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IN THE HIGH COURT OF SOUTH AFRICA

(CAPE OF GOODHOPE PROVINCIAL DIVISION)

“REPORTABLE”

CASE NO: 5215/2004

In the matter between:

GERD MUELLER 1^st Applicant

PASCALI TRADING NO. 2 CC 2^nd Applicant

And

THE MINISTER OF SAFETY & SECURTIY 1^st Respondent

THE MINISTER OF HEALTH 2^nd Respondent

THE ADDITIONAL MAGISTRATE FOR THE

DISTRICT OF CAPE TOWN 3^rd Respondent

THE DIRECTOR OF PUBLIC PROSECUTIONS

(CAPE OF GOOD HOPE) 4^th Respondent

JUDGMENT DELIVERED ON 16 MAY 2005

DLODLO, J

INTRODUCTION

1. On 19 May 2003, servants of the Second Respondents, acting on information received regarding the re-packing and export of medicines, entered the premises of a pharmacist, one Mr. Chris Moolman, and carried out a search and seizure operation. One Mr. Daniel Lionel Snyman (hereinafter called Mr. Snyman), a servant of the Second Respondent, took part in the operation. They questioned Mr. Moolman and seized medicines. On 28 May 2004, the said Mr. Snyman, having applied for and been granted a search warrant by the Third Respondent, searched the premises of the First Applicant. He was accompanied by servants of the First Respondent, including one Jacobus Anthony Beukes (hereinafter called Inspector Beukes). They seized certain items, including the passport of First Applicant. However, in the main, they seized computers and computer equipment.

2. On 2 July 2004, the Applicants approached this Court and applied for an Order:

1. Setting aside the Third Respondent’s search warrant;

2. Directing that their computer equipment be returned;

3. Directing that they be allowed to trade as before;

4. An Order that the trade practised by them is justified and does not constitute a commission of an offence in south Africa (“the declaratory order”); and

5. Costs of suit in the event of the application being opposed.

Subsequent thereto, the matter came before the above Court and was postponed for hearing. An Order was granted by consent. In terms of the consent order the servants of the First and Second Respondents were allowed to keep the computer equipment until they had down-loaded all the information contained on the computers; the computers were thereafter to be returned to the Applicants; and the Applicants were to be allowed to continue to trade, at their own risk.

(3) Subsequently, the Third Respondent filed his record and an Answering Affidavit and First and Second Respondents, in the person of Mr. Snyman and Inspector Beukes, filed opposing Answering Affidavits. The Answering Affidavits of the Respondents was met by a Replying Affidavit, deposed to by the Applicants’ attorney. Inasmuch as the question of whether or not a search and seizure warrant should have been granted by the Third Respondent is now largely academic, the Applicants have abandoned their application for a review of the Third Respondent’s actions. The computers have been returned and the Applicants have been allowed to continue to trade. They therefore have no need for an order to this effect and the application for such orders has also been abandoned.

(4) All that is before me is the application for the declaratory order and, of course, the question of costs. A declaratory order is necessary, so it is contended on behalf of the Applicants, as the servants of the First Respondent and Second Respondent are of the view that the present activities of the applicants constitute offences. Mr. Uijs SC assisted by Mr. Grobbelaar appeared for the applicants. Mr. Moerane SC assisted by Mr. Jaga and Mr. Valley appeared for the First and Second Respondents. The Third Respondent (Magistrate) as well as the Fourth Respondent (DPP) filed notices to abide by the decision of this court.

THE FACTUAL BACKGROUND

(5) According to the allegations contained in the Applicants’ Founding Affidavit, the following is the factual situation:

1. An almost instant form of electronic international communication exists, using a word-wide computer “link-up”. This is known as “the internet”.

2. A large number of specialist distributors of pharmaceuticals (“medicines”) exist world-wide.

3. Certain of these distributors have “addresses” on the internet. These addresses are known as “websites”. Persons from around the world can communicate with the distributors by contacting them on their websites.

4. On these websites, the distributors “advertise” and “market” their wares. Such distributors who use the internet in this way are known as “website pharmacies”.

5. Persons from around the world who wish to order medicines from the distributors can do so by contacting them at their websites. They do so by submitting an “online” request (i.e. a request via the internet, submitted by computer) to be supplied with medicines.

