South Africa: North Gauteng High Court, Pretoria

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Reiscor Tow CC and Others v Minister of Trade and Industry and Another (4640/19) [2020] ZAGPPHC 192 (7 May 2020)

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IN THE NORTH GAUTENG HIGH COURT,PRETORIA

[REPUBLIC OF SOUTH AFRICA]

Case No: 4640/19

7/5/2020

In the matter between:

REISCOR TWO CC FIRST APPLICANT

PARKWILL CC SECOND APPLICANT

FONTAINEBLEUA WINE EMPORIUM CC THIRD APPLICANT

AND

THE MINSITER OF TRADE AND INDUSTRY FIRST RESPONDENT
THE NATIONAL LIQUOR AUTHORITY SECOND RESPONDENT

JUDGMENT

MAVUNDLA J;

[1] This is an opposed application by the three applicants for the declaratory relief coupled with a review application in terms of section 6(2) of the Promotion of Administrative Justice Act, Act 3 of 2000 ('PAJA"). The decision to be reviewed is the respondents" decision to impose certain allegedly ultra vires conditions on the registration of the applicants as distributors of alcohol.

[2] The applicants seek an order in terms of the prayers 1 to 4 of the amended Notice of Motion dated 3 April 2019.

[3] The three applicants are all registered as "distributors" in terms of the National Liquor Act, Act 59 of 2003 (hereinafter referred to as "the Act") and the registrations are unconditional.

[4] The National Liquor Act, Act 59 of 2003, governs the manufacturing and distribution of alcoholic beverages in the Republic of South Africa and the norms and standards for the legislation in respect of retail sales and micro manufacturing in various provinces.

[5] "Distribution" is what was previously referred to as "whole sale". In other words, anybody who wants to distribute liquor in the Republic of South Africa, which only may be distributed to the holders of liquor licenses or exempted persons, must obtain a registration as a Registrant for distribution in accordance with the provisions of Act 59 of 2003.

[6] When the National Liquor Act came into operation, there was a window period for conversion of previously existing licences, which included the right to do wholesaling, into distribution registrations in terms of the new legislation. All three of the applicants fell within this category and they all converted their rights to National Distribution Registrations as follows:

6.1 First applicant converted to Bootleggers Lombardy registration number RG0001332;

6.2 Second applicant converted to Bootleggers Booysens registration number RG0001330;

6.3 Third applicant converted to Bootleggers Fourways registration number RG0001329.

6.4 All three applicants attached copies of their respective Registration Certificates as annexure "B1", "B22" and "83".

[7] In terms of the National Liquor Act, the first respondent has the right to impose conditions on registration as distributors. In casu this was not done, and all three registrations of the applicants were issued unconditionally in the form of the prescribed registration forms, Form NLA9 and NLA30 copies of which were attached herein as Annexure "Bl", "B22" AND "B3". It needs noting that all three registration certificates were dated 17 March 2009.

[8] The applicants alleged that in terms of the National Liquor Act, a registration remains valid and in force until it is cancelled by the first respondent. They allege further that this has not happened in the case of any of the registrations of all three applicants.

[9] I must hasten to point out that, in terms of the National Liquor Act, a registrant must (my emphasis) renew its registration each year. Regulation 15A of the Regulations to the National Liquor Act, which deals with the renewal process, require, a registrant to lodge the Form NLA28 and proof of payment. The relevant Regulation reads as follows:

"15A Annual renewal of registration

(1) Upon receipt of a Notice for annual renewal of the registrant's registration on Form 32, a registrant must submit the registrant's annual information return on Form NLA 28 and pay the annual renewal fee as set out in Table NLA4, within a period contemplated in regulation 11(4).

(2) When the registrant has submitted the Registrant's annual information return and paid the annual renewal fee as contemplated in sub-regulation (1), the National Liquor Authority must deliver an Annual renewal certificate in Form NLA33 to the registrant."

[10] It must be noted that the use of the word "must" in sub-regulation (1) of 15A Regulation is peremptory, and therefore demands strict compliance with the demand to submit annual information of returns and proof of payment of the renewal fee. In this regard I am bolstered vide the matter of Minister of Environmental Affairs & Tourism v Smit[1] where Brand JA held that:

"[32] ...An applicant 'must pay' the application fee and 'must' pay the application fee promptly and timeously'. The general principle is, of course, that language of a predominantly imperative nature such as 'must' is to be construed as peremptory rather than directory unless there are other circumstances which negate this construction (see e.g. Sutter v Scheepers 1932 AD 165 at 173-4) Even though the provisions under consideration are drafted in narrative form, common sense dictates that this principle be afforded some weight. An even more significant indication that timeous payment of the application fee is peremptory is that the invitation contains an explicit sanction for non- compliance with the provision-- an application submitted without proof of proper and timeous payment will not be considered (cf Sutter v Scheepers (supra at 174)). There is also the more general consideration that where, as in the present case, a statute provides for the acquisition of a right or privilege-as opposed to the infringement of an existing right or privilege--- compliance with formalities that are prescribed for such acquisition, should be regarded as imperative. See e.g. R v Noorbhai 1945 AD 58 at 64; South African Citrus Exchange Ltd v Director- General: Trade and Industry and Another {1997 (3)236 (SCA) at 241E-1)."

