Gaertner & Others (including Orion Cold Storage) v the Minister of Finance & Others

Background to the case

Orion Cold Storage (Pty) Ltd (ĎOCSí), 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 SARSís attention that the prices according to the supplierís 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 OCSís 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. †††††

Applicantsí case:

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 licenseesí other premises or offices.†

Respondentsí case

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 theoretical.†

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 Courtís reading-in and stated that it was overly constraining, impractical and confusing.

Outcome of the case

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.†