6. The website pharmacies respond to such a request by requiring the prospective customer to complete an online questionnaire. This is designed in such a way that the prospective customer, by completing the questionnaire, provides the information which he or she would have provided to a doctor in a face-to-face consultation.

7. The completed questionnaire is submitted online, via the internet, to one of a panel of registered doctors (in countries other than South Africa). These doctors are contracted to the distributors to consider the contents of each questionnaire and to decide whether the use of the medicine in question is indicated and appropriate in the case of each prospective customer.

8. If a doctor decides that it is appropriate to furnish the customer with the medicines requested, he or she will supply a prescription. This is also furnished online, via the internet, to the distributor, who will only supply a prospective customer with medicine if an “internet doctor” furnishes such a prescription.

9. The distributor will also ensure that the prospective customer is “credit-worthy”. The transactions being international, the customer is called upon to pay by an internationally-accepted credit card. Thus, to ensure that the customer is “credit-worthy”, the distributor will establish whether or not the debit to the prospective customer’s credit card will be honoured by the banking house which issued the customer with that credit card. Once satisfied that a prescription has been given to a prospective customer and that it will be paid if it dispatches medicines to that customer, the distributor duly dispatches such medicines.

(6) For reasons of convenience, the distributors acting as “internet pharmacies” have “outsourced” various functions to outside entities (referred to herein as “third parties”). These functions include:

1. The design, operation of and maintenance of their websites;

2. The establishment of the credit-worthiness of prospective customers; and

3. “Customer liaison”, which includes dealing with the queries of customers and checking the accuracy of the amounts raised on invoice.

4. In return for supplying the services referred to hereinabove to distributors acting as “internet pharmacies”, the third parties receive payment which is calculated according to the value of successfully completed transactions. According to the Applicants, they merely act as such a third party and that constitutes the only business activities they are involved in.

(7) The “authorities”, representing the Second Respondent (in the person of Mr. Snyman) and the first Respondent (in the person of Inspector Beukes) regard the present activities of the Applicants as being unlawful. The Applicants regard their present business activities as being lawful. It is common cause that the Applicants are continuing to carry out their said business activities. In this regard there is an apparent dispute between the First and Second Respondents and the Applicants. The nature of the dispute, however, remains debatable between the parties.

HISTORICAL BACKGROUND OF THE WHOLE MATTER

(8) The Applicants entered into an agreement with Mr. Moolman, a South African pharmacist. They agreed that Mr. Moolman would, with their assistance, order and receive medicines from an overseas “internet pharmacy”. Mr. Moolman would receive the online prescriptions described hereinabove, would package the medicines prescribed and dispatch them to the foreign customer.

(9) As appears from one of the affidavits used by Mr. Snyman to obtain the search and seizure warrant on 19 May 2003, Mr. Snyman, having received information regarding the re-packaging and export of medicines, “raided” Mr. Moolman’s pharmacy. Here he found a large quantity of Schedule 5 medicines, which Mr. Snyman concluded were being re-packaged for dispatch to clients who had placed orders over the internet.

(10) Mr. Snyman came to the conclusion that Mr. Moolman and Second Applicant were committing a large number of offences, either as principal or agent. He came to the conclusion that Mr. Moolman and Second Applicant were contravening Section 33 of the Medicines and Related Substances Act, Act 101 of 1965 (“the medicines Act”), (any reference to a regulation herein, is a reference to a regulation promulgated in terms of that Act.) He further came to the conclusion that Mr. Moolman, Second Applicant and “the Doctors” were contravening Regulation 45 by advertising medicines.

(11) He found that the Schedule 5 medicines were, in the main, contained in “ice cream containers” although some had been re-packed in plastic rolls of 10 tablets each. The packs of 10 tablets were affixed to cardboard folders (“omslae”) which, in turn, were contained in special, protective packaging envelopes. The information brochures relating to medicines, or photo copies thereof, were contained in the envelopes. Mr. Snyman thus came to the conclusion that the medicines were not labelled in accordance with Section 18 of the Medicines Act and Regulation 8.

(12) He also came to the conclusion that Regulation 33 had been contravened, in that medicines were being “re-packaged” into “patient-ready packs”. He asked for a computer print-out and received same. He came to the conclusion that Mr. Moolman and/or Second Applicant was importing and exporting medicines without a permit, in contravention of Section 22A(11) of the Medicines Act.

