THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No. 360/08

THE COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE SERVICE

First Appellant

CHRISTINE FOUCHE

Second Appellant

CROCS INC

Third Appellant

v

MORESPORT (PTY) LTD

First   Respondent

MAGISTRATE SAMUEL MAKU NO

Second Respondent

MR MOVER CC

Third Respondent

Neutral Citation: SARS v Moresport (360/08) [2009] ZASCA 63 (29 MAY 2009)
Coram:
Nugent, Ponnan, Mlambo, Mhlantla JJA and Tshiqi AJA
Heard:
18 May 2009
Delivered:
29 May 2009
Updated:
Summary:
Customs and Excise ─ Failure to disclose a defence contained in a
letter in an ex-parte application, not fatally defective.

ORDER

On appeal from:
High Court, (Pretoria) (Seriti J sitting as court of first instance.)

1.
The appeal is upheld.
2.
The order of the Pretoria High Court is set aside and substituted with the
following order:

‘The application is dismissed with costs.’

JUDGMENT

TSHIQI AJA (Concurring: NUGENT, PONNAN, MLAMBO, MHLANTLA JJA ):

[1] One of the main purposes of the Counterfeit Goods Act 37 of 1997 (‘the Act’)
is to prevent the release of counterfeit goods into the channels of commerce in
South Africa. Section 15(1) of the Act entitles an owner of intellectual property to
apply to the Commissioner for Customs and Excise (‘the Commissioner’) for seizure
and detention of counterfeit goods. The South African Revenue Services (‘SARS’) is
empowered in terms of Sections 15(4) and 113(A)(1)(b)(i) of the Act to seize and
detain counterfeit goods or suspected counterfeit goods imported into or entering
South Africa (during a particular period) and calculated to infringe an intellectual
property right. This entails securing the goods until such time as it has been
determined whether they are counterfeit or not. The power ought to be exercised in
terms of the Act and a customs officer may refuse to do so in circumstances where
the request does not conform to the requirements of the Act which requires that:

‘15 (3) The Commissioner must consider and deal with an application in terms of subsection
(1) without delay, and must grant the application if satisfied on reasonable grounds─
(a)
that the goods claimed to be protected goods are prima facie protected goods;
(b)
that the intellectual property right, the subject matter of which relates to the protected

goods, prima facie subsists; and
(c)
that the applicant prima facie is the owner of that intellectual property right.’

[2] The continued detention of the goods is achieved by means of a warrant
obtained in terms of section 6(1), on an ex parte application before a judge or a
magistrate of the court. This section deals with the provisions regarding the issue
and execution of a warrant and provides:
‘(1)
The warrant contemplated in section 4(2) read with section 5(1) will be issued in
chambers by any judge of the High Court or by a magistrate who has jurisdiction in the area
where the relevant suspected act of dealing in counterfeit goods is alleged to have taken or
to be taking place or is likely to take place, 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 place . . .’

[3] This appeal concerns the issuing of such a warrant by magistrate Samuel
Maku NO (‘the second respondent’), in an ex parte application in the magistrate’s
court, Cape Town on 14 September 2006. The warrant authorised the seizure,
removal, detention and collection of 5 015 pairs of beach sandals incorporating and
embodying the Crocs copyright design to which Crocs Inc (‘the third appellant’) is the
copyright holder. The first respondent (applicant in the court below) brought an
application in the North Gauteng High Court (per Seriti J) for an order setting aside
the warrant. The application succeeded. The appeal is brought with leave of the
court below.

[4] The first respondent and the third appellant (the third respondent in the court
below) have settled the issues in this appeal. The first and second appellants (being
the first and the third respondents in the court below) persist with the appeal on the
basis that the judgment of the court below has far-reaching consequences for the
officials of the first appellant in the performance of their duties in preventing the
proliferation of counterfeit goods into the channels of commerce in the country. This
court has recognised the importance of similar matters to the first appellant and a

case has been made for the adoption of a similar approach in this instance.1
Therefore although the dispute has since been settled, the issue is still a ‘living
issue’ for the appellants such that it necessitates the exercise of the discretion by
this Court.2

[5] The background leading to the issue of the warrant may be summarised as
follows: On 20 June 2006 the third appellant lodged an application which was
subsequently approved by the first appellant for ‘a seizure of goods featuring,
bearing, embodying or incorporating the subject matter of the Intellectual Property
Right contained in the application or to which the subject matter of that right has
been applied which was imported into or entered the Republic during the period 1
May 2006 to 30 April 2007’3 (‘the application’). The application covered both the
Crocs trademark and the design for what is known as Crocs Beach model shoes.

[6] The subject matter of the warrant was a shipment of footwear purchased by
the first respondent from Holey Soles Holding Ltd, Vancouver which arrived at Cape
Town harbour in July 2006. On 19 July 2006, the second appellant, a customs
officer employed by the first appellant, examined a container and discovered that the
shoes inside were replicas of the Crocs shoes by virtue of their shape and general
resemblance in design. After she confirmed that there had been compliance with
section 15 (1) of the Act, by the third appellant, she detained the consignment and
advised the third appellant’s attorneys and the first respondent. Samples of the
shoes were sent to the third appellant and in turn the third appellant’s attorneys sent
an affidavit confirming that the goods are indeed counterfeit.

