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Monday Jul 01, 2013

Auction Alliance wins legal challenge on estate agency inspections

Auction Alliance has won a constitutional challenge against laws that allow for targeted, non-routine inspections of estate agencies without a warrant.

In a ruling in the Western Cape High Court on Friday, Judge Willem Louw declared a section of the Estate Agency Affairs Act (EAAA) and of the Financial Intelligence Centre Act (Fica), inconsistent with the constitution and invalid.

Auction Alliance took the matter to court after the Estate Agency Affairs Board conducted search-and-seizure operations at its premises in Cape Town, Joburg and Durban in March last year.

While the board's inspectors did not have search-andseizure warrants, it relied on the impugned pieces of legislation - section 32A of the EAAA and section 45B of Fica.

The board argued that the legislation gave it the power to conduct not only routine inspections to check whether real estate businesses were complying with the EAAA, but also non-routine, targeted inspections - where there was already suspicion of wrongdoing - without warrants.

This enabled it to effectively regulate the estate agency industry, which involved property and large amounts of money.

First obtaining a warrant, it contended, might allow time for those being inspected to destroy vital records.

However, Auction Alliance contended that the legislation infringed on its right to privacy. Although there was a reduced expectation of privacy in the industry, the targeted, warrantless searches could eventually lead to the laying of criminal charges.

Judge Louw found that the respondents - the board and the ministers of trade and industry and of finance - had not shown that requiring a warrant for targeted, non-routine inspections would defeat the purpose of the inspection.

"The need for surprise, which will often be crucial, can be preserved by allowing warrants to be obtained on an ex parte (one-sided) basis and to provide for limited circumstances under which a targeted search may proceed without a warrant."

Judge Louw declared both sections invalid to the extent that they permitted any inspections other than routine or random without a warrant.

The order, however, was not retrospective and did not affect the validity of any criminal, civil or administrative proceedings that relied on documents already obtained through inspections.

He noted that section 45B of Fica involved "immense public interest considerations" and, therefore, suspended the effect of his order for 18 months to give the legislature time to amend the provisions "so as to make them constitutionally valid".

In the meantime, he put in an interim measure, allowing the board to apply for warrants by approaching a judge or magistrate.

Cape Times

 
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