It would appear that Mr. Moolman kept no record of the medicines found. This led Mr. Snyman to the conclusion that Mr. Moolman was contravening Sections 22A (5) and (6) of the Medicines Act and/or Regulation 30. According to the bank statements given to Mr. Snyman by Mr. Moolman, an estimated amount of R1 897 201, 00 had been paid by Second Applicant to him. He found that two local and one foreign (Namibian) doctors had signed prescriptions. These doctors, he came to the conclusion, had contravened Regulations 11, 28 and 45.

THE CASE FOR THE APPLICANT

(13) Mr. Gerd Mueller (the First Applicant) deposed to the Founding Affidavit filed in support of the Notice of Motion in this matter. Among other things he stated that he acquired the Second Applicant as a shelf company in March 2002. At that particular time Mr. Gerd Mueller was contemplating the idea of introducing certain aspects of the business model described under the “factual background” above to South Africa. He averred that he was then considering contracting with South African pharmaceuticals to attend to the packaging and dispatching of the pharmaceuticals in question. He averred further that one of the main objectives of relocating that particular aspect of the business to South Africa had been to benefit from the lower South African labour costs as well as costs of living. Having received legal advice Mr. Mueller came to realize that none of the relevant statutes and regulations appeared to prohibit the activities he contemplated. He was further assured by Mr. Moolman that the proposed activities were not illegal nor in conflict with any code of conduct to which Mr. Moolman as a South African pharmacist was subject. On these bases Mr. Mueller approached Mr. Moolman the aim being to explore the idea of engaging in a joint venture with a view of pursuing the said activities. The intention on the part of Mr. Mueller was to use the Second Applicant as the vehicle through which he would participate in the proposed joint venture with Mr. Moolman. The Second Applicant was to act as a facilitator between pharmacies participating in the abovementioned business model and the South African pharmacist in question and the Second Applicant was to attend to certain administrative functions. The SA pharmacist was to attend to the receipt of the prescription, issued pursuant to the mechanism described, and to the packaging and dispatch of the pharmaceuticals in question. According to Mr. Mueller the understanding was that the pharmaceuticals which were packaged and distributed pursuant to the receipt of a relevant prescription, would be dispatched to a foreign destination. There was never any contemplation of the supply/delivery of pharmaceuticals to South African customers.

(14) Mr. Mueller further averred that a few months after the commencement of the joint venture, the premises occupied by Mr. Moolman’s pharmacy were searched and various articles were seized. This became clear to Mr. Mueller and Mr. Moolman that the search was related to the participation by Mr. Moolman in the joint venture with the Second Applicant. It became apparent to Mr. Mueller that the joint venture was seen by the Prosecuting Authorities and the SAPS as a potential contravention of relevant statutes and regulations.

Mr. Mueller averred that Mr. Moolman and himself decided within a day of Mr. Moolman’s premises having been searched to discontinue the joint venture. He stated that neither the Second Applicant, nor himself nor any other entity in which Mr. Mueller have any interests has had any business relationship with Mr. Moolman since, nor has the distribution of pharmaceuticals from South Africa been pursued by him.

(15) With regard to the activities of the Second Applicant since the discontinuation of the joint venture which involved Mr. Moolman, Mr. Mueller alleged that these have been limited to the following:

1. Attending to those customer communications which are of a purely administrative nature consisting of replying to customers’ queries as to the whereabouts of a particular order and related matters. The ability on the part of the Second Applicant, so alleged Mr. Mueller, to attend to the aforementioned function is guaranteed through his access via the internet, to the relevant data base containing the information required to respond to the customer’s queries.

2. Verifying the correctness of the invoices submitted by the pharmacy in respect of the pharmaceuticals dispatched to the customers;

3. Liaising with credit companies to obtain confirmation, prior to the customer’s order being dispatched, that the charge in respect of a particular pharmaceutical may be debited to the customer’s account.

