SCA spells out procedure under Section 5(4) of the Counterfeit Goods Act
6/01/2011

In a judgment handed down on 29 November 2010 in the matter between the Minster of Trade and Industry v E L Enterprises (193/10) [2010], the Supreme Court of Appeal considered the correct procedure to be followed in applications to confirm the seizure without a warrant of suspected counterfeit goods.

The procedure is prescribed by Section 5(4)(a) of the Counterfeit Goods Act No. 37 of 1997 (“the Act”). Since the commencement of the Act, the practice has been to bring a full-blown High Court application under the section on notice to the respondents. The court held that this is not the procedure contemplated by the section; though an applicant would not be non-suited by doing so provided that the application is at least issued within the prescribed time period.

Section 5(2) of the Act authorises customs officials, police officials and the like, as inspectors under the Act, to seize suspected counterfeit goods without a warrant, if there are reasonable grounds to believe that –

(a) the required warrant will be issued if application were to be made for it; and

(b) the delay that would be brought about by first obtaining the warrant would defeat the object of the seizure.

Section 5(4)(a) of the Act provides that a seizure “performed by an inspector by virtue of subsection (2) must be confirmed by a magistrate or a judge of the High Court having jurisdiction in the area where the (seizure was) performed, on the application of the inspector brought within 10 court days of the day on which (the seizure was) performed”.

The facts of the matter were briefly as follows:

• the Appellants seized without a warrant suspected counterfeit goods in the possession of the Respondents;

• the Appellants’ application under Section 5(4)(a) of the Act was brought to court on notice of motion;

• the application was issued on the 10th day following the seizure and was served on the Respondents the day thereafter.

The Respondents argued in limine before the High Court that the word “brought” in Section 5(4)(a) means that the application must be issued and served within the 10-court day period referred to in the section. The point in limine was upheld. The court a quo refused leave to appeal and the Appellants then petitioned the Chief Justice of the Supreme Court of Appeal. Leave was granted and the appeal proceeded on a single point of law.

The Appellants argued on appeal that Section 5(4)(a) does not contemplate an application on notice of motion; rather, the use of the words “magistrate” and “judge of the High Court” shows that the legislature prescribes an application in chambers. For this reason, so the Appellants argued, service of the application was not required or even contemplated by the legislature. The court agreed and held that this interpretation is consistent with other provisions of the Act, as well as the Uniform Rules and Magistrate’s Court rules.

The court first examined Section 6(1) of the Act. This section provides that a warrant (authorising a seizure of suspected counterfeit goods) is to be “issued in chambers by any judge of the High Court or magistrate… and will be issued only if it appears to the judge or magistrate from information on oath or affirmation that there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken or is taking place or is likely to take place…”.

The court analysed the interrelationship between the two sections and held that the only significant difference between the two is that Section 6 covers the situation where “reasonable grounds” exist before the search and seizure operation is carried out, whereas Section 5(4)(a) requires confirmation that reasonable grounds existed for the performance of the search and seizure operation. The court held that the purpose of the two sections is such that it does not include notice to any respondent. On the contrary, the court held that the nature and purpose of a search and seizure operation in terms of the Act demands that no notice be given. The court recognised that notice is likely to defeat the purpose of the warrant when the procedure in terms of Section 6 is followed and in many cases the applicant for a warrant will not know the identity or whereabouts of potential respondents.

The court compared the wording in Section 5(4)(a) to the wording in Section 6 and held that, while Section 6 makes it fairly clear that notice to potential respondents is not required, the wording of Section 5(4)(a) is less clear on the issue. The court emphasised that Section 5(4)(a) does not refer to the warrant being issued “in chambers” or information to be placed before the judge or magistrate on oath or affirmation ; it requires an “application”. In deciding whether or not these differences in wording justify an interpretation that Section 5(4)(a) prescribes formal application proceedings on notice to a respondent, the court took into account the following:

1. Uniform rule 1 defines “judge” as “a judge sitting otherwise than in open court”; and

2. in Section 5(4)(a) the word “application” is used as the manner in which the inspector is to approach the judge or magistrate. This section does not refer to a notice of motion (the application procedure in the High Court) or a notice (the application procedure in the Magistrate’s Court). It was held that the legislature must have been mindful of the distinction between a judge or magistrate on the one hand and a court on the other, as well as an application on the one hand and an application on notice of motion on the other. As far as the latter distinction is concerned, the court relied on the provisions of Section 7(4) to substantiate its interpretation. This section provides that a person prejudiced by a seizure of goods is entitled to “apply to the court on notice of motion” for a determination that the goods seized are not counterfeit goods and are to be returned to that person.

For these reasons, the court held that the difference in wording between Section 5(4)(a) and Section 6 does not result in a substantial difference in procedure. The confirmation referred to in Section 5(4)(a) after the search and seizure is also to be sought from and given by a magistrate or a judge of the High Court, as opposed to the court. The confirmation is to be sought in chambers, on oath or affirmation.

The court accordingly upheld the appeal and also issued a declaratory order on the interpretation of Section 5(4)(a) of the Counterfeit Goods Act.

Adams & Adams represented the Appellants on appeal.
Dale Healy
Partner
dale-h@adamsadams.co.za