The question that arises is what is meant by "annual returns". I will later revert to this issue.

[11] In casu, the applicants in an endeavour to comply with the provisions of "15A (1)" injunction, submitted Form NLA28 ("Registrant's Annual Information Return" dated 15 March 2018) and proof of payment of renewal fee (dated 25 March 2018), copies of which are attached in their respective affidavits marked annexure "C1", "C2" and "C3". respectively.

[12] It needs noting that on 15 March 2018 the applicants' filed Forms NLA 0 (application for extension of time. The application was for an extension of time so that they could file inter alia SAPS clearance certificate, Tax clearance certificate and 8-BBBEE certificate.

[13] The second respondent per letter dated 31 July 2018 (NLA 21 Compliance Notice) informed the applicants per section 9 of the Liquor Amendment Regulation that they have not complied with section 14(4)(b) in that they have not complied with the conditions and provisions of this Act. They were informed that the conditions to comply with the documents mentioned below was imposed and consented to by the Registrant during the application process. The registrants failed to comply with the provisions of the Act in that the documents mentioned below are still outstanding:

"1) Bee certificate accredited by SANA;

2) Valid tax certificate; and

(3) Zoning certificate."[2] This notice is dated 1/08/2018.

[14] The applicants in their papers contended that the second respondent refuses to issue an NLA 33 proof of renewal in respect of each of the applicants' registrations to each applicants, but also does not take a decision to refuse such renewals or to cause the cancellation of the registrations, which, as they allege, is precisely the type of situation provided for in section 6(2)(g) of the Promotion of Administrative Justice Act, Act 3 of 2000- "PAJA".

[15] The applicants further contended that the respondent, as a creature of statute, are unnecessarily delaying or refusing to issue to the applicants their NLA 33 proof of renewal of respective registrations without any sound reason for doing so and without anything that is prescribed being outstanding or any time limits not having lapsed.

[16] In so far as the contention that there was absence of sound reasons, I must hasten to state that there is no merit on this, because the NLA 21 attached to the applicant's papers provides sufficient reason, namely failure of compliance. The only issue deserving attention is what they referred to as "without anything that is prescribed being outstanding". This in their heads of argument is what is supposed to amount to ultra vires, in that, according to the submissions made on behalf of the applicants it is not prescribed. This would refer to:

"1) Bee certificate accredited by SANA;

2) Valid tax certificate; and

3) Zoning certificate.

In buttressing this point, reliance is made on the authority of, inter alia, C Beiling & Six Others v Gauteng Provincial Liquor Board case number[3] where the respondent refused the applicant's application for a liquor store licence for the following reasons:

---there was no local authority /zoning certificate;

----There was no proof that the consenting party is the owner of the party (sic)

.... The premises are in the residential (sic);

.... There was no plan approved by the local authority....

The Court held that:

".... that a creature of statute such as the present respondent would on this basis be entitled to perform acts which it is not empowered to in terms of the act which creates the specific administrative authority... There is no authority whatsoever to the effect that the Liquor Board is entitled to enforce the terms of a town planning scheme, conditions in a deed of transfer, or to perform the functions if the local authority."

[17] In my view, the C Beiling & Six Others matter is distinguishable from the present matter. In casu, the outstanding documents are specifically referred to in the letter sated 31 July 2018, as indicated in paragraph [13] supra as well as in Regulation 9.

RESPONDENTS' CASE

REGULATION 9 PROVIDES; TRANSITIONL ARRANGEMENTS

[18] It was submitted on behalf of the first respondent that in terms of regulation 9, "Registrants registered before the coming into effect of this regulations must upon coming in effect of this regulations and when filing an annual return file, such return with the following information:

(a) a business zoning certificate for industrial purposes or a consent letter issued by the relevant authority;

…..

(e) a valid Tax clearance certificate if Registrant is juristic person issued by South African Revenue Services within twelve months from the date of application, or proof of tax compliance for natural person issued by SARS.

…..

(g) Verification certificate issued in terms of the Broad- Based Black Empowerment Act, 2003 (Act No. 53 OF 2013)."

[19] The National Liquor Act, spells out its purposes as being:

"to provide for control over the sale of liquor: and for matters connected therewith.

'it seeks to exercise that control by a licensing system. liquor may only be sold by a holder of liquor licenses which determine the rights and privileges" as well as the "obligations and liabilities" of their holders, license holders are therefore bound by their license conditions and by the provisions of the Act applicable to them".