4. Coordinating the various web marketing efforts.

Mr. Mueller referred to Annexure “GM3” (printouts from the website www.whooi.sc/pharma-drugstore.com) and admitted that “administrative contact” and “technical contact” therein referred, refers to himself. The reference, according to him, is the result of the fact that he himself caused these websites to be designed and hosted in January 2003 in the implementation of the joint venture with Mr. Moolman. Mr. Mueller alleged that his featuring as the “administrative contact” and as the “technical contact” for these websites does not constitute a crime, according to how he was advised.

(16) On 28 May 2004 pursuance to the duly authorized search warrant, the South African Police Service proceeded to seize and remove the computers and other items from Mr. Mueller’s residential premises at 5 Ocean Way, Sunset Beach, Milnerton. When Springer-Nel Attorneys on instruction by Mr. Mueller sought to gather the reasons for the above search and seizure they were supplied with an affidavit annexed on the papers as Annexure “GM3” which Mr. Mueller on advice by his attorneys regard as vague. Mr. Mueller was further allegedly advised that Annexure “GM3” does not disclose any basis for a reasonable belief that an offence has been or is about to be committed either by Mr. Mueller himself of by the Second Applicant.

(17) In conclusion Mr. Mueller averred that he was advised that the activities conducted by the Second Applicant do not constitute the commission of a crime and that therefore the Second Applicant is entitled to a declarator to that effect. Mr. Mueller is of the opinion that the application for a search and seizure warrant on the strength of which his items were seized, would have been made in pursuit of what was nothing more than a “fishing expedition” into the activities of the Second Applicant and himself. All of his requests to have the items listed in Annexure “GM2” returned to him, according to Mr. Mueller, have been met with “a simple, unreasoned refusal” resulting in him being unlawfully deprived of a constitutionally entrenched right to carry out lawful economic activities.

(18) Explaining the urgency of the matter Mr. Mueller alleged that the investigation of the Second Applicant’s business particularly the search warrant issued on 27 May 2004 threaten to cause the Second Applicant’s business irreparable harm. Mr. Mueller alleged that “a dispute accordingly exists between myself and the Second Applicant on the one hand and the First and/or Second Respondent on the other. The dispute can only be resolved by way of an order of this Honourable Court and I…..submit that the Second Applicant and I are entitled to such an order.”

It must be noted that the Rule 53 record is not to be dealt with in this Judgment because such proceedings have become academic in this matter.

THE CASE FOR THE RESPONDENTS

(19) Mr. Daniel Lionel Snyman, a Principal Medicine Officer in the employment of the Medicines Control Council deposed to an Affidavit filed in support of the opposition lodged by the Second Respondent. First and foremost Mr. Snyman averred that the founding affidavit by Mr. Mueller is deliberately written in a style that is designed to mystify the activities of the Applicants. He contended that the founding affidavit is seriously lacking in detail and submitted that this is deliberately done. Mr. Snyman further contended that the Applicants do not furnish the Court with an explanation of how the drugs, for which they accepted payment from the purchaser, has been sent to the purchaser and where such drugs are being sourced. It is Mr. Snyman’s contention that after he investigated the practices of the Applicants and others he was satisfied that the Applicants are committing many offences. That is why he deposed to two (2) affidavits in support of an application for the search warrant.

(20) In Mr. Snyman’s view the Applicants are intent on stymieing their criminal prosecution and he invites the attention of the Court to the following consideration of importance, namely:

1. That the First Applicant is not registered in terms of the relevant laws as a pharmacist in this Country and the Second Applicant is not registered in terms of the relevant laws as an owner of a pharmacy. They are thus both prohibited by law from storing, advertising or selling, importing or exporting medicines.

2. That the Applicants are suspected of engaging in unlawful activities, involving storing, advertising, selling, importing and exporting medicines.

3. That these issues will be dealt with and considered by the Criminal Court. It is not for this Court to pronounce on these issues without reference to the evidence to be led at the Criminal Court. It is also not appropriate for either of the Respondents to spell out the full details of the case that will be made by the prosecution at the Criminal Court.

(21) Mr. Snyman contended that when he deposed to affidavits made in support of applications for search and seizure warrants, he believed that the Applicants were engaged in unlawful activities and that this belief has now been strengthened because having had regard to the contents of Mr. Mueller’s affidavit, he is even more convinced that the Applicants are engaged in unlawful activities in South Africa. In Mr. Snyman’s view the business activities described by Mr. Mueller are not lawful in South Africa. Such activities involve the breaching of many provisions of the Medicines and Related Substances Control Act 101 of 1965, and the Regulations issued in terms of both Acts.

