The Commissioner for the South African Revenue Service and Others v Moresport (Pty) Ltd and Others

The third appellant, Crocs Inc, was the copyright holder of the Crocs Beach model shoe design. On 20 June 2006, Crocs lodged an application with SARS for seizure of goods infringing its intellectual property rights for the period 1 May 2006 to 30 April 2007. In July 2006, a shipment of footwear purchased by the first respondent (Moresport) from Holey Soles Holding Ltd arrived at Cape Town harbour. On 19 July 2006, the second appellant, a customs officer, examined a container and discovered shoes that were replicas of Crocs shoes based on their shape and design. The goods were detained and samples were sent to Crocs, whose attorneys confirmed the goods were counterfeit. On 4 September 2006, Moresport wrote to Crocs' attorneys disputing Crocs' right to protection under the Counterfeit Goods Act and stating they had a defence to the continued seizure. On 14 September 2006, SARS obtained a warrant from magistrate Samuel Maku NO in an ex parte application authorizing seizure of 5,015 pairs of beach sandals. The letter dated 4 September 2006 from Moresport was not disclosed to the magistrate. The goods were seized on 3 October 2006. Moresport applied to the Pretoria High Court to set aside the warrant, which succeeded, with the court finding that the failure to disclose Moresport's defence was a material non-disclosure.

• Whether the failure to disclose that a respondent claims to have a defence in an ex parte application for a warrant under section 6(1) of the Counterfeit Goods Act 37 of 1997 constitutes a material non-disclosure requiring the warrant to be set aside
• What constitutes a 'material fact' that must be disclosed in an ex parte application for a warrant under the Counterfeit Goods Act
• What standard of proof is required when a customs officer applies for a warrant under section 6(1) of the Counterfeit Goods Act

The appeal was upheld. The order of the Pretoria High Court was set aside and substituted with an order dismissing the application with costs.

In an ex parte application for a warrant under section 6(1) of the Counterfeit Goods Act 37 of 1997, the failure to disclose that a respondent claims to have a defence does not constitute a material non-disclosure that would render the warrant susceptible to being set aside. At the warrant stage, the judge or magistrate is not required to adjudicate on whether the goods are indeed counterfeit, but merely to determine whether there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken, is taking, or is likely to take place. The customs officer need only establish a prima facie case and is not required to prove on a preponderance of probabilities that the seized goods are counterfeit. The duty of utmost good faith in ex parte applications requires disclosure of material facts that might influence the court's decision, but this does not extend to disclosure of a claimed defence at the warrant application stage.

The Court noted that while a legal representative presenting an ex parte application might have an ethical duty to bring to the attention of the judicial officer issues of law that might affect his or her decision, this is a different matter from the legal duty to disclose material facts. The Court also acknowledged the importance of similar matters to SARS and that the judgment of the court below had far-reaching consequences for officials of SARS in the performance of their duties in preventing the proliferation of counterfeit goods into the channels of commerce in the country. This justified the exercise of discretion to hear the appeal notwithstanding the settlement between the first respondent and third appellant, as the issue remained a 'living issue' for the appellants.

This case clarifies the requirements for ex parte applications for warrants under the Counterfeit Goods Act 37 of 1997. It establishes that the duty of utmost good faith in ex parte applications extends to material facts, but does not necessarily require disclosure of a respondent's claimed defence. The case is significant for customs officers and SARS officials in performing their duties to prevent the proliferation of counterfeit goods, as it clarifies that at the warrant stage, only a prima facie case is required rather than proof on a balance of probabilities. It provides important guidance on the distinction between material non-disclosure of facts and disclosure of legal defences in ex parte applications, and defines the appropriate standard of proof at the warrant application stage under the Counterfeit Goods Act.