CERTAIN sections of the Estate Agency Affairs Act and the Financial Intelligence Centre Act have been declared inconsistent with the constitution and invalid to the extent that they permit any inspections — whether routine, random or for enforcement purposes — without a warrant.
This the finding of the Western Cape High Court following an application by the ill-fated auctioning house Auction Alliance after the Estate Agency Affairs Board and the Financial Intelligence Centre conducted a warrantless search in March last year at the company’s offices in Johannesburg, Durban and Cape Town.
Judge Willem Louw made an interim provision on Friday allowing the legislature to amend the sections and gave a period of 10 days in which the Estate Agency Affairs Board could apply for a warrant.
Dale Smiedt, legal representative for Auction Alliance, said the long-running case was won with costs. "This is Auction Alliance’s 10th successive win since the controversial Quoin Rock auction in December 2011."
That matter arose when businesswoman Wendy Appelbaum complained to the National Consumer Commission that the auctioneers had used a "ghost" bidder to force up the bidding when she bought the Quoin Rock estate for R50m. The commission conducted an investigation and issued a compliance notice against Auction Alliance, the liquidators and the Institute of Auctioneers.
Auction Alliance applied to the Consumer Tribunal, asking it to set the compliance notice aside because of procedural irregularities. In January this year the commission dropped its case against Auction Alliance because of its defective compliance notice.
In Friday’s judgment, the court said the board and the centre had not shown that requiring a warrant for targeted non-routine inspections would defeat the purpose of a targeted inspection.
"The need for surprise, which will often be crucial, can be preserved by allowing warrants to be obtained on an ex parte basis and to provide for limited circumstances under which a targeted search may proceed without a warrant."
Judge Louw said there were "immense public interest considerations" involved in terms of declaring section 45B of the Financial Intelligence Centre Act unconstitutional.
"It would in my view be just and equitable to make an order suspending the declaration of unconstitutionality for a period and to provide for an interim measure to enable a warrant to be obtained for targeted non-routine inspections."
He suspended the order for 18 months to afford the legislature the opportunity to amend the offending provisions.
The provisions in section 32A of the Estate Agency Affairs Act are, according to the judgment, "overly broad" and do not sufficiently circumscribe the discretion of an inspector. Judge Louw said the section was invalid to the extent that it allowed warrantless targeted enforcement searches and seizures under all circumstances.