(22) Mr. Snyman contended that anyone who adopts the model involving “the supply of pharmaceuticals to any customer…..” is engaged inescapably in the activity of…..pharmaceuticals”. These activities, averred Mr. Snyman, can only be undertaken by persons (natural or juristic) registered to do so in terms of the Pharmacy Act. To Mr. Snyman’s knowledge, neither of the Applicants are so registered and they are thus on their own version engaged in unlawful activities.

(23) Mr. Snyman stressed that the marketing of medicines is regulated by, inter alia, the Pharmacy Act and the Regulations made thereunder. It is also regulated by the Medicines Act. In his averment the definition of “sell” in the Medicines Act covers the practice of advertising. Regulations make specific reference to the advertising of medicines which makes the marketing of medicines fall within the scope of the Medicines Act. In response to Mr. Mueller’s assertion that in their internet system the doctor analyses the information supplied without meeting the customer face to face, Mr. Snyman contends that it is an offence for a doctor in South Africa to prescribe medicines to anyone he/she has not physically examined. In his view if the Applicants are aware of any doctor who prescribes medicines without physically examining the patient and if they supply the patient with the medicines prescribed by that doctor, they are accomplices to his/her offence. The pharmacy which practises in the way described by Mr. Mueller is committing many offences according to Mr. Snyman. The same need to be said of the third party.

(24) According to the averments by Mr. Snyman, the Applicants actually market the medicines and purchase them from the pharmacy and thereafter sell them to the person ordering them. The fact that the Applicants do not physically handle the medicines, so contended Mr. Snyman, does not detract from the fact that they are engaged in the advertisement, purchase and sale of medicines. Mr. Snyman claimed that according to the evidence in his possession (to be made available at the Criminal trial) the Applicants have full access to information as to which person purchased which medicines and when he/she purchased the medicine. They are thus committing an offence.

(25) Mr. Snyman stressed that the Applicants are supplying pharmaceuticals from South Africa and as such are subject to the laws of this Country. He stigmatizes their conduct as unlawful. According to the evidence Mr. Snyman had prior to the arrest of Mr. Moolman, it was the latter who was supplying the medicines. Mr. Moolman together with the Applicants were thus exporting the medicines to other countries. Mr. Snyman claimed to have evidence that prior to Mr. Moolman’s arrest, the Applicants paid Mr. Moolman an amount of R1 897 201.00 (One Million Eight Hundred and Ninety Seven Thousand, Two Hundred and One Rand) for medicines.

(26) Mr. Snyman denied emphatically that the Second Applicant merely “attends to certain administrative functions” and “acts as a facilitator”. In his view there is clear evidence that both Applicants have engaged in unlawful activities and such evidence will be presented at the Criminal trial. Stressing both Applicants’ culpability Mr. Snyman stated as follows:

“Both the Applicants and Moolman will be answering to various criminal charges. Moolman has, subsequent to our investigation, closed his pharmacy. A substantial body of evidence showing that Moolman and both Applicants were engaged in unlawful activities was retrieved from Moolman’s pharmacy. It is clear that Mueller was the person that conceived the ideas that gave rise to these unlawful activities and that he used the Second Applicant as the vehicle to carry them out.”

(27) Before Mr. Moolman was arrested and before the decision to arrest and charge Mr. Mueller, Mr. Snyman already had information that the Applicants continued unlawful activities. He allegedly conducted an investigation and was thereupon satisfied that both applicants continued to act unlawfully. Mr. Snyman assures everybody else that when Mr. Mueller returns to the Country, Inspector Beukes will arrest him. Even though Mr. Mueller does not disclose where the medicines are sourced Mr. Snyman avers that they are sourced in South Africa.

He has information in this regard. Mr. Snyman stressed that even if the medicines are not sourced in South Africa, the Applicants may well be committing crimes in other Countries and are using South Africa as their base from which the crimes are committed. In his view the Applicants are attempting to stifle the investigation with the present application.

