of the Act states that a SARS officer may, for the purposes of the Act:
(4)(a)(i) Without previous notice, at any time enter any premises whatsoever and make such examination and enquiry as he deems necessary;
(ii) 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;
(iii) 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
(iv) 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 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 in 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.’
OCS contended that these provisions infringed the privacy right guaranteed by s 14 of the Constitution:
Every person has the right to privacy, which includes the right not to have –
- their person or home searched;
- their property searched;
- their possessions seized;
- the privacy of their communications infringed.
The court made a distinction between routine and non-routine searches and between designated and non-designated premises and when warrantless searches of such premises would be allowed.
The court defined a non-routine search as being a search where the premises are selected or 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.
Persons whose premises could notionally be the subject of routine searches under the Act are those that are required to be registered or licensed under the Act. 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. If a search were then regarded as necessary, there is no reason why a warrant should not be obtained.
Warrantless routine searches of registered persons and licensees are therefore justifiable, since 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.
There is no justification for the warrantless non-routine searching of the premises of registered persons. 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.
The warrantless non-routine searching of licensed premises is justified only insofar as it concerns the licensed business of the warehouse. If SARS wishes to conduct a targeted search at a licensed premises in respect of some other business conducted by the licensee, a warrantless search would not be justifiable.
The absence of guidelines for section 4, are one of the features that renders it unconstitutional and the court declared sections 4(4) (i) and (ii), (4)(b), 4(5) and 4(6) invalid, suspended for 18 months to afford the legislature an opportunity to amend the offending provisions so as to make them constitutionally valid. Certain provisions are to be read into the above sections during the period of suspension to render them valid.
To properly balance the searched person’s privacy with SARS’ legitimate interest in infringing such privacy for the Act’s purposes, the court proposed that the following guidelines are incorporated in the empowering provision in respect of warrantless searches:
- Entry should take place only during ordinary business hours unless the officer reasonably considers that entry at another time is necessary on the grounds of urgency.
- 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.
- Only those officers whose presence is reasonably necessary to conduct the search should enter the premises.
- The person in charge or his delegate should be entitled to be present and observe all aspects of the search.
- 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.
- Decency and order should be strictly observed during the search.
It should not be necessary for SARS to obtain a warrant under the Criminal Procedure Act or the National Prosecuting Authority Act. The Act should contain provisions entitling SARS officers to apply to a judicial officer for a warrant.