[7] On 4 September 2006, the first respondent responded to correspondence
from the third appellant’s attorneys and disputed the third appellant’s right to seek
protection in terms of the Act. The letter also stated that the first respondent had a
defence to the continued seizure of the goods. On 14 September 2006, the first

1 Commissioner, South African Revenue Service v Saleem 2008 (3) SA 655 (SCA) at 662 (paras C-
D).
2 Coin Security Group (Pty) Ltd v SA National Union for Security Officers 2001 (2) SA 872 (SCA) at
875 (para 8); s 21A of the Supreme Court Act 59 of 1959.
3 Application to SARS to detain and/or seize counterfeit or suspected counterfeit goods, dated 20
June 2006 (Annexure ‘ER 2’).

appellant obtained a warrant from the second respondent in chambers. The letter
dated 4 September 2006, from the first respondent, was not disclosed to the second
respondent when the ex parte application was made. Consequent to the issuing of
the warrant, the first appellant seized the goods on 3 October 2006.

[8] The first respondent applied for an order (amongst others) setting aside the
warrant. The learned judge in the court below found that the defence raised by the
first respondent in the letter was relevant and material and should have been
disclosed to the magistrate. The learned judge consequently found that this failure
was such that it rendered the warrant susceptible to be set aside. In coming to this
conclusion the court below sought to rely on a decision of this court in National
Director of Public Prosecutions v Basson in which Nugent JA stated the following:
‘Where an order is sought ex parte it is well established that the utmost good faith must be
observed. All material facts must be disclosed which might influence a court in  coming to its
decision, and the withholding or suppression of material facts, by itself, entitles a court to set
aside an order, even if the non-disclosure or suppression was not wilful or mala fide
(Schlesinger v Schlesinger 1979 (4) SA 342 (W) at 348E-349B)’4

[9] In that decision and in subsequent decisions5 the courts have frowned upon
the failure by the applicants in ex parte applications to disclose relevant and material
facts and not the failure to disclose that the respondent claims to have a defence, as
was the case in this matter. A legal representative presenting an application before
the judge or the magistrate might have an ethical duty to bring to the attention of the
judicial officer issues of law that might affect his or her decision, but that is another
matter. This is clearly so, because at that stage the judge or magistrate is not
required to adjudicate on the dispute on whether the goods are indeed counterfeit or
not but merely to make a decision on whether there are reasonable grounds for
believing that an act of dealing in counterfeit goods has taken or is taking or is likely
to take place.6 I therefore accept the submission that at that stage of the
proceedings the customs officer need only satisfy the judge or magistrate that a
prima facie case exists and is not required to prove on a preponderance of

4 2002 (1) SA 419 (SCA) at 428 para 21.
5 Cometal-Mometal SARL v Corlana Enterprises (Pty) Ltd 1981 (2) SA 412 (W).
6 Shoprite Checkers (Pty) Ltd v The Commissioner for the South African Revenue Services and 3
Others case no 1460/06 (CGHPD).

possibilities that the seized goods are indeed counterfeit. In this regard therefore the
court below erred.

[10] In the result the following order is made:
(1)
The appeal is upheld.
(2)
The order of the Pretoria High Court is set aside and substituted with the
following order:
‘The application is dismissed with costs.’

________________________
Z L L TSHIQI
ACTING JUDGE OF APPEAL

APPEARANCES:

For Appellant:
C E PUCKRIN SC

T KHATRI

Instructed by:

1ST and 2ND Appellant:    The State Attorney

Pretoria

The State Attorney

Bloemfontein

3RD Appellant:
Adams and Adams

Pretoria

Honey Attorneys

Bloemfontein

For Respondent:

NONE

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:  The Registrar, Supreme Court of Appeal
Date:  29 MAY 2009
Status: Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

SARS v MORESPORT (360/08) [2009] ZASCA 63 (29 MAY 2009)

The Supreme Court of Appeal today upheld an appeal against an order in the High Court,
Pretoria in terms of  which the High Court granted an order setting aside a warrant issued by
a magistrate, in Cape Town in an ex-parte application on 14 September 2006. The warrant
authorised the seizure, removal, detention and collection of 5015 pairs of beach sandals
incorporating and embodying the Crocs copyright design to which Crocs Inc (third appellant)
is the copyright holder.

The footwear had been purchased by Moresport (first respondent) from Holey Soles
Vancouver. A customs officer employed by the SARS (the first appellant) detained the
consignment after she examined its contents and discovered that the shoes inside were
replicas of the Crocs shoes by virtue of their shape and general resemblance in design.
Samples of the shoes were sent to the Crocs Inc who confirmed that the shoes were indeed
counterfeit.

On 4 September 2006, Moresport’s attorneys responded to correspondence from Croc Inc’s
attorneys and disputed Moresport’s right to seek protection in terms of the Act. The letter
also stated that Moresport had a defence to the continued seizure of the goods. On 14
September 2006, the SARS obtained a warrant from the magistrate in chambers. The letter
dated 4 September 2006, from the Moresport’s attorneys, was not disclosed to the magistrate
when the ex parte application was made. Consequent to the issuing of the warrant, the SARS
seized the goods on 3 October 2006.

Moresport applied for an order (amongst others) setting aside the warrant. The learned judge
in the court below found that the defence raised by Moresport in the letter was relevant and
material and should have been disclosed  to the magistrate. The learned judge consequently
found that his failure was such that it rendered the warrant susceptible to be set aside. The
SCA held that the high court erred because the courts have frowned upon the failure by the

applicants in ex parte applications to disclose relevant and material facts and not the failure
to disclose that the respondent claims to have a defence, as was the case in this matter.

Although the dispute had been settled between Crocs Inc and Moresport, the court accepted
the submission by the SARS that the judgment has far-reaching consequences for the SARS
in the performance of their duties such that it necessitates the exercise of the court’s
discretion in terms of s 21A of the Supreme Court Act 59 of 1959.

---ends---