THE APPLICANTS’ REPLY

(28) In reply to the answering affidavit Mr. Andreas Springer (an Attorney for the Applicants) confirmed that Mr. Mueller is presently detained in America on business and that it was virtually impossible to obtain an affidavit from him in time but that he was duly authorized by the Applicants to depose to the replying affidavit. Mr. Springer made it clear that the Applicants have decided to abandon the application to review and set aside the decision of the Third Respondent. He further placed it on record that the equipment and items seized have been returned to the Applicants and that the latter have been allowed to trade at their own risk. Mr. Springer responded to the criticisms leveled against the Applicants by Mr. Snyman to the effect that Applicants are intending on hindering the prosecution. Mr. Springer said that is certainly not the case. Referring to the activities of the Applicants and Mr. Moolman, Mr. Springer stressed as follows:

“They do not believe that they are, indeed, guilty of committing any offences. Nor do they believe that Moolman is guilty of committing any offences. However, it is for the Court seized of the criminal matter to decide these questions”.

(29) In reply to the accusation that the Applicants have deliberately omitted to disclose certain important information in the Founding Affidavit, Mr. Springer states as follows:

“It is, I believe, the right of the Applicants to refrain from furnishing any information which might be used against them in the criminal trial which is pending. Accordingly, the Applicants do not wish to furnish details as to how, where and under which circumstances they allegedly “accepted payment from the purchaser”, how the medicines were sent to the purchaser or from which source the medicines emanated, save as set out in the Founding Affidavit and hereinbelow. Such details is in any event irrelevant for the purposes of deciding whether or not that which the Applicants presently do constitutes an offence or offences.”

(30) Mr. Springer maintains that section 18 of the Medicines Act relates to the advertising of medicines and does not entirely prohibit the advertising of the medicines. According to Mr. Springer, section 18 simply provides that medicines may only be advertised in the prescribed manner. He quotes the provisions of Regulation 45 and stress that they set out the prescribed manner in terms whereof the medicines may only be advertised. Relying on section 22(A) of the Medicines Act, he averred that it merely regulates the possession, sale, exportation, importation and manufacture (in short “the marketing and distribution”) of medicines. He concludes that none of the act presently performed by the Applicants are specifically prohibited by section 22(A) supra.

CONSIDERATION OF CONTENT OF AFFIDAVITS & SUBMISSIONS

(31) The First Applicant averred that since the raid on 19 May 2003, the Applicants have not brought any medicine into South Africa or sold any medicines in South Africa. It is contended on behalf of the First Applicant that Section 33 of the Medicines and Related Substances Act, 1965 (Act No. 101 of 1965) (Medicines Act) as amended creates no offence. Mr. Uijs relying on section 22A (11), (12) and (13) submitted that whilst the Medicines Act prohibits the import and export of medicines, it does not totally prohibit such imports or exports of medicines. It merely makes it obligatory to obtain a permit to import or export, so it is submitted on behalf of the Applicants.

(32) In Mr. Uijs’ interpretation of the word “sale” Mr. Moolman was “notwithstanding anything contained” in the sub-sections of section 22A prior to sub-section 22A (16), entitled to be in possession of the medicines found by Mr. Snyman irrespective of their source.

(33) In order to better understand Mr. Uijs’ above submission, it is necessary to set out the definition of “sale” as contained in Section 1 (xxxviii) of the Act which reads:

“Sell’ means sell by wholesale or retail and includes import, offer, advertise, keep, expose, transmit, consign, convey or deliver for sale or authorize, direct or allow a sale or prepare or possess for purposes of sale, and barter or exchange or supply or dispose of to any person whether for a consideration or otherwise; and sale and ‘sold’ have corresponding meanings”.

Needless to say that the above definition is indeed so wide that any conduct on the part of either the Applicants and/or Mr. Moolman would conceivably fall within the purview of the prohibition. In any event, the content of Mr. Snyman’s affidavit shows that Mr. Moolman at least would have been contravening the provisions of Section 18 and Regulation 8 by failing to comply with the requirements as to the labeling. There is nothing to preclude the State from relying on the extended meaning of “sell” particularly “importation” or “exportation” of medicines in any envisaged prosecution of Moolman and the First Applicant. This would be the position despite Mr. Uijs’ submission that regulations and prescriptions of the Medicines Act must relate only to that which must be contained on the labels of medicines sold in South Africa.