[20] In my view, it is not only the conditions of the licence that bind a license holder of registrant but also the Act itself. It is possible therefore, that in certain instances, the conditions might not be stated in a licence but the Act is the overall governing statute of the liquor trade and remains binding. The regulations derive their legal efficacy from the Act itself. In the matter of AAA Investments (Pty) Ltd v Micro Finance Regulatory Council and Another[4] the Constitutional Court held that: "the doctrine of legality which requires that power should have a source in law, is applicable whenever public power is exercised."

[21] In casu regulation 9 referred to herein above, provided a mechanism through which, registrants (such as the applicants in casu) were holders registered before the coming into effect of this regulation, are brought on board within the purview of the renewal mechanism in terms of regulation 9. Once they are on board, the annual renewal continues and the applicants must therefore continue submitting their annual returns as prescribed, namely the information referred to in paragraph 13 herein above. Their contention that regulation 9 is a once off mechanism will run against the prescripts of section 15A of regulation 9.

[22] In the matter of Minister of Environmental Affairs & Tourism v Smit[5] it was held that:

[ "31] As a general principle an administrative authority has no inherent power to condone failure to comply with a peremptory requirement. It only has such power if it has been afforded the discretion to do so (see for example, Le Roux and Another v Grigg Spall 1946 AD 244 at 252; South African Co-operative Citrus Exchange ltd Director General: Trade and Industry and Another [1997] ZASCA 6; 1997 (3) SA 236 (SCA) ((1997] 2 BALL SA 3210 at 241(SA). "

[23] In the matter of United Technical Equipment[6] with regard to the City Council's obligations to enforce the law in the face of illegality the court held that:

"The respondent has not only a statutory duty but also a moral duty to uphold the law and to see it due compliance with its own planning scheme. It would in general be wrong to see whittle away the obligations of the respondent as a public authority to uphold the law. A lenient approach could be an open invitation to members of the public to follow the course adopted by the appellant< namely to use land illegally with a hope the use will be legalized in due course and pending finalization the illegal use will be protected indirectly by the suspension of an interdict".

[24] In the matter of Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council[7] the Constitutional Court held that "... it is a fundamental principle of the rule of law, recognised widely, that the exercise of public power is only legitimate where lawful. The rule of law-to the extent that it expresses this principle of legality-is generally understood to be a fundamental principle of constitutional law ."

[25] The contention of the applicants that, what was required by the respondents, in refusing to renew their licence applications was ultra vires, stands to be rejected because there is no merit in that contention. Those requirements were not thumb sucked by the respondents, but are a legislative requirement in terms of Regulation 9 of 2013 and the Act.

[26] In the matter of Watkins v Kingsburgh Town Council[8] it was held that:

"It is common cause that this Court must exercise the ordinary functions of a Court of appeal, but " al ways bearing in mind such weight as may attach to the fact the discretion is, in the first instance, committed to a public officer or body who may be presumed to have special knowledge of local conditions, and who may act on that knowledge 'provided a fair hearing is given to the applicant. ' ... It is also common cause that it is a serious matter to deprive a licence holder of his right to trade and that if the Court is satisfied that a renewal of his licence has been refused on inadequate grounds it will allow the appeal. In Estate Tajoodeen v Pietermaritzburg Master Bakers Association, 1937 NPD 113 it was held that:

'It is trite that the applicants must satisfy the court that the impugned decision was materially influenced by errors of law and must therefore be reviewed and set aside in terms of S8( l)(C) (II) of Promotion of Administration Justice Act 3 of 2000 (PAJA). The impugned decision of the Appeal Board (FSB Appeal Board) can be reviewed and set aside by the High Court, in terms of PAJA, if found to have been materially influenced by an error of law, or evaluation of the facts, inter alia; vide Edcon v Financial Services Board of Appeal;[9] National Tertiary Retirement v Registrar of Pension Funds[10]; Pepcor Retirement Fund v Financial Board Services Board[11]; Registrar of Pension Funds v ICS Pension Fund[12]. Vide also Germistaon City Council v Hillowitz 1963 (1) AD at 650H-6=651A"'.

[17] In so far as the Beiling case as well as those others the applicant relied upon, I respectfully do not consider myself bound thereby.

[28] I have not been persuaded that the decision of the second respondent in refusing the applicants' renewal applications was influenced by any materiality, of mala fides or error of law, to warrant the intervention of this court and review and set it aside.

[29] It is trite that costs follow the event. There was an urgent application under case number 17802/2019, which was brought by the applicants against the present respondent. In that matter an interim order was issued, the effect of which was to suspend the cancellation of the applicants' liquor trading licences pending the outcome of the present application. The costs therein were reserved to follow the outcome of the present case. Needless to state that in the circumstances the applicants have to bear those costs as well.

[30] In the result, the following order is issued:

1. That the application is dismissed;

2. That the applicants, are jointly and severally, the one paying the other to be absolved, ordered to pay the costs of the application, which costs to include the costs of the urgent application under case number 17802/2019.