(34) My understanding of Mr. Uijs’ submission is that he concedes (I may be mistaken in this regard) that it can legitimately be argued that Mr. Moolman was an agent of the Applicants, but that in his view section 33 of the Act does not impose strict liability. In his view section 33 creates “reverse onus” and that renders the section unconstitutional. I do not intend to deal with this submission in greater details. I have been referred to the authorities S v Coetzee & Others 1997(3) SA 527 (CC) where the Constitutional Court found Section 245 of the Criminal Procedure Act 51/1977 as creating reverse onus and declared that section and Section 332(5) of the same Act to be inconsistent with Republic of South Africa Constitution Act 108 of 1996. I do not for that matter deem it necessary to set out the provisions of section 33 because I am of the view that it is hardly necessary for purposes of this case to determine the constitutionality or otherwise of what Mr. Uijs calls “reverse onus” allegedly created by this section.

(35) Mr. Uijs argued that the Applicants are entitled to the “declaratory order” because inter alia the servants of the First and Second Respondents appear to be of the view that the activities of the Applicants constitute offences. The Applicants also “base their claim to be allowed to trade freely on section 22 of the Constitution (Act 108 of 1996)”. I am of the view that the best forum to determine whether the activities of the Applicants are lawful or otherwise should be the criminal court. There is certainly no doubt that Mr. Uijs is correct in arguing about the right to trade freely contained in section 22 of the constitution. But it is of cardinal importance to note Mr. Moerane’s submission in this regard, namely, that the right to trade freely contained in that section contemplates lawful trade. Until such time that it has been determined that the activities of the Applicants in “trading” in the manner they did and still do, were/ are lawful, it is my view that the right to trade freely contained in section 22 of our Constitution should not even come into play.

(36) I do want to quote the following portion of Mr. Snyman’s Answering Affidavit appearing on page 126 of the record paragraph 30.1:

“Mueller will within the next day or two be criminally charged by Inspector Beukes (Beukes). I am advised that Mueller is currently out of the country and on his return will be arrested forthwith by Beukes. This evidence (the evidence about his and the second Applicant’s criminal activities) will be presented at the appropriate moment in the criminal Court”.

Strangely the Replying Affidavit does not deal with the above assertion save for stating that the First Applicant is detained in America on business. The papers before me show it as both fundamental and indisputable that the authorities of this Country intend to pursue criminal prosecution against the First and Second Applicants. Clearly the declaration sought will thus impact on such intended prosecution.

(37) In my view Courts must act carefully and avoid where they can to be seen as sanctioning “the commission of a crime or a wrongful act”. (Clark v Hurst NO and Others 1992(4) SA 630 (D) at 634G.

The Appellate Division provided guidance in Attorney-General of Natal v Johnstone and Co. Ltd. 1946 AD 256 at 261 where it stated thus:

“Now there is no doubt that, in general where it is alleged by the Crown that a person has committed an offence, the proper way of deciding on his guilt is to initiate criminal proceedings against him; and where such proceedings have already commenced, even if the stage of indictment has been reached, it seems to me that a Court which is asked to exercise its discretion by entertaining proceedings for an order expressly or in effect declaring that the accused is innocent would do well to exercise great caution before granting such an order. In most types of cases such an order would be entirely out of place.

I must respectfully associate myself with these eminently lucid observations. In my view they fully apply to the matter before me.

In Johnstone’s case supra the Court considered granting the declaratory order to the extent that the Applicant was not committing a crime. But Johnstone’s case supra contained no disputed facts. The Court had to make a determination as to what the law was on the point and it applied undisputed facts and stated thus:

“It seems to me, therefore, that in this class of case, where there is no dispute as to the facts an application for declaration may well in a proper case, be entertained even though the Applicant has already, if he is wrong in his contentions as to the meaning or validity of the relevant determination or agreement, contravened the law. Nor should it make any material difference that a criminal summons has already been issued, provided that the crown agrees to its being suspended or withdrawn pending the decision of the civil proceedings.”

(38) In the instant case it does not appear that important details regarding the Applicants’ activities have been furnished. Mr. Snyman in the Answering Affidavit similarly accuses the Applicants of failure to disclose important detail such as how drugs for which the Applicants have accepted payment have been sent to the purchaser of such drugs. In reply in this regard, the Applicants’ Attorney averred:

“It is, I believe, the right of the Applicants to refrain from furnishing any information which might be used against them in a criminal trial which is pending.”

When Applicants were invited to disclose where the medicines are sourced, the reply was:

“Snyman knows full well where the sources of the medicines are located. He can obtain the information and has obtained this information by accessing the websites maintained by the Applicants”.

(39) There is no doubt that a lot of information which may be material to the exercise of my discretion is withheld. Whilst Mr. Moerane blames this to the lack of candour on the part of the Applicants, my view is that there is understandable fear on their part that certain information, if disclosed, might have an effect of disadvantaging them in the forthcoming criminal prosecution. That, unfortunately, puts me in a very difficult position. How do I decide to exercise my discretion in favour of the Applicant in circumstances where clearly material facts have not been disclosed?

THE UNLAWFULNESS OF THE APPLICANTS’ ACTIVITIES

(40) Mr. Uijs argues that the Medicines Control Act and other Statutes referred to by Mr. Snyman are in effect only in South Africa. In his view there is no evidence that the Applicants are “storing” medicines. He bases this submission on the premise that the names, uses, prices and unit sizes of medicines appear on the computer screen of any person who accesses the websites. But it is noteworthy that Mr. Snyman deposed to an Affidavit in support of the application for a search warrant after receiving certain information about the activities of the Applicants and those whom he believed colluded with them. He investigated the practices of the Applicants and was satisfied they were committing many offences. Mr. Snyman states that after having regard to Mueller’s Founding Affidavit, he is “even more convinced that the Applicants are engaged in unlawful activities in South Africa”. Mr. Snyman avers that it has been ascertained that the Applicant continue to sell medicines using internet. He even lists internet sites used by the Applicants as well as their administrative addresses. Mr. Uijs’ argument that the activities do not take place in South Africa is indeed not completely correct. The administrative sites are in South Africa. (See pages 39, 41-47 and 49 of record.

(41) The Applicants contend that they adopted a business model involving “the supply of pharmaceuticals to any customer”. This in the Applicants’ version is “an activity that involves the delivery of ….pharmaceuticals”.

(See Mr. Mueller’s Founding Affidavit page 9 para 11; Mr. Snyman’s Answering Affidavit page 120-121 para 13).

I have set out the definition of the word “sell” as it appears in the Medicines Act.

42. Mr. Uijs maintained that it is difficult to see how the criminal prosecution against the Applicants (save for a possible prosecution on a charge of importing and exporting medicines without a permit) can succeed. He contended that if medicines were brought into South Africa for consignment to other foreign places, they cannot be said to have been imported. In support of the latter contention Mr. Uijs referred me to Beckett and Co. Ltd. v Union Government 1921 TPD 153; Union Government v Mitchell Cotts and Co. 1925 CPD 345.

Beckett and Co. Ltd. case supra dealt with a consignment of flour dispatched from abroad to Durban for a purchaser in the then Union. The bill of lading stated that the flour was in transit to Delagoa Bay where the purchaser had a branch business. The Court held among other things that even though the flour was intended originally for the Mozambique Agencies but the control was all the time in the Plaintiff’s hands at Pretoria.

Similarly Mitchell Cotts & Co. case supra dealt with cases of petrol consigned for Cape Town and Mossel Bay. The duty payable was raised as from 1^st of September 1923. The Defendant failed in its action for raised duty in respect of the portion since the goods had been “entered” at Table Bay for consumption in the then Union prior to the coming into operation of the raised duty.

Whatever these authorities are intended to convey to me, I think it would be unwise to overlook the possibility of a successful prosecution even on a charge of importing and exporting medicines without a permit which Mr. Uijs himself seemingly concedes.

CONCLUSION

(43) It is my view that probably the criminal court is best suited to decide whether the Applicants are committing any offences. The criminal court will surely be presented with all the information both from the State’s side as well as from the defence. At the present moment all the parties tend (understandably) to be rather economic with regard to the furnishing of information. It thus becomes difficult for me to exercise my discretion either way.

COSTS

(44) The general rule stands, namely, that a successful party is entitled to its costs. There is no justification even in this matter to depart from this rule.

ORDER

(45) In the circumstances, I make the following order:

The Application is dismissed with costs; such costs shall include those occasioned by the employment of two (2) Counsels.

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DLODLO, J

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